Harum Energy acquires another coal mining firm

JAKARTA. Thermal coal producer PT Harum Energy (HRUM) acquired a 50.5 percent stake in PT Karya Usaha Pertiwi, a coal mining company in East Kalimantan, to help secure its coal reserves.

The publicly listed Harum acquired Karya Usaha’s shares for US$2 million from mining firm PT Karya Wijaya Aneka Mineral on Sept. 28. After the acquisition, Karya Wijaya now holds 49.5 percent of Karya Usaha’s shares.

“Funds for the acquisition came from our internal cash. We bought Karya Usaha because it has the same quality thermal coal as ours,” Harum investor relations head Veronica Jordan said on Wednesday.

Karya Usaha’s mining site is expected to begin operations in the second half of 2013, according to Veronica.

Harum was conducting research to finalize the estimation of resources in Karya Usaha in accordance to the standards of the Joint Ore Reserves Committee (JORC), Veronica wrote in an email sent to The Jakarta Post, adding that the company had not set a production target for Karya Usaha.

At the moment, Harum has four other coal mining companies besides Karya Usaha; PT Mahakam Sumber Jaya, PT Santan Batubara, PT Tambang Batubara Harum and Harum Energy Australia.

Mahakam, Santan and Tambang run their activities in East Kalimantan. They have combined coal resources and coal reserves of 509 million tons and 106 million tons, respectively.

Meanwhile, Harum Energy Australia, through subsidiary Cockatoo Coal, operates in Queensland, Australia, and has 2.62 billion tons in coal resources and 334 million tons in reserves.

In the first half of this year, Harum produced 6.1 million tons of coal, 39.5 percent higher from the same period in 2011. The coal production came from its Mahakam and Santan mining sites only because the Tambang site has not begun production.

Tambang is scheduled to operate late this year and is expected to produce about 1 million tons of coal, according to Veronica.

Between January and June 2012, Harum sold 7.4 million tons of coal, jumped 62 percent from a year before. The company booked higher sales volume than production because it also purchased coal from third parties.

Its average selling price grew slightly during this year’s first half, up 0.1 percent to $90.2 per ton from 2011.

Harum’s net profits surged 23.2 percent to $89.6 million for the first six months of this year. Higher net profits were supported by higher revenues, which soared 71.1 percent to $583.1 million.

Despite the positive results in the first half, Harum set a lower coal production target by year’s end. It aims at producing 12.5 million tons of coal in 2012, 3.8 percent lower from last year’s total production volume.

The company attributed the minor decline in its target to lower production from Santan due to expected growing logistical and operational costs.

According to Veronica, Harum has not come up with the 2013 target even though Karya Usaha and Tambang will have started production next year.

As of June 2012, Harum’s assets stood at $528.4 million. Its liabilities and equities reached $148.4 million and $380 million, respectively.

Harum’s shares closed at Rp 5,700 (59 US cents) on Wednesday, down 2.6 percent from the previous day. (Tassia Sipahutar, The Jakarta Post)