Tambangraya to increase exports to India

JAKARTA. Coal miner PT Indo Tambangraya Megah (ITMG) expects to see a shift in its export market, with higher sales to India forecast this year as sales to other countries remain flat.

ITMG marketing director Hartono Widjaja said India would remain as one of the publicly listed company’s three main export destinations, along with China and Japan.

“However, we think that India will play a bigger role in our export composition because demand keeps growing there, but the country’s production capacity does not seem to be able to meet it,” he told reporters during a press conference on Wednesday.

ITMG is looking to sell a total of 29.7 million tons of coal in 2014, up from 29.1 million tons booked last year. Exports to India are expected to make up more than 9 percent of the sales target.

It attributed India’s higher needs to its thriving business and the depreciation of the rupee, which might spur coal imports.

It estimates that India’s thermal coal imports will surge to 148 million tons from 136 million tons recorded in 2013.

Last year, ITMG — which is part of Thai energy firm Banpu Group — sold 29.1 million tons of coal, 7 percent higher than 2012. About 8.6 percent of the sales, or 2.5 million tons, went to India. China accounted for 27.8 percent of the figure with Japan at 15.8 percent.

India’s bigger contribution this year, Hartono said, would be caused by relatively flat growth in China. In a business presentation, ITMG noted that exporters would see greater competition from China’s own suppliers.

Meanwhile, ITMG president director Pongsak Thongampai said that he expected global coal prices to rebound in 2014 to around US$80 or $85 per ton. “Global supply will decline because companies may reduce their production due to soaring costs,” he said.

ITMG itself predicts that its average selling price will stabilize around $75 per ton in 2014.

To support its operations, the company is setting aside $86 million of its internal reserves for capital expenditure (capex). ITMG finance director Edward Manurung said that most of the capex would be used to improve infrastructure facilities at all of its mines.

Currently, ITMG operates six mines in Central Kalimantan, East Kalimantan and South Kalimantan.

According to Edward, ITMG is looking to acquire new mines, but no decision has been made regarding the targeted mines. It is also planning to develop a coal-fired power plant, with state power firm PT PLN as its principal customer.

“We may construct the plant ourselves, partner with a third party to form a joint venture or acquire an existing power firm. We are open to all options,” he said.

He did not provide details on the plant’s capacity, but said that it would be higher than the 2.7 megawatts produced by its power plant in Bontang, East Kalimantan. The current plant is used to supply power for its internal activities.

Meanwhile, during its annual general shareholder’s meeting, ITMG decided that it would disburse $195.91 million in dividends, at Rp 1,989 (17 US cents) per share.

The amount is equal to 85 percent of its 2013 net profits, which stood at $230.48 million. The dividend payment is scheduled to take place on May 14.

ITMG’s shares closed at Rp 24,850 on Wednesday, up 0.4 percent on the day before. (Tassia Sipahutar)