PT Harum Energy Tbk Allocates $470m to Acquire Coal Miner near East Kalimantan Operation
PT Harum Energy Tbk recently announced during their 2014 shareholder meeting that they are allocating $470 million to purchase a coal mining company located near their mining operation in East Kalimantan. This acquisition falls under the company’s plans for expansion this year.
Harum Energy is one of the leading thermal coal producers in Indonesia with integrated mining operations in East Kalimantan. The coal mining company is controlled by Indonesian businessman Kiki Barki. Through its subsidiaries and joint venture company, the Harum Energy operates three coal mines and a tug and barge operation.
The Company markets its coal to a diversified group of customers in various Asian countries, such as Japan, South Korea, Taiwan, China and India, under both multi-year contracts as well as spot contracts. The Company's customers include large coal-fired power generating and manufacturing companies located throughout Asia.
“We’ve already set aside the fund. We have our eyes on a mining company located close to our Harum mining operation in East Kalimantan,” said Ray Gunara, president director at Harum Energy, in Jakarta on Thursday.
The potential for the presently unnamed coal miner to produce at least 50 million metric tons per year is a primary factor as to why Harum Energy has selected this premium target for acquisition.
Gunara also reported that the Jakarta-based Harum Energy would use its internal cash of approximately $200 million and a $270 loan facility which it received last year for the acquisition plan.
In addition, Harum Energy already has $10 million worth of capital expenditure allocated for the company’s coal production equipment maintenance this year.
Global iron ore production to recover by 5.1% in 2021
Global iron ore production fell by 3% to 2.2bnt in 2020. Global production is expected to grow at a compound annual growth rate (CAGR) of 3.7% to 2,663.4Mt between 2021 to 2025. The key contributors to this grow will be Brazil (6.2%), South Africa (4.1%), Australia (3.2%) and India (2.9%). Key upcoming projects expected to commence operations include South Flank in Australia (2021), Zulti in South Africa (H2 2021), Serrote Da Laje in Brazil (H2 2021) and Gudai-Darri (2022), according to GlobalData, a leading data and analytics company.
Vinneth Bajaj, Associate Project Manager at GlobalData, comments: “Declines from Brazil and India were major contributors to the reduced output in 2020. Combined production from these two countries fell from a collective 638.2Mt in 2019 to an estimated 591.1Mt in 2020. The reduced output from the iron ore giant, Vale, was the key factor behind Brazil’s reduced output, while delays in the auctioning of mines in Odisha affected India’s output in 2020.
“Miners in Australia were relatively unaffected by COVID-19 due to effective measures adopted by the Australian Government, while a speedy recovery in China led to a significant 10.4% increase in the country’s iron ore output.”
Looking ahead, the global iron ore production is expected to increase by 111.3Mt to 2,302.5Mt in 2021. Rio Tinto is expected to produce up to 340Mt of iron ore, while BHP has released production guidance of 245–255Mt, supported by the start of the Samarco project in December, which is expected to produce between 1–2Mt.The company has retained its guidance for Australian mines at 276–286Mt on a 100% basis, due to scheduled maintenance work at its ore handling plant and tie-in activity at the Area C mine and South-Flank mine.
Bajaj added: “The remaining companies are expected to produce more than 600Mt of iron ore, including FMG, whose production is expected to range between 175–180Mt supported by its Eliwana mine that commenced operations in late December 2020, and Anglo American, which is expecting to produce between 64–67Mt. Vale is expected to resume 40Mt of its production capacity, taking its overall production capacity to 350Mt in 2021, with production guidance of 315-335Mt.”