Indonesian Coal Miners Post Revenue Growth Despite Global Shift Away From Fossil Fuels

Despite the global shift away from fossil fuels, Indonesian coal miners have posted encouraging growth, thanks to a dramatic rise in coal prices throughout the year.

Bayan Resources—owned by billionaire Low Tuck Kwong—reported revenues of $1.7 billion for the third quarter this year, up 70% from the same period last year. Meanwhile, Adaro Energy—controlled by tycoon Garibaldi Thohir—recorded revenues of $2.5 billion in the third quarter, a 31% increase from the same period last year.

The phenomenon of soaring coal prices, however, is an anomaly. According to Juan Harahap, an analyst at Mirae Asset Sekuritas Indonesia, the price of coal should have been declining after the winter season. “The rise has been primarily driven by robust demand from China due to the industrial recovery from the pandemic amid the mine safety issues in China and heavy rainfall in Indonesia,” Harahap said in his latest research report.

Bayan Resources’ average coal price reached $59.7 per ton in the third quarter—a 54% increase from the same period last year. The company has increased its coal production to 27.3 million tons in the third quarter, a 29.3% rise from the same period the previous year.

The positive sentiments made Bayan Resources increase its revenue target for this year as the company already surpassed its initial aim of $1.4 billion to $1.6 billion for the year. “We project that this year’s revenue will be higher than the previous guidance so that revenue is projected to close in the range of $ 2.6 billion to $2.9 billion,” says Russell Neil, director of Bayan Resources.

Adaro also recorded a similar increase in coal prices with a 40% increase compared to last year. The company produced almost 40 million tons of coal in the third quarter this year, a 5% decrease year over year. Adaro was also upbeat on the rest of the year and adjusted its target for operating Ebitda to $1.75 billion to $1.9 billion for this year. “Considering the latest development on the coal market fundamentals, we decided to adjust our profitability target,” says Thohir, who serves as president director and CEO of Adaro Energy.

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For next year, Harahap projected that average coal prices will decrease as there is the potential for lower demand from China and India, a production surge in Indonesia, and disruption from renewable energy. “However, we foresee the transition for renewable energy will still be challenging in the near future, and the coal assumption price of $100 per ton in 2022 is still lucrative for Indonesia’s coal industry,” adds Harahap.

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