Sales contracts signed by Bumi Resources, Indonesia’s largest coal miner, suggest the company is set to easily meet its sales target for the year.
Company director Dileep Srivastava told Investor Daily on Sunday that the company had already achieved 82 percent of its sales goal for the year of 75 million tons through contracts. Srivastava said the average selling price was $85 per ton.
Meanwhile, the remainder of the sales goal will be achieved through spot market sales, Srivastava said, adding that he expected a similar average selling price for them.
Last year, Bumi’s average selling price was $92.70 per ton, but that fell to $87.60 per ton in the first quarter this year.
Bumi sells 80 percent of its production locally, while the remaining 20 percent is exported to countries including China, India, Japan, Taiwan and South Korea.
“We view present spot price weakness as temporary and seasonal,” Srivastava said, adding that he believed the coal price would rise as the Northern Hemisphere winter approached.
The company is also planning to improve the efficiency of its production, intending to reduce its strip ratio, an indicator of efficiency in coal production, to 10 from 11.5 last year.
The company also aims to reduce its interest payments in order to boost income. Bumi plans to reduce its interest expenses by paying off its debt two years ahead of schedule.
The company owed a total of $750 million to China Investment Corporation, of which it paid $150 million last year.
Bumi is aiming to reduce its interest expenses by half by next year.
Meanwhile, Australian investment giant Macquarie Group cut its forecast of global growth in coal demand this year to 8 percent from 10 percent because demand from China had shown signs of continued decline in the second quarter of the year.
News of Bumi’s sales results did little to buoy the company’s stocks, which were hit hard by global fears of excessive stockpiles held by coal companies.
Share in Bumi fell 9.1 percent to Rp 1,100 on the Indonesia Stock Exchange on Monday. The shares have fallen 49 percent so far this year.