Berau Coal Cites Forex as Reason for Losses in H1

Dion Bisara

A fluctuation in the exchange rate turned out to be costly for mining firm Berau Coal Energy.

The company posted a loss in the first half of this year, reflecting challenges that the country’s miners are facing amid declining global commodity prices.

Berau, one of the largest coal miners in Indonesia, posted a $39.4 million loss in the period that ended on June 30, compared to the $90 million profit it posted during the same period last year, the company said in a report to the Indonesia Stock Exchange (IDX) on Friday.

The company posted a foreign-exchange loss of $3.5 million during the period, compared with a $4.9 million gain last year, the report showed.

Berau also reported a $47 million drop in the value of financial assets.

Still, revenue at the company, affiliated with Bumi Resources, rose 5.7 percent to $770.5 million in the first six months, compared to $729.1 million last year.

The rupiah has weakened 4.5 percent this year, in line with a deterioration of Indonesia’s goods trade, which has been in the red for three straight months and posted a record $1.3 billion deficit in June, according to data from Bank Indonesia.

It strengthened 0.06 percent, to 9,477 against the dollar, on Friday.

The central bank has spent some of its foreign-exchange reserves to defend the ailing rupiah. The reserves dipped to $106.6 billion in July after peaking at $124.6 billion in August last year. The government expected the rupiah to trade at 9,000 against the dollar this year in the revised state budge submitted to the House of Representatives in March, slightly weaker than the average of 8,779 in 2011.

Rosan P. Roeslani, president director of the company, said last month that the company expected selling prices of coal to fall this year due to slowing prices in the global market. Its average selling price has dropped to $78.80 per ton this year, compared with $81 per ton last year.

Berau has targeted its coal sales to reach 23 million tons this year, rising from last year’s 20 million level. The company has total coal reserves of at least 447 million tons, Rosan said.

The company expects to add to its reserves over time but Rosan was not prepared to give details on how or when that would happen.

The miner also wants to start building a 40-megawatt power plant in Kalimantan, at a cost of $300 million, by next month. It will use some of the proceeds from a $500 million bond sale to finance the power plant.

Berau Coal has set aside as much as $186 million for capital expenditures this year. Rosan said the capex would form part of the company’s plans for $620 million in investments over the next four years.

By September, Berau expects to start building a 40-megawatt power plant in Kalimantan at a cost of $300 million. It will use some of the proceeds from a $500 million bond sale to finance the plant.

The company is looking for bidders on contracts for the power plant’s construction, Rosan said.

“Some foreign parties are interested and winning bidders will be announced in August,” he said last month.

Berau rose 1.7 percent to Rp 305 on the IDX on Friday.