Harum Energy Looks to Other Markets as Demand From China Drops Off

By webadmin on 10:01 pm May 18, 2012
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Francezka Nangoy

Indonesian coal mining holding company Harum Energy is expanding its market in Asia in anticipation of slowing demand from China, the continent’s biggest economy.

“We started to look for markets outside of China since the end of last year,” Ray Gunara, the company’s president director, said at its annual stockholders’ meeting in Jakarta on Wednesday.

Ray said that the company had secured contracts with more buyers from South Korea and Taiwan.

He said China’s contribution to the company’s total sales declined to 15 percent in the first quarter this year, compared to 32 percent contribution in the same period last year.

At the same time, South Korea increased its contribution to 35 percent from 32 percent, while Taiwan rose to 33 percent from 15 percent.

“We are also looking at markets like Malaysia, and increasing our domestic sales,” Ray said. He added that domestic sales more than doubled in the first quarter, but did not offer details.

Total combined coal production increased 43 percent to 2.9 million tons in the first quarter from 2 million tons in the same period a last year, while combined sales volume rose 57 percent to 3.6 million tons, according to the company’s website.

Ray said the company plans to increase its production by 30 percent, to about 13 million tons this year, from 9.7 million in 2011. Sales are forecast to grow in line with the production target.

Ray figures that the growth in sale volume would offset a possible fall in the selling price this year as the average selling price with he said “might not be as good as last year’s.”

The average selling price of coal was recorded at $94 in the first quarter this year, matching the average selling price for 2011. In the first quarter last year, the average selling price was at $88.40 per ton, according to the company’s website.

Ray said the average selling price is forecast to range between $85 to $95 per ton this year amid global market uncertainties. Harum sells 70 percent of its products through contracts, but the prices are not fixed he said. The price is reviewed quarterly, and adjusted based on movements in the benchmark Newcastle Index.

The company has set aside $30 million to fund its increase in coal production for this year. It also has Rp 400 billion ($43 million) from its 2010 initial public offer for mine acquisition.

Shares of Harum rose 0.8 percent to Rp 6,450 at the Indonesia Stock Exchange on Wednesday.