Coal miner Atlas Resources has secured a 20-year coal supply contract with a state utility company, with the resources firm angling for three additional contracts.
In a filing to the Indonesia Stock Exchange on Friday, the company said that through its subsidiary Hanson Energy, it had signed an agreement to supply 429,000 metric tons annually to Perusahaan Listrik Negara’s coal-fired power plant in Teluknaga, Banten.
The company will supply low-calorie coal to PLN for two decades, to 2031.
Atlas director Dono Boestami said the contract did not have a fixed value due to the price being benchmarked against an index.
“The value will be based on Indonesia’s coal price index given PLN uses that benchmark. It may change every year,” Dono told the Jakarta Globe.
According to data from the directorate general of minerals and coal at the Ministry of Energy and Mineral Resources, the coal price benchmark set by the government is $86.21 per ton in September.
The average price so far this year is $99.62 per ton, compared to an average of $118.40 per ton last year, the data showed.
Dono said this was the second contract it had secured with PLN.
Previously it secured an agreement to supply more than 500,000 tons per year for a coal-fired power plant in Tarahan Baru, Lampung.
He said the company had lodged a further three proposals to supply coal to upcoming PLN power plants. “When we can progress with the agreement will depend on how quickly PLN finishes the construction of the power plants,” Dono said.
The combined total of coal Atlas would need to supply for all five contracts is estimated at 3 million tons per year, he added.
The coal supplied will come from Atlas’s Muba hub in South Sumatra, where the company is expanding its production to 3 million tons within two years.
Muba hub is Atlas’s biggest concession, with 9.5 billion tons of reserves.
The company is aiming to increase production at Muba to about 10 million tons annually in its next phase of expansion.
“But with the coal market not doing very well, I think we will not rush it,” Dono said.
In the first half of this year, the company’s net income fell to $607,000 from $3.04 million on the same period a year earlier.
Shares in Atlas closed down 1.4 percent at Rp 1,450 in Friday trading in Jakarta.