Bumi Resources

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PT. Bumi Resources Tbk is a major Indonesian coal and energy company. The company, which initially started out as a hotel and tourism company, shifted its focus onto oil, natural gas and mining investments in 1998.[1] In 2009 the company produced 63.1 million tonnes of coal, up 19.5% on the previous year.[2]

Company History

The company, which was listed on the Indonesian Stock Exchange in 1990, was majority owned by by the Indonesian finance company, AJB Bumiputera. In 1997 its 58% shareholding was bought by PT Bakrie Capital Indonesia, a part of the Bakrie & Brothers family of companies. Subsequently the company shifted its focus to coal and energy projects, acquiring 80% of the coal mining company PT Arutmin Indonesia (Arutmin) in November 2001 from BHP Minerals Exploration Inc. At the time of acquisition, Arutmin was the fourth largest coal producer in Indonesia. Just under two years later Bumi Resources bought PT Kaltim Prima Coal (“KPC”) from Rio Tinto, transforming the company into Indonesia's largest coal miner. In 2003 Bumi Resources bought Kaltim Prima Coal, from Rio Tinto.[1]

In April 2004, Bumi Resources brought its shareholding in Arutmin up to 99.99% and the following year undertook a minor divestment of its shareholding in KPC. In 2007 Bumi Resources sold a 30% stake in both the companies to Tata Power of India.

Aburizal Bakrie, the oldest of the Bakrie brothers, headed Bumi Resources until 2004, when he joined Indonesian President Susilo Bambang Yudhoyono’s administration.[3]

Bumi Resources is Nathaniel Philip Rothschild's partner in the London-listed coal venture, Bumi Plc. Rothschild is Britain’s richest hedge fund manager, and is estimated to be worth around a billion pounds. Rothschild has a 10 percent stake in Bumi Plc; Bumi Plc owns a 29 percent stake in Bumi Resources, which in turn controls the coal mines.[3]

Coal interests

Bumi's coal mining intertests are conducted by its four mining subsidiaries, Kaltim Prima Coal (KPC) in East Kalimantan, Arutmin in South Kalimantan and PT Pendopo Energi Batubara (PEB) and PT Fajar Bumi Sakti (FBS). KPC and Arutmin are both open-cut coal mines with dedicated coal processing facilities and dedicated coal loading terminals and port facilities. According to a February 2009 Bumi Resources briefing for investors "KPC and Arutmin together commanded a dominant 28% market share of Indonesia coal production in 2007, and together represent the second largest thermal coal exporter globally. Moreover, KPC’s mine is the largest export coal mine in the world."[4]

FBS's mine at Loa Ulung, Tenggarong in East Kalimantan is relatively small operation with only 14 million tonnes of coal reserves. It has both underground and open-cut mines. The company also has an open cut mines at Gunung Sari Village and at Buluk Seng Village, Tabang, in East Kalimantan. The latter concession, the company claims, as 100 million tonnes of coal reserves.[2]

A November 2007 presentation to investment analysts by the President of BHP Billiton Coal, Dave Murray, noted that Bumi Resources had an 8% share of the global coal export trade, making it the second largest coal exporter in the world.[5]

In early 2009, Bumi Resources acquired 84% ownership of PT Pendopo Energi Batubara (PEB) via via Pendopo Coal Ltd. The company states that PEB "owns 17,840 hectares of concession area with a 30-year operating permit, effective from May 5, 2009 until May 4, 2039. Research conducted by a mining consultant has revealed that PEB has potential reserves of 1,954 million tonnes."[2] Coal mining operations are currently at the early development stage. In its 2009 annual report the Bumi Resources states that "looking at the coal characteristics it produces, PEB will be the coal producer specifically supplying power plants and alternative industrial energy."[2] One PEB project under investigation is the Muara Enim Coal-to-Liquids Project.

Coal mines

Kaltim Prima Coal has:

Arutmin operates:

Coal exports to India

Singapore-based shipper Trust Energy Resources, owned by India's Tata Power, commenced shipping coal to the Mundra Ultra Mega Power Project in September 2011. The plant will contract its coal from Tata’s coal mines in Indonesia, where it owns 30% of PT Bumi Resources. The mines are producing around 60Mt of coal and will scale up to 75Mt by end-2012. Executive director of Tata Power, S Ramakrishnan, said the project’s coal requirement is around 2Mt. At the start of January 2012, one 800MW plant will go online every 3-4 months, until the entire plant is up-and-running by mid-2013.[6]

In January 2011, Tata Power said it was negotiating to refinance debt of $270 million, raised to buy assets of Indonesia's PT Bumi Resources and coal mine acquisitions in Indonesia and Africa. It may also increase its stake in the Bumi assets, including the mines PT Kaltim Prima Coal (KPC), and PT Arutmin Indonesia. Tata Power had purchased a 30% stake in the two thermal coal mines and trading companies of Bumi for $1.1 billion in 2007. The acquisition was then backed by UK's Barclays Bank.[7]

Corporate strategy for coal

Bumi Resources lists as one of its key corporate gaols as being to "expand mine exploration, especially in coal", add new resources to its reserves and extend its expertise in the development, production and marketing of coal.[8]

The company also states that it aims to expand production of coal to 100 million tonnes per annum and "expand and diversity customer base" into new markets including India, China and the domestic market.[9] However, in its 2009 report the company stated that it expanded coal production by 19.5% and that its target for 2012 coal production was 111 million tonnes per annum.[2]

Contact Details

Wisma Bakrie II
Jl. H.R. Rasuna Said Kav B-2, 7th floor
Jakarta 12920 - Indonesia
Tel. +62 21 5794 2080
Fax. +62 21 5794 2070
Website: http://www.bumiresources.com/

Articles and Resources

References

  1. 1.0 1.1 Bumi Resources, "Milestone", Bumi Resources website, accessed June 2010.
  2. 2.0 2.1 2.2 2.3 2.4 Bumi Resources, "Annual Report 2009", April 2010.
  3. 3.0 3.1 Janeman Latul, Saeed Azhar and Clara Ferreira Marques, "Indonesian Mines Lure Rothschild Into the Wild" Jakarta Gold, Nov. 13, 2011.
  4. PT Bumi Resources, "PT Bumi Resources Tbk: World Class Energy Operator", CLSA Asia Investor’s Forum, Las Vegas, 9 – 11 February 2009, page 3.
  5. Dave Murray, "BHP Billiton Coal CSG Analyst Visit: Hunter Valley Energy Coal", BHP Billiton, November 2nd, 2007.
  6. "Tata starts coal shipment for Mundra UMPP" Industrial Fuels and Power, September 26th, 2011.
  7. Nesil Staney, "Tata Power to refinance $270m loan raised for PT Bumi assets" The Economic Times, January 31, 2011.
  8. Bumi Resources, "Corporate Strategy", Bumi Resources website, accessed June 2010.
  9. Bumi Resources, "Business Strategy:Developments", Bumi Resources website, accessed June 2010.

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