Friday, February 3, 2023

Bayan Resources absorbs US$ 166.2 million Capex, to increase coal production in 2023

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PT Bayan Resources Tbk. (BYAN) has absorbed capital expenditure (Capex) of US$ 166.2 million on the construction of a coal transport road, overland conveyor and a barge loading facility in Muara Pahu, East Kalimantan. The company seeks to increase its 2023 coal production targets to over 45 million tons, an increase compared to 2022 which was below 40 million tons.

Bayan is a coal producer based in East and South Kalimantan. The company produces coal ranging from semi-soft coking coal to environmentally friendly sulfur coal, and sub-bituminous coal. This company is supported by its subsidiaries engaged in the coal sector.

Hindered 2022 Capex absorption

Bayan Director Russell John Neil explained that most of the realized Capex were used for the construction of a new coal hauling road to Muara Pahu, an overland conveyor, and a barge loading facility in East Kalimantan.

Previously, Bayan budgeted a Capex of US$ 220 million – US$ 250 million. According to the plan, a total of US$ 218.1 million was intended to be spent from January to September 2022. However, Bayan’s Capex realization in January-September was lower than the plan due to delays in infrastructure development caused by high rainfall.

Neil did not reveal how much the company’s Capex plan would be in 2023 because the figure was still being finalized. However, he estimated that the allocation for Capex in 2023 would be similar to 2022.

Increasing coal production

Bayan also pursues to increase the coal production target of more than 45 million coal production in 2023. Therefore, according to Neil, most of the company’s Capex allocation in 2023 would be focused on financing the construction of a coal hauling road in the Muara Pahu mining area, East Kalimantan.

This is the same as the previous year when most of the Capex was also used to upgrade facilities in the Muara Pahu mining area. Bayan is also planning to add facilities in the coal mining area in Balikpapan and is targeted for completion in 2024.

In addition to upgrade the mining facilities in Balikpapan, Neil said Bayan has established a contract for the construction of a 1.5 megawatt solar PV facility at a coal transportation facility next year.

Rising demand and usage of coal

Indonesia has a lot of opportunities in the use of natural resources, especially coal. As the third world third largest producer of coal after China and India, Indonesia seeks to use coal to combat inflation in 2023 by using it to pay its debt.

Due to the EU’s restriction on new coal imports from Russia, demand for coal grew from several EU nations, such as Germany and Poland, during the first half of 2022. This will then positively affect the coal industry as the world still have a high reliance on said resource at least for a couple of years.

Moving away from coal

After the G20, Indonesia has emphasized its stance on transitioning to clean energy and meeting its net–zero emission target by 2060. This might negatively affect the coal industry in the future as the country slowly tries to reduce its need and use of coal.

The use of coal today to create electricity to power electric vehicles ihas been seen as a problem by researchers and experts. Demands to move away from coal and dirty energy source, in general, are steadily rising, starting from researchers and experts as the country begins to promote and build the ecosystem for electric vehicles across the country.

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