State-owned coal mining company PT Bukit Asam Tbk (PTBA) has budgeted IDR 6.4 trillion (US$ 413.7 million) Capital expenditure (Capex) in 2023, more than double its 2022’s Capex of IDR 2.9 trillion, for business expansion and investments in its subsidiaries.
The government established then PN Tambang Arang Bukit Asam (PN TABA) in 1950 although its history dated back to 1923. It became PTBA in 1981 and went public in December 2002. On August 17, 2019, the government set up a mining industry holding MIND ID, and PTBA became a part of it. PTBA focuses on coal mining operations, covering general survey, exploration, exploitation, processing, purification, loading, trading, maintenance of coal port facilities, operating steam power plants for internal and external needs and providing consulting services related to the coal mining industry and its derivative products and plantation development.
Low Capex absorption
Despite the much higher Capex in 2023, PTBA’s Capex absorption in 2022 only reached 28%.
“For 2023, we have a slight increase in spending. The use of funds in several areas includes routine investment in subsidiary companies and investment in development properties,” PTBA Director of Finance and Risk Management Farida Thamrin said in a press conference on March 3, 2023.
The company also plans on a number of expansions but is still currently sorting out which will be first, President Director Arsal Ismail said. The expansion will not only be in the coal mining sector but will also be in other downstream industries to support the government’s program.
“PTBA actually still wants to expand, but we are selective. We have coal resources of more than 5 billion metric tons of coal while the minable resource is 3 billion MT. We are more focused on existing conditions and we think about how we can optimize the existing ones,” Ismail said.
Risks in coal mining business
Dependency limitation: PTBA’s opportunity depends entirely on the government. For now, the company will focus on potential opportunities and existing resources. “If there is an opportunity, we will expand with in-depth studies and analysis and exploration,” said Ismail.
Environmental limitation: The company will have to correspond to the government’s current environmental policies. “We have to adjust our other focus because we cannot avoid net zero emissions. We have diversified not only into fossil fuels but also into new and renewable energy [EBT], including downstream,” Ismail explained.
