The company reported a19% production increase on the first half of 2012. Unfortunately, the price it was receiving for that coal fell 20% during the 2013 first half to $61.4 per tonne.
The production cost of sales was also down, to $37.1/t.
Bumi’s earnings before interest, tax, depreciation and amortisation for the 2013 first half were $74 million. For the first half of 2012, the EBITDA was $139 million and that figure included some other exceptional costs and extraordinary items.
Despite the lower coal price, cash flow from operations increased $6 million to $189 million, mainly due to improved working capital and reduced costs.
So where are things at for the London Stock Exchange-listed Indonesian coal miner?
The company has continued with its major cost-reduction initiatives, has advanced its separation transaction from the Bakrie Group, reviewed its capital structure to reduce interest costs, and cut debt and continued to improve its financial systems and controls.
The company has also set a near-term target of 30 million tonnes per annum. It obtained a key licence for the Bingungan mine in August.
When it comes to cutting costs, no part of the business is off limits. Even corporate overheads are up for the chop.
The six key areas of immediate focus are: reducing contractor costs; life-of-mine planning; exploration and evaluation activities; marine services; fuel management; and marketing.
Stretch targets are being developed for each of these areas.
PT Bereau’s life-of-mine plan is being reviewed with the aim of growing production and reducing overall costs through better planning. A key focus is on cutting the overburden haulage distance.
The operation is in northeast Kalimantan and consists of three operating mines – Lati, Binungan and Sambarata.
Exploration and evaluation activities are being assessed to improve the productivity and efficiency of E&E fieldwork. Drilling shifts will likely be increased, which should maximize value and reduce the overall number of rigs.
The company is targeting an improvement in barging and transhipment productivity by increasing the capacity of barges and boosting the frequency of barging cycles. Barge and transhipment scheduling will also be optimised to reduce coal transport delays.
Fuel management is being reviewed to find ways to reduce the amount of fuel used by the vehicles shifting overburden and coal, as well as the barges shipping the coal.
The company is also counting on two key appointments to aid its efforts.
Paul Fenby is joining as chief financial officer and Keith Downham joins as chief mining officer. Both will be based in Jakarta.
Fenby has more than 20 years’ experience in the oil and gas industry. He was most recently finance and business services director for Petrofac’s upstream business in Malaysia.
Downham has worked for a who’s who of international coal miners in his 30 years in the industry, including Peabody Energy, BHP Billiton, AngloCoal and Glencore.
He was responsible for the construction, operation and expansion of Peabody’s Wilpinjong coal mine in New South Wales. In Indonesia, Downham worked on BHP’s development of the Arutmin coal mine.
Bumi chief executive Nick von Shirnding said governance and financial control issues identified earlier this year had been a key focus.
“We carried out an extensive review of the financial position of Berau, which has resulted in increased alignment with Bumi PLC policies and procedures, and the enhancement of our financial systems and controls,” he said.
“This process is ongoing and further improvements will be made during the year.
“The second [part of the Berau review] is the development of a revised mine plan in conjunction with an asset-optimisation exercise to profitably increase coal production, improve efficiencies and reduce costs.”
