Oct 31, 2010

Berau Coal investment & coal contracts

Coal mining company PT Berau Coal Energy Tbk (BRAU) has put Rp1.18 trillion money, 2.8 folds of September's net profit, as short term investments at three firms, Chateau Asean Fund 1 worth Rp669.30 billion, PT Danatama Capital Management worth Rp220 billion, and PT Lautandhana Investment Management worth Rp296.77 billion.
Berau Coal signed an investment agreement with Chateau Asean Fund 1 on January 26 2010. Chateau issued premium convertible unsecured loan notes. Chateau issued premium convertible unsecured loan notes worth US$75 million.
Berau Coal signed an investment agreement with Lautandhana on August 12 2010 for a period of 3 months. Under the contract, Berau Coal has given a full authority to Lautandhana as investment manager.
On September 1 2010, Berau Coal and Danatama Capital agreed on 1 month investment contract. Based on the agreement, Berau Coal has given an authority to Danatama as investment manager.
Coal contracts
How about coal contracts? Berau Coal has entered into agreements with several parties regarding on sales contract.
In April, Berau Coal signed 5 year coal sales contract with China-based Huaneng Power International Fuel Co Ltd from 2011 to 2015. Under the contract, Berau commits to deliver 1.5 million metric tons to Huaneng. The selling price is determined based on annual basis.
Within the same month, Berau Coal also entered into 5 year sales contract from 2011-2015 with China-based company namely Shanxi Kingstar International Trade Co Ltd with annual coal to be delivered of 500,000 metric tons. The selling price is determined based on annual basis.  
In April 2010, Berau Coal entered into 5 year sales contract from 2011-2015 with China-based Guodian Fuel Co Ltd with the commitment quantity to be delivered of 500,000 metric tons. Still, the selling price is determined based on annual basis.
Berau Coal entered into 5 year coal sales contract from 2011-2015 with China-based company Rizhao Honglu Electricity and Energy Co Ltd with the annual quantity to be delivered by Berau of 500,000 metric tons. The selling price is determined based on annual basis.
In May 2010, Berau Coal agreed 3 year coal sales contract from 2010-2013 with Singapore-based firm namely Zhushui International Energy Pte Ltd with the annual commitment of 1.50 million metric tons. The selling price is also determined on annual basis.
Berau Coal's wholly owned subsidiary Seacoast Offshore Inc on August 18 2010 acquired 100% ownership in Maple Holing Limited, a company engaged in coal sales service, based on Labuan, worth US$200 million from Regulus International Pte Ltd.
In December 2009, Berau entered into a marketing services agreement with Maple Holdings Ltd. Maple has agreed to act as the exclusive marketing agent of Berau for all coal sales except those coal products which Sojitz Corporation is entitled to market and sell to customers in Japan under terms of the Japan Marketing
Agreement. The agreement shall become effective from December 30, 2009 to December 30, 2019 and can be renewed for a further period of 10 years by mutual agreement.  As compensation, Berau is required to pay Maple a commission of 2% of the sales.
The commission is US$2.5 lower than a commission charged by Glencore to PT Borneo Lumbung Energi & Metal Tbk under 3 year contract.

Disclosure: No position at the stock mentioned above.

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