Dec 21, 2010

KKGI domestic coal sales to rise 300%

PT Resource Alam Indonesia Tbk (KKGI) has signed a new contract to supply 500,000 metric tons of coal to PT Perusahaan Listrik Negara (PLN) in 2011. 
In the last 3 years, KKGI coal sales for domestic market is always below 10%, it even only 3.7% in 3Q 2010. In 2010, KKGI has signed a contract with PLN to sell 120,000 metric tons of coal, its only 5.4% of KKGI production target. 
This contract will jack up KKGI domestic sales about 300% next year and it will contribute around 15% of its total sales.
With reliable amount of 41 million metric tons mineable coal deposits which spread in 11 mining site, the company has promising coal production ahead.
Currently, the company already operating 6 mining site out of 11. This 6 mining sites are estimated to produce about 2.21 million metric tons this year or more than doubled last year production.
In 2011, Resource Alam plans to open 3 or 4 new mining site to increase its production to reach 3.42 million metric tons, its about 55% increase from production target for 2010.
"We assumed KKGI will have 9 operating mining site by the end of next year, there is still room for another production growth considering there still 2 not yet operated mining site," said a company report published by PT Pemeringkat Efek Indonesia (Pefindo) on December 20.
Resource Alam was established in 1986, engaged in adhesive manufacturer for plywood supporting industry.
When the industry began to decline due to decreasing of plywood manufacturer activity, KKGI started its coal mining business in 2006 through its wholly owned subsidiary, PT Insani Baraperkasa.
The company has coal mining concessions with total of 41 million metric tons mineable reserves in East Kalimantan, the areas are; Simpang Pasir, Bayur, Tani Bakti, Gunung Pinang, Loajanan, Separai, Perangkat and Maukiri.
In 2009, KKGI succeed to record 1.01 million metric tons coal production or increase 30.5% YoY, and KKGI’s coal production already reach 1.56 million metric tons in 3Q 2010.

Disclosure: No position at the stock mentioned above.  

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