Mar 12, 2011

BUMI, DEWA and 23-day strike

At 712 pages of Vallar Plc's prospectus, there are many something interesting. One of them is the performance of PT Darma Henwa Tbk (DEWA) in its business, especially related with PT Bumi Resources Tbk (BUMI).
Referring to the prospectus, Bumi Resources Group(BRG) mines all of its coal at KPC's Bengalon mine and a portion of its coal at Arutmin's Asam Asam mine through Darma Henwa. In 2008, 2009, 2010, Darma Henwa produced 6 million tons, 6 million tons, and 6.6 million tons of coal respectively, which represented 11.3%, 9.5%, and 11% of the total production of KPC and Arutmin in those periods.
BRG's ability to increase production capacity from approximately 72 million tons last year to 74.8 million tons in 2011 under its current mine plan will depend on the ability of associated coal contractor PT Darma Henwa Tbk (DEWA) to refinance and increase its indebtedness.
The refinancing is needed to improve and expand its mining equipments and mobile fleet to ramp up production at the Asam Asam mine.
BRG is consisting of PT Bumi Resources Tbk and its subsidiaries. DEWA is the mining contractor at Asam-Asam mine.
BRG may require further financial resources for the exploration and development activities of its newly acquired coal mines. BRG incurred estimated capital expenditure of US$232 million in 2010 and plans to incur US$533 million in 2011. 
In addition, the BRG spent an estimated US$244.3 million in 2010 and currently plans to spend US$294.3 million in 2010 on finance leases.
Go down to page 48 of Vallar Plc's prospectus, there is something interesting here. In the first paragraph, line 5, it is mentioned that in August and September 2010, Bumi Resources Group experienced a 23-day strike at Bengalon mine by the employees of Darma Henwa over a dispute regarding payments of holiday bonuses.
The strike caused Bumi Resources Group an estimated loss in coal production of 560,000 tons that could have otherwise achieved during this period.
Berau Coal didn't experience any significant labour disputes in 2010 nor has it to date in 2011.
Bengalon and Sangatta mines are operated by PT Kaltim Prima Coal (KPC), BUMI's subsidiary, while Senakin, Satui, Mulia, Asam Asam and Batulicin mines are operated by BUMI's subsidiary PT Arutmin Indonesia. As of September 30 2010, Bengalon mine produced 3.2 million tons, slightly lower than 3.5 million tons in the previous year.
Any significant labour dispute, unrest, activism or action that the Group or its contractors experience could have a material adverse effect on the Group's business, financial condition, results of operations and prospects.
Any announcement of the strike to Indonesia Stock Exchange? I have been searching such particular announcement about the strike both submitted by BUMI and Darma Henwa's managements' at IDX website during August and September. But, I could not find it. Will you help me how to find it? At 712 pages' Vallar prospectus.   

Disclosure: No position at the stock mentioned above.

Print This Article

No comments: