Coal news and updates

Bumi Coal output gains 10% amid challenging price outlook

Bumi Plc (BUMI), the Indonesian coal producer at the center of an ownership dispute, said output of the power-station fuel gained 10 percent in the third quarter while the outlook for prices “remains challenging.”

Production from its PT Berau Coal Energy mines rose to 6 million metric tons from 5.5 million tons a year earlier, the London-based company said today in a statement. The cost of sales dropped 6 percent in the first nine months of the year to $36.80 a ton, Bumi said.

Bumi owns 76 percent of PT Berau, which is traded in Jakarta. The average sale price in the quarter was $58.50 a ton, an 18 percent drop from a year earlier. The company maintained its full-year production forecast of 23 million tons.

“While coal prices have moved off their lows, the near-term outlook remains challenging,” Nick von Schirnding, chief executive officer, said in the statement. “We remain very focused on operational improvements and efficiencies, which is our priority in the current weak coal price environment.”

For longer than 18 months, Bumi has been at the heart of a battle for control between Indonesia’s Bakrie family and Nathaniel Rothschild, 42, scion of a centuries-old British banking dynasty. The shares plunged 69 percent in London last year as each side made rival proposals to unwind the $3 billion deal that brought them together in 2010, and as waning coal prices, board infighting and probes in the U.K. and Indonesia weighed on sentiment.

Bumi gained 0.1 percent to 194.5 pence on Nov. 1. The stock has fallen 29 percent this year, valuing the company at 469 million pounds ($748 million).
Returning Cash

Bumi, owner of stakes in two Indonesian coal suppliers, has agreed to sell its 29.2 percent stake in PT Bumi Resources (BUMI) to the Bakrie Group as part of a two-step plan to separate from the Indonesian family. Bumi Chairman Samin Tan has agreed to buy the Bakries’ 23.8 percent holding in Bumi Plc for $223 million.

Bumi swung to an underlying loss in the first half after prices for power-station coal declined. The loss was $45 million, compared with a $7 million profit a year earlier, the company said in August.

Bumi plans a “substantial” cash return to investors from the proposed sale of its PT Bumi stake to the Bakries for $501 million, it said in July. Rothschild, who owns about 21 percent of the voting rights in Bumi, has criticized the handling of the separation from the Bakries and repeatedly called for Chairman Tan to resign.

Source: Bloomberg