Bumi battles against weak coal prices

Mining group Bumi said it continues to target a medium term production target of 30mt each year and in light of the weak coal price environment, it will focus on lower cost pits and defer some of its expansion plans.

Mining group Bumi said it continues to target a medium term production target of 30mt each year and in light of the weak coal price environment, it will focus on lower cost pits and defer some of its expansion plans.

The London listed Indonesian group said it has been hit by weaker coal prices, particularly during the second half of the year. As a result, it said realised selling prices for the year are expected to be around $70.0/t compared to $81.4/t for 2011.

Meanwhile production for Berau Coal, which is 84.7% owned by Bumi, is expected to be in line with previous guidance at 21m tonnes of coal for the full year. 2013 production is forecast at 23mt, an increase of 9.5%.

Production unit costs for the second half of 2012 are expected to be in line

with the first half, it added. Higher fuel and contractor costs have been mitigated and further cost saving initiatives are underway, Bumi explained.

PT Bumi Resources, in which Bumi has a 29% interest, reported a net loss of $655m for the nine months ended September 30th 2012. An independent investigation is currently being commissioned by the board into alleged financial irregularities in Bumi's Indonesian operations, especially in relation to PT Bumi Resources. Bumi said it will be consolidating its 29.2% share of this loss.

Commenting on the full year, Chief Executive Officer Nick von Schirnding said: "Our near term strategy is very clear: to effect a separation from Bumi Resources and to maximise value in our operating subsidiary, Berau."

"We have taken immediate steps to mitigate the on-going impact of lower coal prices by adjusting the mine plan for Berau, targeting lower stripping ratios and reducing hauling distances."

CJ

Recommended

Three strong Asian stocks trading at bargain prices
Share tips

Three strong Asian stocks trading at bargain prices

Professional investor Nitin Bajaj of the Fidelity Asian Values investment trust picks three stocks that dominate their industries, earn good returns o…
20 Sep 2021
Why it pays to face up to your investment mistakes
Investment strategy

Why it pays to face up to your investment mistakes

Buying stocks can be a complicated business. But selling stocks can be tricky, too – even if you sell for the right reasons. Max King explains how to …
17 Sep 2021
Share tips of the week – 17 September
Share tips

Share tips of the week – 17 September

MoneyWeek’s comprehensive guide to the best of this week’s share tips from the rest of the UK's financial pages.
17 Sep 2021
Royal Mail will deliver for investors – here's how to play it
Trading

Royal Mail will deliver for investors – here's how to play it

Royal Mail Group has found its feet in the past 18 months and looks cheap. Matthew Partridge looks at how to trade the shares.
14 Sep 2021

Most Popular

The times may be changing, but don’t change how you invest
Small cap stocks

The times may be changing, but don’t change how you invest

We are living in strange times. But the basics of investing remain the same: buy fairly-priced stocks that can provide an income. And there are few be…
13 Sep 2021
Two shipping funds to buy for steady income
Investment trusts

Two shipping funds to buy for steady income

Returns from owning ships are volatile, but these two investment trusts are trying to make the sector less risky.
7 Sep 2021
Should investors be worried about stagflation?
US Economy

Should investors be worried about stagflation?

The latest US employment data has raised the ugly spectre of “stagflation” – weak growth and high inflation. John Stepek looks at what’s going on and …
6 Sep 2021