Indonesian coal miner Harum eyes raising H1 2017 output to 2.2 mil mt

Indonesian coal miner Harum eyes raising H1 2017 output to 2.2 mil mt

Indonesian thermal coal miner Harum Energy said late Friday it is targeting
to raise output in the first half of 2017 to 2.2 million mt, up 15% from H2
2016.

"Despite the challenging operating conditions -- with continuous heavy
rainfall at the mine site -- the company is confident it can achieve the
target," the company said.

Harum posted an output of 3.2 million mt in 2016, down from 3.6 million mt
in the previous year. Sales volume for 2016 fell 12% to 4 million mt, while
FOB vessel cash cost slumped 21.3% to $31.20/mt.

Average sales price, or ASP, for 2016 fell 1.4% to $51.90/mt, the company
said, but fourth-quarter ASP improved 2.2% from the third quarter because of
Chinese demand and supply tightness.

Thermal coal prices more than doubled in 2016 driven by Chinese demand and
supply tightness at various coal producing regions. Indonesian production
was impacted by heavy unseasonal rains.

"In response to the recovery in coal prices, the company ramped up its coal
production in the second half [of] 2016, boosting production and sales
volume by 47.3% and 48.3%, respectively over the first half of 2016," Harum
said in its annual report.

In the fourth quarter of 2016, the company produced 1.2 million mt of coal,
jumping 53.9% from the previous quarter, while sales volume in the same
period surged 72.5% to 1.5 million mt. However, cash cost during the fourth
quarter jumped 13.5% from the previous quarter to $33.20/mt, because of
higher stripping ratio as it ramped up production.

At the end of the year, inventory stood at 0.36 million mt, said the
company, which counts China, Malaysia, South Korea and Taiwan among its
major customers.

Harum said it has already sold the majority of its first-half 2017
production, with Q1 sales priced at higher level compared with the previous
quarter.

Harum has mining operations in East Kalimantan and produces coal with
heating value ranging from 5,800-6,400 kcal/kg air dried basis, according to
its website.

The price of FOB Kalimantan 5,900 GAR has surged 59% since the start of 2016
to be assessed Friday at $75/mt, according to S&P Global Platts data.

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John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com