Bukit Asam to set up power subsidiary

OREANDA-NEWS. Indonesian coal producer Bukit Asam is setting up a separate subsidiary to support the development of its expanding power generation business.

The company is seeking to diversify into new areas of business, including power plant development along with chemical and coal processing, to help offset a weakening coal market. Bukit Asam hopes to streamline its business interests by setting up the separate power generation subsidiary.

Bukit Asam currently operates 300MW of generating capacity near its Tanjung Enim mine in Sumatra, along with a 16MW power plant at Bandur Lampung port to meet its own power needs. It is also developing another 220MW coal-fired mine mouth power plant at Lahut in south Sumatra, which is awaiting connection to the grid by state-owned utility PLN.

Construction is scheduled to start later this year on a 1,240MW power plant, also at Tanjung Enim. Bukit Asam is carrying out feasibility studies on two other potential power plant projects in Sumatra that could have a total combined capacity of 2,200MW. The firm is involved in several other diversification projects, including power plant management. It is considering acquiring Australian assets that focus on coal upgrading technology.

Indonesian coal producers facing falling coal prices have been exploring various ways to maintain their margins on top of cost cutting. They are exploring potential new markets, as well as vertical integration to develop power plants that use the coal they produce.

Fellow Indonesian coal producer Adaro last year said it was diversifying into power generation, through its subsidiary Adaro Power, to offset the impact of lower coal prices.

Bukit Asam aims to produce 21mn t of coal this year, up from 19mn t in 2014.