Jakarta, PT Adaro Energy Indonesia Tbk (ADRO) projects that the volume of thermal coal production next year will be flat, not much different from this year’s achievements. Even so, ADRO will continue to optimize the production capacity of its subsidiary, PT Adaro Indonesia.

Director of Adaro Indonesia, Hendri Tan, said that to set production targets, ADRO considered a number of factors. Including in terms of market dynamics and global coal prices, maintaining reserve levels, as well as approval from the government.

Currently, Hendri cannot detail the exact figures for ADRO’s thermal coal production targets because he is still waiting for approval of the Work Plan and Budget (RKAB). “We will focus on optimizing existing reserves and achieving more efficient production,” said Hendri, Wednesday (13/12).

As for September 2023, ADRO’s coal production volume will increase 12% to 50.73 million tons. This achievement is still in line with the sales volume target set at 62 million – 64 million tons throughout 2023.

Hendri also highlighted that this year global coal prices have declined. However, there will be an increase in the fourth quarter of 2023, in line with increasing demand. According to Hendri, the current position of coal prices can still support ADRO’s performance.

“Overall, it is still at a healthy level for the company to be able to perform. We are grateful that coal is still fundamentally sound,” added Hendri.

Even though thermal coal production has the potential to be flat, ADRO will continue to boost production of metallurgical coal (coking coal) through its subsidiary, PT Adaro Minerals Indonesia Tbk (ADMR). This step was taken to pursue an increase in coking coal production to reach 6 million tonnes by 2025, an increase compared to the current target of around 4.3 million tonnes.

The increase in metallurgical coal production is in line with the strategy to increase revenue contribution from outside the thermal coal business. As a group, ADRO targets revenue from non-thermal coal to reach around 50% by 2030.

Apart from boosting thermal coal production, ADRO is also encouraging mineral and new renewable energy (EBT) projects to achieve this target. One of the jumbo projects currently being worked on is an aluminum smelter via ADMR.

This downstream project will be carried out in three stages with a production capacity of up to 1.5 million tons. In the first stage, the aluminum smelter project is targeted for completion in 2025 with a capacity of 500,000 tons of aluminum per year.

“Our goal is that by 2030 non-coal related income can contribute around 50%. This does not mean that the nominal contribution from coal (thermal) will decrease, but because of the expansion of projects and products that we are working on, it has started to provide returns,” said the Director Adaro Minerals, Wito Krisnahadi.

Adaro Power President Director Dharma Djojonegoro added that ADRO’s diversification beyond thermal coal is a long-term project. He gave an illustration that the fastest completion of just one project would take up to two and a half years.

In the EBT electricity segment, ADRO currently has a number of projects ranging from Solar Power Plants (PLTS), Wind Power Plants (PLTB), and Hydro Power Plants (PLTA). It is projected that ADRO will only be able to start harvesting the results of these projects between 2026-2030.

“Approximately that’s when revenue appears. The project is long term, so next year we will focus on being able to execute it,” said Dharma.

A number of Adaro Group’s green electricity projects include the Mentarang Main Hydroelectric Power Plant with a capacity of 1,375 Megawatts (MW). This hydroelectric power plant is targeted to be able to operate commercially in 2030, which will supply energy for the Industrial Area in North Kalimantan.

Another project that ADRO is working on is the Tanah Laut PLTB with a capacity of 70 MW, which is targeted for commercial operation in 2025. Apart from that, ADRO through PT Adaro Power is also part of a consortium to develop the solar panel and battery energy storage industry together with the Medco Group (MEDC) and TBS Energy (TOBA).

Sources : Djakarta Mining Club- Dec 20.23