Burning Bright

ARSJAD RASJID NAVIGATES INDIKA ENERGY THROUGH CHALLENGING TIMES. NOW HE POSES FOR A NEW ROLE AT KADIN.

- Elisa Valenta

CHINA HAS ENJOYED an economic resurgence following the effects of the pandemic in H1-2020. Consumer goods spending in the first half of 2021 was up 23% year-on-year and, showing the scale of the recovery, also up 9% versus 2019. This has led to a strong rebound in the manufacturing and industrial sectors too and with it, a corresponding surge in power demand. With over 50% of the country’s power generation still fueled by coal and stockpiled inventories over 20% down a year ago, there is strong demand from China for imported coal. This has seen prices rise 140% year-on-year to around $149 per tonne in early August, its highest level for over 10 years. With prices still rising and the fact that non-coal power transformation investments are long-lead-time projects, Indonesia's coal mining sector is optimistic about the future for now.

With China accounting for around 27% of Indonesia’s coal exports and it looking for increased supply, “Indonesian coal miners can expect to benefit from the Memorandum of Understanding signed last year between Indonesia's Coal Mining Association (ICMA) and China Coal Transportation & Distribution Association to increase coal exports from Indonesia to 200 million tonnes,” says Hendra Sinadia, ICMA's executive director. As a result, coal miners now have the opportunity to expand their operations and to increase their coal exports to China. Among them is PT Indika Energy, Tbk. After two years of losses, running into millions of dollars, Indika is showing signs of improvement this year, with a profit of $12 million from revenue of $1.28 billion in the first half of 2021.