Thailand's PTT to sell Indonesian coal mines amid lower sales, clean energy drive

Thailand's state-owned PTT Public Company Ltd is in the process of divesting its coal mining business in Indonesia as sales volume shrinks, while the company plans to focus more on clean and environmentally friendly technologies, it said in its latest investors' presentation on April 2.

The development comes as the company's sales volumes fell in 2021 even when demand for thermal coal rose amid supply-chain disruptions. Moreover, the Russia-Ukraine war has disrupted trade flows across the world leading to supply tightness and sharp jump in prices.

PTT operates its Indonesian coal mining business through its subsidiary Sakari Resources Co., which operates two mines -- Jembayan and Sebuku.

The mines cumulatively sold volumes to the tune of 6.14 million mt in 2021, nearly 4% lower than 6.37 million mt in 2020.

"Sales volume dropped from lower production plan and ceased operation of the Sebuku coal mine," the company said in its presentation.

The Jembayan mine produces 5,500 kcal/kg GAR coal with 0.7% sulfur and 7% ash content.

Market participants said that the move by PTT to divest its coal mining business may be a bid to focus on its core businesses of oil and gas. The company said it plans to, "expedite growth in new energy like renewable, energy storage & system related and EV value chain."

According to the investors' presentation for 2021, the coal business makes up about 1% of its revenue.

While the company said it is divesting its stake in the coal mining business to decarbonize its operations, market participants said the move is timed well, with a bullish run in the global coal prices.

The Kalimantan 5,000 kcal/kg GAR coal price has risen from $66.50/mt FOB in January 2021 to $146/mt on April 5, while the Newcastle 5,500 kcal/kg NAR coal price has risen from $50.50/mt FOB on Jan. 4, 2021, to $187/mt FOB on April 4, according to S&P Global Commodity Insights data.

PTT entered the coal business after buying a 55% stake in Singapore-listed coal miner SAR in 2012. It acquired the remaining 45% share through a tender offer.