Coal Miners’ Shares Drop on Fallout From Bridge Collapse

Monday, November28, 2011

Shares of Harum Energy and other Indonesian coal miners that operate in East Kalimantan province fell on Monday on concern that the collapse of the Kutai Kartanegara bridge into the Mahakam River would affect their profitability.

“The Mahakam River is the largest river in East Kalimantan and has one of the most crowded coal-barging traffic activities,” said Herman Koeswanto, an analyst at Mandiri Sekuritas, in a report sent to clients on Monday. “This will affect almost all listed coal companies that are located in East Kalimantan.”

He said that “the most-affected listed coal companies” would be Harum Energy, Indo Tambangraya Megah (ITMG), Sakari Resources and Bayan Resources.

These companies, which do a lot of business in resource-rich East Kalimantan, use the Mahakam River to transport coal for distribution at a port from their facilities.

Shares of Harum dropped 5.4 percent to Rp 6,950 at the Indonesia Stock Exchange (IDX). ITMG slipped 2.3 percent to Rp 37,800, and Bayan lost 0.3 percent to Rp 18,150. Sakari, which trades in Singapore, shed 1.8 percent to 1.895 Singapore dollars.

The mining index, which measures the movement of coal miners on the IDX, fell 1.4 percent to 2,487.96 on Monday, compared to a 0.3 percent gain for the benchmark Jakarta Composite Index (JCI).

Coal miners including Harum, Bayan, ITMG and Bumi Resources have notified the exchange and investors as to whether the collapse of the bridge would affect them. Most of the coal miners said they would not be affected by the disaster.

“The closure will prevent us from transporting coal from our Separi port to our transshipment points in Muara Jawa and Muara Berau,” said Harum Energy spokesperson Alexandara Mira in a statement.

“Our coal shipment for the month of November 2011 should largely be unaffected since almost all of the coal due to be loaded for the month has been barged past the affected section of Mahakam River. We have notified our customers of potential delays of future shipments resulting from the river closure.”

Dileep Srivastava, Bumi Resources’ investor relations director, said on Monday that the disaster would have no impact on the company.

“We expect to maintain normalcy of coal shipments from our dedicated ports to our valued clients,” Dileep said in a statement.

Jenny Quantero, corporate director at Bayan, said that there would not be any impact on the company in the short term.

“For now, we are not affected,” she said in a statement. “We hope that the reparation of the bridge will not last long. If the renovation will take more time, we will be affected.”

Bayan is producing 14.5 million to 15.5 million tons of coal and it plans to sell 15 million to 16 million tons of coal this year. The company sells coal to Japan, India and Malaysia and has eight mining companies in East Kalimantan, according to its Web site.

Analysts in Jakarta, however, were not so sure that the disaster would have such a light impact on the companies.

“This accident should affect the coal loading and deliveries activities that may incur demurrage cost for coal producers,” Mandiri Sekuritas’ Herman said.

Erindra Krisnawan, an analyst with CIMB Niaga, agreed.

“As long as the evacuation schedule is not clear, we expect their stock to be pressured,” Erindra said.

Saturday’s collapse of the 10-year-old bridge, which spans the Mahakam river in central East Kalimantan province, has claimed the lives of at least 10 people, and 28 more are missing. The government is currently assessing the effects of the disaster.

The government has prevented any ship from crossing the area of the river where the bridge collapsed.

(sourced The JakartaGlobe)