Management Discussion & Analysis
FY 2018 Summary And Highlights
Important Note: The results provided below reflect the unaudited consolidated results of PT Harum Energy Tbk. (“Company”) for the 9-month period ending 31 December 2018, which include the results of PT Mahakam Sumber Jaya (“MSJ”), PT Layar Lintas Jaya (“LLJ”), PT Tambang Batubara Harum (“TBH”), PT Karya Usaha Pertiwi (“KUP”), PT Bumi Karunia Pertiwi (“BKP”), PT Santan Batubara (“SB”), Harum Energy Australia Ltd and Harum Energy Capital Ltd. The report below is prepared by the management and unaudited.
The global coal markets started the year 2018 on a positive note supported by a combination of strong Chinese and Indian demand, and limited supply growth from exporting countries like Indonesia. However, as the year progressed, a string of issues arose such as the US vs China trade war, falling Chinese domestic coal prices and increasing seaborne supply, all of which started putting downward pressure on the market from the second half of the year. Prices for low to medium calorific value coal was hit especially hard, declining by nearly 20% from June to December 2018 (see Coal Price Performance chart below).
In 2018, the Company sold 4.6 million tonnes (MT) of coal, slightly below previous year’s level. Despite a weak second half of the year, the Company’s average sales price increased 7.3% for the year, while at the same time production costs increased by 15%. The Company also commenced commercial production from two new mines in 2018, namely PT Karya Usaha Pertiwi and PT Santan Batubara.