Okay. So good afternoon, everyone. Welcome to Bumi's first half 2025 earnings call. I am Wirandi from CLSA research team. I will host today's session. So from Bumi, we have Pak Ashok Mitra, CFO of Bumi, and also Pak Christopher Fong, FPS advisor. Without further ado, I will pass it on to Bumi's management team. We can start with the presentation first, and then we will proceed with the Q&A session afterwards. Yeah. Please go ahead, Pak.
Okay. So good morning, everybody. I will just do the next page.
Can we go to the next page? Thank you.
Yeah. The financial update for the first half of 2025. The production first half was 35.9 million tons versus 37.7 million tons. Basically, the reduction was due to heavy rainfall in KPC during the first half. But we hope to make it up in the second half. The weather is dry in KPC both in July and August, so we hope to catch up the production going forward. The realized coal prices in first half of 2025, we had a drop from $75 per ton to almost $61 per ton compared to 2024. So we had a drop almost $14. This is mainly due to two reasons.
Oversupply in the market, primarily from Indonesia because based on the global thermal coal, export of 1 billion tons, almost 500 million tons is supplied by Indonesia. There is an oversupply in the market. India, Coal India Limited, the domestic producer, it's produced a record 1 billion tons for the financial year 2025. What India is doing is they are buying coal from Russia and Colombia at much reduced prices, and then they are blending the coal, high-grade coal with the low-grade high ash coal and bringing down the cost. There has been a sharp deterioration in the coal price in the market. Thirdly, China domestic production has also gone up. The hydropower was also good. All these factors had an impact on the price as well on the coal sales.
What we have done in order to mitigate the impact of drop in sales prices, the overall production cost decreased from $47 per ton to almost $42.2 per ton. Mainly in KPC, we have been able to negotiate the oil price to bring it down as well as we reduce the strip ratios. Next, please. We expect in the year 2025 from KPC, we are looking at $53, between $53-$ 54, could be a mix factor of $53.5. Arutmin could be around $23.5. That's what we are looking at. Overall, we should be able to touch between $76-$ 78. Prices, it doesn't look much better than what we have realized in the first half.
Although we are seeing the global gC NEWC moving up, but ICI index is far lower compared to the market today. KPC, we are looking overall the price will be between $60 and $62. Arutmin will be between $64$ 66. Arutmin between $50 and $52. Cost, we are looking at $42-$ 44. KPC between $44-$ 46 and Arutmin between $36-$ 38. Although in KPC, we have been able to reduce in the first half, but to continue the production also for this year, next year, and coming years, the strip ratio will go up. Just to remind you, the cost doesn't include the royalty and the commission which we are paying to our marketing agents. This is a price movement. You can see gC NEWC at this moment, 110. It is recovering between 110- 113 now.
Because of the situation in Japan, there is a demand from Japan. As a result, the gC NEWC is going up. Australia is also facing a rough weather, so they're not able to supply the high-grade coal to Japan, and Indonesia has been put in a good place to fill that gap. Next page. This is the [HCU] news. As I was mentioning to you, this started moving up since June this year, and we hope that we'll be able to reap the benefit of this increase. Next page. This is the Bumi's operation highlights. Overburden total in KPC was 218. It is reduced compared to last year. Basically, if you look at it, is the strip ratio, which we have reduced to compensate for the drop in prices.
Coal sales, it is $24.6, but we hope that we will be able to reach in KPC almost 54 million tons. 30 million tons will be in the second half. In KPC, we are almost touching, could be between 14.5 million tons- 15 million tons of sales in the third quarter, since the weather is pretty good at this moment. So first half, as I mentioned to you, the FOB price went down $64.9, almost $65 compared to $81, almost $16 we got a hit, which was compensated through productivity improvement as well as cost reduction. Inventory, we are carrying almost 2.3 million tons compared to last year, 2.8 million tons. Arutmin overburden this year is higher, 71.9. South Kalimantan weather was better compared to East Kalimantan KPC area, so we could have better overburden.
Strip ratio was 6.8. Coal mined was better compared to last year. Coal sales was better. Also, there was FOB price of drop of $5 compared to last year. If you look at the combined one, overall, overburden has reduced by 14%. Again, the strip ratio, we had to reduce to compensate for the drop in sales prices. Coal mined combined is $35.9. Coal sales was $34.8. FOB prices combined was $61.3. Next page. This graph of rainfall, as you see it, KPC we had rainfall higher compared to last year. Arutmin was dry comparatively, but they are experiencing rainfall now in the month of August. Normally, East Kalimantan rainfall is in the first half. South Kalimantan has a dry climate, and South Kalimantan has rainfall starting from June onwards. East Kalimantan gets dry climate. Next page.
Next. Yeah. So [O&M] removed, as I mentioned, there was a drop, although there has been compared to last year, overall coal mined has dropped a bit compared to last year. Next. So the operational highlights, as I mentioned, the strip to compensate for the reduction in FOB prices, we had to reduce the strip ratio also. Next page. So if you look at the Bumi's operational cost, compared to last year, it has gone down this year. But although we had a reduction in overall production cost, the FOB price had gone down substantially this year compared to last year. Next. So the average selling price of other than Eco-Coal, we had $69 compared to $84 last year. A drop of almost $15. Eco-Coal had a drop of $6. So overall, it was a drop of $14 in first half of 2025.
This was compensated through reduction in production cost. Basically, in Arutmin, it was drop of almost $3. But in KPC, we had a drop of almost $5. So overall, we had a drop of $5 reduction in production cost. Next. Next slide. Next. Yeah. So this is the Bumi's financial year, which we have already published after being approved by the audit committee. So compared to last year of $93 million, it has come down to $38.6. If you look at the tax, there is a swing of almost $43 million. It is basically the deferred tax assets, which was there in the first half of last year. It went down to $9 million. Last year, we had booked $50 million deferred tax assets as a result. We had no tax liability, but this year it was only $9 million.
There was a swing of almost $41 million on tax. On other expenses, this year, we had impairment of assets by BRMS almost amounting to $14 million. This is the main. Also, in case of KPC, last year, we had $43 million. This year, we had only $13 million, again, because of the drop in FOB price. The swing almost, if you take $30 million is on account of KPC and $14 million impairment came from BRMS. It is a swing of almost $44 million this year only on account of these two factors. That is the main. If you go to the financial highlights, including KPC, Arutmin, and BRMS, we will have a net income of $52.
Next page.
Next page. $52 million compared to $134.9. Again, as I mentioned, the two factors was impairment of $14 million by BRMS as well as deferred tax assets. Next page. This is how we report it based on consolidated and current reporting standards. Next page. We had an EBITDA increase. If you look at, we had an EBITDA increase compared to last year, even though the FOB price went down. If we see the consolidated EBITDA for the year, we could have a much higher EBITDA compared to last year. This is what this graph shows. Next. If you just consolidated KPC 51%, AI 90%, on 100% basis, we have almost KPC will have $421.7 million. AI will have $83.4 and $7.7 on 100% basis. Next. This is the cash balance we have at this moment. Almost in KPC, we and Arutmin together, we have $291.
Basically, in KPC, we have in restricted fund of $138.75. This fund comes in the next, following the close of the month, we get it in the first week. This is as per the CBA we have. Next. Then I come to the Australia coal project. We have already mentioned too that we will be making an asset acquisition in Wolfram, in Deniliquin, in Queensland. The asset includes a 960-kiloton per annum processing plant, power supply by State Grid Corporation of China, tailings dams, haul roads, camp water treatment, and other key infrastructure. At this moment, we are doing the refurbishment of site infrastructure as planned, prior to restarting operations, with commencement expected by June next year. Wolfram contract preparation for drilling, geotech and metallurgical tests, and plant refurbishment. This is being carried out by Wolfram. Wolfram is targeted for 100% acquisition at AUD 63.5 million.
If you take it as roughly, it will be $43 million-$44 million in U.S. dollars. With the bidder statement released and offer closing targeted by 22nd September 2025. Wolfram also plans to invest $15.7 million towards commissioning by June 2026, with Bumi committing to support the required fund to meet this target. Next page. This is the overview of where the project is. It is a privately held company that has successfully acquired the Mount Carlton asset. It is situated at a 2.5 hour drive from Townsville City in Queensland, which I mentioned to you already. The key enablers for this is the asset includes a 960-kiloton processing plant, power supply, as I mentioned earlier. Refurbishment of site has started.
It holds proven reserve and probable reserves of 8.56 million tons, containing 237,000 ounces of gold, as reported in JORC statement report year 2022, and can be processed in the existing flotation plant. Stable commodity prices, consisting demand growth, and accessory of take channels further enhancing the project attractiveness. We have not taken any upside. Whatever we have gotten at this moment, based on our technical data, we have taken this project. But the upside, we will come to know once we really get into it. The transaction date, as I mentioned, we are committed to get this project to be on the ground by June 2026. Next page. These are key information. If you look at, it says open pit, then the NPV is almost 35.71 million. IRR gives almost 36.60. Payback period is 29 months after first payment.
This is where we are looking at. This is our yearly budget, which we have already prepared, and hopefully, we will be able to meet the requirements. Can you look at the next, [Shipajit?] Next one. These are all the maps, where is the potential of the existing project. If you go to the next page. Next page, please. This is where we are looking at the upside, but our calculation is based on today's project. These are the key information. Next page. And we have already put our people to Next page. The board of directors who are from [Indeth], we have put our technical committee already from our side to get this project up. Next page. These are the project images. Next page. Next. Next. And I hand it over to Chris Fong, he will take the ESG part.
Okay, Pak. ESG, as of June 2025. Year- to- date, we have allocated and spent just under $2 million, so roughly 50% of what we normally spend. Although last year, we spent closer to $5 million. Sorry, that was consolidated, the CSR projects. In total, we spent $34 million compared to $68 million. Land reclamation, it is quite straightforward here. KPC, 3.94. Arutmin, 177. Trees planted, nearly 600,000 plants at KPC and nearly 150,000 plants at Arutmin. Safety performance is in line with our expectations, both at KPC and Arutmin, and as our gas emission standards and reporting. I think it is quite straightforward, the numbers there in relation to what you can see in the last 12 months. Over to you.
That is the next slide. There is nothing. Same as what I mentioned to you earlier, the 160 KPC, Arutmin. That is all from our side.
Okay. Thank you. Thank you for the presentation. We will move on to the Q&A session. If the participants have any questions, please feel free to type it in the Q&A box or raise your hand directly. Maybe I can start with the first question. I think it is interesting on your acquisition plan on the Australia asset. Can you explain a bit more color on the rationale for the acquisition and also what kind of synergies that Bumi can bring on this asset?
If you recall, Bumi is basically a coal company with KPC, Arutmin, and Kutubko]. In today's environment, you need to diversify into something where you can make a quick one, and the commodity price is also not going down. If you invest in other projects, aluminum and all, nickel, the commodity price is pretty low at this moment. We decided to invest in gold and copper. This Wolfram project, we found that it suits us. We can get into the production next year, second half of next year, and that will help us to make Bumi not dependent on coal for 100%, and it gets diversified into getting on other segments, too. That was one of the reasons why we are and also because of the carbonization impact of coming out of coal, we need to also look at other sectors for the carbonization.
That was mainly the reason behind Bumi getting into gold and copper.
What kind of synergies can you bring to this asset from your expertise in Bumi Resources?
See, as you remember, we have BRMS also with us. So we have our people, the technical people, we have got from BRMS, and that will help us to expedite the production at this moment from bringing these people from BRMS. We have recruited some people from BRMS because they have experience both in commissioning the plants as well as running the production.
Okay. Thank you. If I shift to your existing coal business, are you planning to do some more exploration to increase your current reserve or resources?
See, in KPC, we are looking at some results beneath the highwall. So that will increase our results to almost 145 million tons. We are in the process of getting the government approval. So hopefully we should be able to get the approval by next year. So this almost 145 million tons, and there is also a river diversion. In KPC, we are doing it, which will give us almost 7 million tons. So roughly 150 million tons additional coal we can mine going forward in KPC. In Arutmin, yes, we are looking at one more pit of high-grade coal, Yudistira. That will help us also. But the quantity is not more than 8 million tons. But mainly it will be in KPC, which will have an increase in coal mine going forward.
We have a question from a participant, Juan. Is there any production guidance for gold and copper assets for 2026 and 2027? Additionally, is there any cash cost guidance provided for the same period?
At this moment, the drilling and all this movement of the refurbishing of all the processing plant is going on. But definitely, maybe in 2027 onwards, we will see some upstate in production from Wolfram project. The impact we will see coming forward from 2027, not next year.
Okay. Is there any estimated production amount that the management is eyeing for?
See, it will be very small going forward. In 2027, it will be able to increase the production from 2028, 2029 onwards.
Okay.
But we will try to expedite more from 2027 onwards, because the price is still very good.
Yeah. Okay. Just wondering, other than this gold and copper asset that you're planning to acquire, are there any other assets that are available in Australia that maybe you're interested in?
Yeah. We've talked about this previously. So as part of our transition, we are looking at other assets, and we expect to make further announcements within the next 6- 12 months. When that will be in that timeframe, we're not sure exactly, but our business development team is working very hard at other assets and we're looking at other deals. So we'll announce them when it becomes relevant. But we expect to have more gold and copper, and mineral assets to be announced in the future.
I see. And this will be under Bumi Resources, but not BRMS.
Yeah. So there has been some confusion, I think, on this. So there is a change going on. Firstly, at this stage, we're looking at, in terms of Bumi Resources, we're looking at near-term assets, whereas BRMS has traditionally looked at and been involved in exploration and development. So there is a difference. They are busy with what they have on their books, whereas Bumi has a different strategy. It needs to diverse away and transition away from coal as we move forward. So this is part of the strategy and keeping it within Bumi's space.
Okay, Pak. Sure. Another question from Caesar. Bumi has bond issuance program up to IDR 5 trillion. Does this bond issuance mostly will be used for asset acquisition program?
Yes. See, at this moment, as I mentioned that this project will be financed through bond issue. We are in the second phase, and book building closure will be on August 12th. In September, we'll be able to complete that transaction of phase two.
Okay. Thank you, Pak. I think last time, Bumi had a plan for their quasi- reorganization, right, Pak? Can you give some latest updates on that, Pak?
Quasi- reorganization has already been done. Whatever the loss was there, carry forward loss, we have adjusted against the retained earnings. There is no more carry forward losses in the books of Bumi.
Okay. I think the previous expectation was that Bumi is able to give out dividends after that corporate action, Pak. But with your plan for more asset acquisitions, is that opportunity still open?
See, we will be looking at only next year. This year, we just got. If you look at when you read Bumi's balance sheet, today, the retained earnings became nil as on 31st December 2024. As on 30th June 2025, it's $20 million. We need some healthy retained earnings to able to declare dividend. So we will look into it next year.
Okay, Pak. That would be interesting to hear more updates on that data.
Yes.
On your coal projects, Pak, I think previously, you had a plan also to develop coal downstream project. Can you give more updates on that, Pak?
Coal downstream project basically is a methanol both for KPC and Arutmin. What we have done, the land acquisition is already completed in the Bengalon. There is a Bengalon Park which is being developed close to KPC mine site. The land acquisition is completed. Now we are working with the government on getting some benefits and all for this project, and then we look forward for getting into a technical collaboration and financial. Yes, it will be mostly, we are talking to several people who have this sort of project experience and technical expertise, mainly from China.
Okay. You will partner with a strategic investor or partner, Pak, for that project?
They should be basically a technical partner, and they will be EPC contractor.
Okay.
The EPC contractor will take responsibility from engineering, procurement, and commissioning.
Okay, Pak. Got it. Just like to remind participants, if you have any questions, you can type it in the Q&A box or raise your hand directly. Question from Raymond Lim. How much is the CapEx for the DME project?
Which project?
DME, I think it is the coal downstream project.
Oh, okay. It is a methanol project. It will be close to about $1.2 billion. At this moment, the calculation is showing.
Going forward, we will see where we stand on this project. Because both in Arutmin and in KPC, we will have reserves beyond the license period. So we have to work it out, how much we will be able to invest and all, and the return. Methanol has a good prospect in Indonesia, so obviously we have to do the entire working before we announce the project.
Okay, Pak. Another follow-up question. What is the progress of Pendopo coal?
See, Pendopo coal has got severely affected by the drop in prices, but they are able to sell a small quantity to the domestic market. But the prices, as you see it, the prices for that sort of coal has gone down substantially in the market today.
The coal quality of Pendopo is much lower compared to the other mines.
Yeah. KPC has an average coal quality of almost 5,000 up average, and Arutmin also. Not far, it is almost 4,700, but Pendopo has close to 3,000.
Okay, Pak. Yeah, I think last time you also have big plans to expand in the renewable energy, Pak. Can you share more updates on that, Pak?
See, the renewable energy, if we have to do, we will be doing in KPC. But as you all know, everybody's looking at coal-fired power plant because that's the cheapest source of power in this country. So we have to be careful when you invest in solar and all. But if we have to do, we will start in KPC first.
Okay, got it, Pak. Just want to remind participants again, if you have any questions, you can type it up in the Q&A box. Or else, if there's no more questions, I think we can wrap it up, Pak. Maybe do you have some closing remarks before we end the call? Oh, sorry. There's one question. Another follow-up question from Caesar. With Darma Henwa now practicing good mining practice, how does it affect KPC and Arutmin cash cost so far? How much more efficient?
Darma Henwa has bought a lot of new equipment, so they're being able to reduce our fuel consumptions. And from Darma Henwa point of view, the maintenance cost has gone down. They have passed on some benefit to KPC and Arutmin also.
Okay, Pak. I think there's no more questions from the participants. Maybe if you have some closing remarks before we end the call.
Yeah. Look, if I am permitted to speak on this, I think you could demonstrate from Ashok's presentation that we were impacted by price dropping and the markets and also other conditions such as rainfall and tax issues. These particular issues were really outside our production capabilities and as a business. What is positive is this is something that is not new and we have gone through this curve, and we expect to come out of this in the future. What is very interesting for us in the future is our transition and our acquisition of Wolfram in Australia. As I said, we expect to announce more acquisitions in the future related to minerals. That will also help us and show a new look of Bumi in the future. Also, with this downstream processing with methanol, will also be a very interesting program for the company.
It demonstrates our move in other areas outside of thermal coal, partly related in terms of the downstream processing. The goal is a very promising future for the company. Thank you.
Okay. Thank you, Pak Ashok, and also Pak Christopher for the presentation and also the insightful insight.