Okay. Good afternoon, everyone. Welcome to CLSA Corporate Access for Bumi Resources Q4 2024, full year 2024 earnings call. I am Nicholas from Research, and I will be the moderator for the call today. On this call, we are joined by Bumi's key director. We have Mr. Andrew Beckham, the CFO of PT Bumi Resources. We have Mr. Nalin, the commissioner at Bumi. We also have Mr. Ashok, the CEO of KPC, and lastly, we have Mr. Chris Fong, the Director of Corporate Affairs. We will begin the call with presentation by Bumi management, then followed by Q&A session. I would like to remind participants that should you have any questions, you can type your question in the chat box or ask directly through the raise hand function. Without further ado, I will pass on the call to Bumi team. Please go ahead, Beck.
Thank you, Nicholas. Welcome, everyone. We will take you, as usual, through the presentation as quick as we can and then open it up to Q&A. On the first slide, the financial update. Total production was slightly down overall, at 74.7 million tonnes for financial year 2024 versus 77.8 million tonnes in 2023. KPC was actually up, but we were down due to one of the contractors in Arutmin had a land dispute, delayed our production. With prices, realized coal prices decreased from $71.8 million tonnes. Sorry. $71.8 per tonne, from $81.3 in financial year 2023, as with the global markets' downward trend. Production costs also followed down from $51.3 to $46.6.
That was not only on fuel prices but also as our mine developed into a lower stripping ratio with the operations. The next slide, please. For guidance for next year or this year, I should say, we are guiding on 79 million to 81 million tonnes, 55 million to 56 million at KPC, and Arutmin, 25 million to 26 million tonnes. Prices at $64 to $69. KPC, $70 to $75, and Arutmin, $50 to $55. Costs at $44 to $46 overall. Again, KPC $48 to $50 and Arutmin, $35 to $37. Next slide. As we can see over the years, the prices have been quite volatile, but if you would see the 2024 and 2025 for the moment are slightly down but pretty stable.
I think that is the uncertainties that has happened in the global market in 2024 with all the elections and war, the couple of wars, and of course, in 2025 with the obvious trade war that we or let us call it by a different way, the tariff war that is currently going on. Next slide, please. In terms of the forward curve, it is still in contango, and we are looking at calendar 2027 at 100 for the Newcastle at 128.50. This is as of the 11th of April. I think even at the 7th of April, it stayed close to that. We still expect to see a recovery in the world economies over the next six to nine months as hopefully wars are resolved and some settlement on the tariffs can be done.
Those will, I think, be the main spurs to any increase in the coal price at the moment. The next slide, please. On our operational highlights, as you can see, the KPC strip ratio, the amount of mined earth we're moving to produce one ton of coal, fell from 10.9 at KPC to 9.3. That is as the mine has got developed, and we are not opening up so much. That helps us long term in terms of cost. Prices were down from $89 to $76, but sales and production were up compared to 2023. With Arutmin, again, similar, we were down on strip ratio because of the mine's development. But as I mentioned earlier, we had a delay due to a dispute in one area on the land ownership, which was resolved, but it cost us about 3 million-4 million tonnes.
Prices were down from $64 a tonne to $59 in 2024. Overall, we were at 75.8 million tonnes of sales against 78 million tonnes, down 4%, and production was similar. But with a strip ratio from 9.8 down to 8.7 overall. The next slide, please. Rainfall, as can be seen, other than a few unusual points, has been pretty much in line with the long-term forecast that we have had, the long term and the five-year. It has been pretty following and we have not had unusually poor, should we say, production effects due to rain. The start of this year has been more wet, for sure, both KPC, especially at KPC, but we hope that will soon change as we come more into the dry season. Next slide, please.
As we have said, overburden decreased primarily due to the decline in the Arutmin's coal production, mainly because of the land dispute. There was improved performance from the owner operator and contractors at KPC. Coal mine was only slightly down overall. Next slide, please. Coal sales were down slightly, 4%. Again, as I mentioned before, because of the Arutmin stoppage. Stripping ratio, again, was down as mentioned. You should see that, especially in KPC, you should see that maintained around that nine figure. Arutmin, it would be only if the higher grade coals are more sold, where you could get an increase in that strip ratio. Next slide, please. Production costs were down because of fuel, but also because of the strip ratio we are mining, as we mentioned, and also prices were down as the general global market fell overall. Next slide, please.
Certainly, as we said, in prices, as you can see, eco-coal, the ASP sort of coal excluding eco-coal, were down from $96 in 2023 to $80 in 2024. This is our realized prices here, not the benchmark. The eco-coal, there was only a slight drop of $48 to $46 because a lot of that coal is sold domestically and it is worked out on the $70 benchmark price that has been implemented for PLN sales in Indonesia. So average overall has fallen from $81.3 a ton to $71.8 a ton. Next slide, please. Production costs, as we can see, Arutmin was only slightly down at $40.9, down to $39.2, but KPC fell from $56 to $49, as we said, with the lower strip ratio, but also because oil prices came down. Next slide, please.
On the financials, the fourth quarter, we had an adjustment on our non-cash items in the deferred tax asset area, which brought our number down to the $67.5 million profit compared to $10.9 million last year. That $67.5 million does allow us conveniently to and the $90.1 million net income in total does allow us to apply for the quasi-reorganization which we tried to do in 2024. But one of the criteria, which was the next total net income, did not qualify. We believe it will qualify this year. So you should see the advert in the newspaper now today, and we are going through the process with OJK for approval. The reason for that, for those who do not understand, is that allows us to use our paid-in capital, the premium paid-in capital, to be used to offset our negative retained earnings.
Once that returns therefore to zero at the beginning of the year in 2025, therefore, we are allowed to, if we make profit, we are allowed to dividend to the shareholders. So that application and process has started and will go on, and we hope the final approval from OJK will come in around mid-May and with the shareholders approving at the AGM. Next slide, please. The next slide is the number we often report to you guys in the press is the consolidated number. It is in the notes to the financial accounts and statements. But the revenue you can see is around $5.7 billion because it includes KPC's costs and revenues. So you get the full picture of the company. Alternatively, only Arutmin and BRMS revenue is included. Next slide, please. So this is just to help you compare the two.
So you can see from the financial statements as prepared under PSAK, the Indonesian accounting standards, and compared to a consolidated number which includes our 51% of KPC. Note under the Indonesian accounting standards, we cannot consolidate KPC because we have a very tight shareholder agreement with the Tata Power and CIC. That means that there is very good governance in the company. But of course, from an Indonesian accounting standard, they class that as a joint venture. Under joint ventures, they can only be shown as equity income. Next slide, please. At Bumi level, the equity has increased because of the slight net profit from $2.7 billion to $2.8 billion. That is the total net equity. As I said, retained earnings are negative at the moment. On EBITDA, it has slightly fallen compared to December 31st, 2023, by about 3% as prices fell over 2024. Next slide, please.
From a consolidated adjusted EBITDA, you can see on 100% basis how KPC, Arutmin, and Bumi look, and then how much we are generating, and then our share of that is in the proportion. So our $294.3 million for the 12 months of 2024 are shown there. Next slide, please. Cash-wise, the number looks quite high. You have to understand, because up until December, I believe, the DHE, which is the requirement that you keep your three months of your imports revenue or your export revenue, sorry. Three months of your export revenue is kept on deposit, and you keep that in the account and you borrow against that money. So you can see for KPC and Arutmin, that was $266.5 million and $89.65 million on the cash deposits. Against that, on the other side will be liabilities where we borrowed against those sums.
Not all of it, but we borrowed against them to use for our operations. The latest DHE update this year, we are meant to keep 12 months of our money of our exports revenue, if it's in US dollars, in the account. However, if we convert that into rupiah, we are allowed to use that money. We are not allowed to use the US dollars for operations or for dividends. So it's a longest restriction, but it's easier to manage now. Next slide, please. The latest announcement that you might have seen on the royalty for a number of the mining industry companies, one part of that was that they changed the bands for the IUPK, which are the coal assets that were previously under Coal Contracts of Work and first generation. When they expired, we moved to an IUPK.
Ourselves and Adaro are the obvious ones of these. In their rates, we had a band and we were constantly paying 28% royalty to the government, and that was running around $1 billion to $1.5 billion a year of actual payments. That now has been slightly changed. So now, it's moved to current price where we are today, we're running at 18% to 19% royalty will be charged going forward on May onwards. From the 26th of April was the actual date. The current HBA is running at about, I think, $130. Yeah, $130 per ton. But we expect that to fall in May as prices have been continuing to fall. So most likely we'll end up with about 18% royalty instead of paying 28% royalty going forward. So that's a saving of about 10% on our revenues.
Net will be about 7.8% as we have to take off the tax benefit you normally get. So there will be a good improvement in the cash and the profit from May onwards. Next slide. This is our ESG data as of December 2024. This information is published regularly monthly on our website. Any requirements for additional ESG data for your internal approvals or details, please contact us. We have a lot more information available. Also to note, the CSR expenditure is for Bumi. If we take the group, at the moment, we're running at about $70 million of ESG expenditure that we are spending. We'll gradually update these numbers going forward. But please, if anyone has any questions on the ESG points, we will happily do. We are also looking at X1 and X2-
Reporting.
...reporting based on 2024 numbers, even though the requirement for Indonesia is for 2027 to start that. We are in the process of appointing someone to do that at the moment. With that, I think that's about it. These are the KPC and Arutmin details. They're available to you guys, but they've already been summarized. Feel free to pick them up off our website if you haven't received a copy already. With that, Nicholas, I'll open that up to Q&A, if that's okay.
Yep. Thank you, Andrew, for your very comprehensive presentation. Before we start the Q&A session, I guess I have a few questions from my end. Let me start with this. Given that coal price has fallen quite significantly in 2025, what are the cost efficiencies initiatives that the company has taken? Maybe if you could share with us, what is your coal industry outlook in the upcoming year?
Ashok, you want to comment on it?
Yeah. Let me explain to you what we are doing now. We have appointed McKinsey to look into all the entire life of mine plan and also our operation improvements. Basically, we are looking at reducing the strip ratio going forward, both in KPC and Arutmin, but not sacrificing the results. What we are doing, it is more a selective mining, so that we gain on lower strip ratio to offset that drop in sales price. Also, as a result, we will be also looking at how to save on fuel. The fuel consumption, I'm glad to inform you that will go down by almost 15%, both in KPC and Arutmin this year, apart from the fall in coal price. Coal price, fuel price has gone down, but government of Indonesia has also come up with subsidy.
We used to have a subsidy up to last year, but effective this year, it has been withdrawn, which led to an increase of $0.20 in fuel effective from 1st January. We are affected both not only by the drop in coal price, but also in increase in fuel price, even though the Brent crude has fallen considerably now. In KPC, we have also stood down some trucks because of the reduction in OB distance. Because of the long plan being looked into, we have been able to reduce the OB distance, and some of the trucks have been stood down.
We have also started with AI, GenAI in some of the divisions in KPC. Preventive maintenance, how to improve the unscheduled maintenance, also in our supply chain management, in our accounts, HR to start with. So all in all, we will be able to save substantial sum by the end of this year to offset the drop in coal price.
Got it. Thanks, Ashok.
And maybe if I could follow up with my second question regarding your coal industry outlook in the upcoming year.
Sorry, say that again.
Your coal industry outlook in this upcoming year.
Nalin, you wanted to comment or?
Sorry, Nalin, I think you are still muted.
Yeah, I think the market has been pretty depressed again for various reasons, including the current trade wars and other things. We believe that the market will be depressed, and markets are offering prices at a discount, which we are resisting from offering any discounts in the market today. We believe that things should turn around in the next three to four months, once the dust on the trade war is settled. Until then, we believe that there is going to be a pressure on the coal prices.
Got it. Thank you, Mr. Nalin. Let me follow up with a question coming from the floor. We have a question coming from the chat box from Giovanni. Would you mind sharing the detail regarding the dispute in Arutmin, and how will it impact production in the future?
No, it was purely an area on the edge of the boundary that was under dispute, and that restricted production there and for dumping as well. That was resolved last year, and we do not foresee that continuing.
Got it. If I may ask a follow-up question on that. How much of the production that was impacted, if you could guesstimate?
About two to three million tonnes, I think it was.
Thank you. It has been resolved, right?
Yes.
Got it.
That is why our guidance is back up.
Got it. Okay. We also have following up question coming from Matthew. Regarding the recent requirement from government to use the HBA coal as a benchmark, can you share about this, what is the impact from this, and are you seeing any pushback from your customer?
It has always been there. Ashok, please correct me if I am wrong, but my understanding is always been the HBA is the basis. You should sell at HBA or higher. Unfortunately, the HBA often trends behind. We will have to pay royalty on the HBA or the actual sales price, depending on which one is the highest.
Just to add, Nicholas, to that. Under the new regulation, which has just been issued, although government is trying to put a stress on HBA as the floor price and all contracts to be on HBA, but they have allowed us to dispatch using the contracted price, and you pay the difference between the contracted price and HBA. HBA, we call once you get the calculation done, you pay the additional royalty and additional tax. There is an element of additional taxes come in addition to the extra royalty to be paid. That is only the difference now under the new law which has come. Yes, that adds to our cost.
Got it. Let me follow up with a question coming from the chat box, coming from Benjamin. There are three questions here. First one, can you provide an update on the progress of the coking coal and bauxite mine acquisition? On the second question, regarding the alumina project, is there any update you can share, particularly on whether the project partner can now be disclosed? On the third question, has Bumi received approval from OJK regarding the quasi-reorganization plan?
Yeah. On the bauxite and alumina, we are in discussions with various parties, and we hope to be able to announce something pretty soon, hopefully in the next two to three months on that area. Coking coal, we are not looking at anything at the moment, especially with coal prices. Coking coal prices have dropped quite significantly, and I think most people are tied up on the Anglo coal deal anyway. The quasi-reorganization, as I mentioned in the presentation, an advert has been put in the newspaper. We will be now in conversation and discussions with OJK over the next four to six weeks, and then hopefully we will get their approval, and at the AGM, we will hold an EGM also for that approval. We hope the OJK will support it as it is the best way to help all the minority shareholders.
Okay. Thank you. Following up on question from the floor, from Ian. When does the new royalty regime take effect? I think this has been answered.
Yeah. The 26th of April, it can come into effect.
Got it, the 26th of April. Following question, what will be the extra annual profit to be generated? As we understand that we will pay less royalty, but we will pay more in context.
Yeah. But if you look at our numbers, on 100% basis, you can see that we are running at about $5 billion-$6 billion revenues. So you have a $500 million of benefit to the shareholders of KPC and Arutmin, less 22% corporate tax. So maybe like $400 million of benefit. Of course, that is for the shareholders to share. So we will be 51% of KPC and 90% of Arutmin. But I will let everyone else work out what the revenues are going to be for this year. We have our guidance so they can calculate that. Yeah.
Got it. Very clear. Thank you, Mark. We got another question coming from Randy. Can you share more updates on your Pendopo mine? Is there any chance to start operating sooner?
Well, actually, we actually did a very small amount of coal sales in 2024. Unfortunately, because of prices, we have not been able to continue doing that, and there has not been any further developments on the Pendopo mine. We have not been able to sell at the moment, although we are looking at an upgrading process from Germany. However, that is at early stages.
Got it. We get a follow-up question coming from Benjamin. Thank you, Mark, for the answer. Any guidance for the cash cost in 2025 compared to 2024?
Well, as the strip ratio we maintain and as Ashok said, we are looking at efficiencies with McKinsey and strip ratios there. From an actual operational point of view, we should see our costs maintained and our guidance are down. Of course, wherever the oil price goes, it will have an effect. If that increases along with coal prices towards the end of the year, you will see costs go back up a bit. But we should be pretty maintaining based on last year, it should be okay.
Got it. Just a reminder to all participants, should you have any question, you can type it in the chat box, or you can raise your hand directly to ask your question. With that, let me continue with some question on my own, Beck. This is regarding the DHE lock-up that you already touched on the presentation. How do you see the recent change lock up affecting your cash flow, given that it is 100% requirement? How do you see the impact coming in the following months?
Ashok, do you want to comment from the KPC side?
From both from KPC and Arutmin point of view, see, this 100% is not affected that much. In fact, the one which was the earlier regulation, you had to take a loan, and then you had to pay an interest. But under this new regulation, after setting aside the dollar amount for tax and non-tax revenue payment, the balance you can convert into IDR immediately and use it for your operation purposes. So there is no impact on both in KPC and Arutmin under the new regulation.
Got it. Okay. Okay, Darren, do you want to ask any question?
Yeah. Thank you. Beck, maybe want to check on, since we acknowledge the fuel price has been falling, right? How about the implementation of using biodiesel like B40? How does it affect your fuel cost so far? How does it impact the cash cost so far, if any?
Ashok, do you want to do that one?
Let me tell you, B40 has become compulsory from 1st January. We have not felt the impact, but as I mentioned to you that beginning of 1st January, the subsidy of $0.20 had been withdrawn. So although the bunker fuel price has gone down from what it was in November, December, but because of the fuel prices increased by $0.20 because of this subsidy removal, it has increased the fuel price compared to what it should have been.
Just to add to that, remember the B40, I think the highest usage somewhere else in the world is in Brazil at 15%. It wears on your engine, so maintenance costs over the long term go up as well. It's not really helping us at the moment, I can tell you. It might be good for the environment. It might be good for the palm oil guys, but that's about it.
Thank you, management. Maybe you want to touch a bit on the quasi-reorganization that you guys mentioned the slides. I think in the market we are quite aware that the intention was to potentially distribute some dividend to the shareholders. Is there any indicative on the payout on that, maybe?
Is there any plan on the dividend?
Yeah. Any indicative guidance on the dividend matter?
No. Not until, let's wait until we get OJK approval before we start thinking that. We don't want to create any discussions on the actual dividend.
Okay. All right, thanks.
Sorry to jump in. I'll follow up with a question coming from the floor. As we know that gold price has recently quite shoot up, and it is a commodity that is currently on the rise, we got a question coming from Matthew. Can you share any view and target for gold this year? Do you have any plan to enter more into this side of the business?
Look, gold goes up depending on the uncertainty, right, in the market. It seems to be the main driver of gold. I am no expert at the moment on gold, but it seems to be following whatever goes on with the tariffs and everything. Yes, it is up and it could well continue to go up. But, currently we are not involved. We are looking at gold and copper as one industry we would look at, and if anything happens on that side. And of course, BRMS with its developments in Citra Palu Minerals is doing very well at the moment. But, I think gold prices will stay high given the current situation.
Got it. Okay. Let me follow up with a question about this. Can you share the weather condition in the first quarter, but then any indication on your production or sales volume? Is it affecting any of your production volume?
Yeah, there has been rain, and it always is. The first quarter is always our lowest quarter because we have rain, and we do not expect that to be ever. The first quarter is typically the lowest quarter in terms of operational numbers. And we expect that to be similar this year.
Similar to what happened in first quarter last year?
It should be, yeah, Ashok. Pretty similar.
It is rainfall. This part in East Kalimantan is higher compared to last year, but in South Kalimantan it has been lower. When overall net to net both KPC and Arutmin are the same figure of last year.
Yeah. Got it. Okay. Maybe if I can ask about your expansion toward the green energy business. Can you share us any of your plan or intention to explore more of this side of the business?
Do you want to mention about transition?
Do you want to go to that?
Look, the only thing is we are planning a diversification, as we've mentioned before, into looking at gold, copper, bauxite, alumina areas. I wouldn't call them a green diversification, but we are coming away from coal. That is our plan. We'll come out with more information on that as we go along this year.
Got it. Okay, we got a question coming from the floor. From Henry Gonyani. Could you share any updates on Gayo Mineral Resources exploration progress? It is one of DEWA's scope mining subsidiary.
Gayo is, what's it called? Our affiliate. I cannot really comment on their development there at the moment.
Right. Okay. I think that is all the questions coming from the floor. Sorry, Darren, do you have any follow-up question on this?
Let us just wait a bit. Just remind the floor, if you guys want to speak with the management can raise your hand. I will mute you guys. Thank you.
If I may ask, do you mind sharing the reserve and resources in Arutmin and KPC? Like the recent update.
Oh, sorry. Go on, Ashok.
Yeah, 664 million tons. But further drilling is going on in KPC. It was as on 31st March 2024. In Arutmin about 225 million tons. Overall it is about 900 million tons. A lot of drilling work is also going on to get more reserves.
Okay.
To convert the resource into reserves.
The drilling work here, is it in both Arutmin and KPC?
Yes.
Got it. I think we don't have any more questions coming from the floor. Maybe do you have any remarks before we end our call today?
No, I think that's fine. No more comments from us.
Okay. Oh, sorry. Okay, we got one last follow-up question here from Benjamin. So yeah, given the decline in coal price, has Bumi initiated any negotiation with its coal contractors to adjust pricing accordingly?
No.
We have this already done with one of our contractors in KPC as well as in Arutmin. But all the suppliers, we are talking to them. There have been some savings here and there. But yes, the amount is not that substantive, but we have made some savings through this negotiation.
If I may follow up on this, will you do any follow-up on this negotiation with other contractors as well?
Yeah, we are doing with all the suppliers and contractors.
Got it. Also another follow-up question coming from Ian. Why do you think there is such a sudden change in the royalty policy? Is it related to the downstream project?
Sorry, say that again?
So why there is such a sudden change in royalty policy? I think he's asking about your opinion on this. Like what-
With all due respect, we're not the government. It will leave that to the government. Mr. Nalin, you want to say anything?
No, I think, what the government has done, I can't say as to what is the basis on which they have done, but if I look at the complete list of royalty adjustments they have done, I think the minister has done very scientifically the complete mineral sector where the royalties are charged. They have done it very scientifically, and I'm sure they must have a very strong reason to protect the resource and reserves of the country, by doing the royalty adjustment that they have done. It has affected from gold to copper to aluminum. Everywhere they have rationalized the complete royalty structure. I think it's first time it's been done on a holistic basis.
Got it. Okay. Thank you for the explanation. Sorry, I think we were interrupted. One thing I was asking about, do you have any remarks before we end this call?
No, there wasn't anything else. No.
Okay. Got it. I guess we can end the call right now. I would like to say thank you for all the participants for joining the call and especially management from the Bumi Resources team. Yeah. Thank you so much, and you may disconnect the call.
Thank you all.
Thank you very much.
Bye
Thank you. Bye-bye.