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(Bloomberg) — PT United Tractors is going “full throttle” for new metals and renewable assets as the Indonesian company aims to cut its dependence on coal to half of its total revenue by 2030.
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A unit of the country’s largest carmaker PT Astra International is actively looking to buy a nickel mine in Indonesia, a gold mine with at least 2 million ounces of reserves and copper in Australia or Canada, CEO Frans Kesuma said in an interview in Jakarta. United Tractors currently earns 75% of its total revenue from coal mining and services.
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Coal producers across Indonesia, the world’s biggest exporter of thermal coal, are using windfalls from rising commodity prices to start a green shift as banks tighten their wallets on new coal investments. Fellow coal miners PT Indika Energi and PT Bumi Resources are also expanding into renewable energy and metals mining, strengthening market competition.
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“It’s like we have to run, but our shoes are falling off,” Kesuma said Monday, referring to the rush toward cleaner energy. The company, which also sells heavy equipment, will not make any new fossil fuel investments, he said, declining to say whether it plans to divest its current coal assets.
“We will not drastically divest our existing businesses because the fact is that they generate cash for our future growth,” added CFO Ivan Hadiantoro.
Shares of United Tractors rose 3.2% to close at 950 rupees on Tuesday.
The company is also looking to build large-scale solar and hydropower projects after buying a stake in hydropower infrastructure company PT Arkora Hidro for $11.2 million.
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United Tractors plans to finance the new projects using mostly cash, with a backup loan from several banks for larger deals, Hadiantoro said. It could allocate up to one billion dollars for the purchase of two metal mines. United Tractors is also considering issuing a green bond of $250 million to $500 million to finance large renewable energy projects, he said.
Other points from the interview
- United Tractors is nearly doubling capital investment in 2023 to $1 billion to $1.2 billion from this year, of which $800 million will be used to repair heavy machinery and the rest to explore the Martabe gold mine in North Sumatra
- The company is also revising this year’s heavy equipment sales target to 5,750 units from 5,500 as it secures more supply
- Heavy equipment sales slow to 5,500 in 2023 as construction firms slow projects ahead of 2024 national election.
(Updates with moving shares in the sixth paragraph.)
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