pama contributes 45% of united tractor's revenue

The shifting energy source trend from oil to coal has put coal into the limelight with huge profit in the future. It is therefore not surprising that coal price has jumped 20% in the last 3 weeks of November and had even touched US$50 per ton.

The potential has been anticipated by Astra International group around a decade ago. Since 1980, its subsidiary, PT United Tractors, has boosted the performance of PT Pama Persada , which now controls 45% of the mining contractor market in Indonesia.

Amidst the decreasing demand on the wake of the fuel hike in 2005, Pama contributed 45% of its annual revenue. With the current increasing coal price trend, PT BNP Paribas Peregrine security analysts estimated that the company's heavy duty equipment in 2007 and 2008 will received a boost and recommended share purchase at Rp7,800 per share.

"We believe that the prospect of coal will remain attractive in 2007 and 2008 based on strong demand and limited market supply," according to BNP analyst Ferry Wong.

The reason for the upward trend of coal price is the increase in demand from various countries. Indonesia as one of the largest coal producers in the world plans to reduce export to meet domestic requirement following the conversion of power plant fuel from diesel to coal. A similar policy has also been taken by India, which is currently aggressively constructing coal fired power plants with total capacity of 20,000 MW.

The move triggered a coal demand hike as a 1,000 MW power plant requires around 3.5 -4 million tons of coal per year. The additional demand from India and Indonesia alone would increase coal demand by 100 million tons per year.

As a comparison, the current coal market capacity is 500 million tons per year. On the other hand, China has decided to reduce its coal export to meet its own domestic requirement, furthering coal shortage and boosting coal prices. Analyst said that the steep hike in coal prices will usually be followed by the increase in heavy duty equipment demand within a 12 month time lag.

This sector contributes over 50% of the heavy duty equipment requirement. Most of the mining companies in Indonesia have indicated that they plan to increase their production volume over the next few years, according to Ferry.

Next year, Pama Persada is estimated to increase its mining volume by 15% in 2007 to around 47 million tons. The production figure comes from Adaro with 17.5 million tons, Indominco with 8.4 million tons, KPC with 5 million tons, PTBA with 3 million tons, Kideco with 3 million tons and other producers with around 10.1 million tons.

In 2008, Pama is estimated to operate coal mining s with a total production capacity of 54.2 million tons or a 15% increase compared to 2007. Demand for heavy duty equipment in the plantation sector, CPO in particular, accounted for 30% of demand.

Tulisanku diterjemahin orang..!! hehe...