Indonesia’s Adaro to spin off thermal coal holding firm

Indonesian coal producer Adaro Energy Indonesia is planning to sell shares in a subsidiary that serves as a holding company for its thermal coal mining concessions.

Adaro said that it aims to sell its shares in Adaro Andalan Indonesia (AAI) in a public offering, effectively creating a new business entity. Any remaining unsold shares will be retained under Adaro's ownership.

Around 21.9mn AAI shares will be offered for sale with an appraised value of $2.45bn. Adaro through AAI owns shares in several thermal coal producers such as Adaro Indonesia, Paramitha Cipta Sarana, Semesta Centramas, Laskar Semesta Alam and Mustika Indah Permai, which produce medium-calorific value thermal coal.

It also owns through AAI shares in two thermal coal producers that are currently under development, Pari Coal and Ratah Coal. It also operates a logistics business, which consists of coal barging and ship loading, river channel dredging and maintenance, stevedoring, land and sea port operations, as well as barge maintenance and repair.

The restructuring is aimed at enhancing the performance of the company's different business sectors by separating the thermal coal mining segment and its supporting businesses from metallurgical, minerals and renewable energy operations. The sale will allow each sector to focus on developing their core strengths by focusing on their own development and performance, Adaro said.

The proposed sale is the second major corporate restructuring by Adaro this year as part of its long-term diversification efforts. The company simplified its ownership structure in its metallurgical coal and mineral business in June of this year by buying shares held by two subsidiaries, increasing its direct ownership of Adaro Minerals to 83.84pc from 68.55pc previously.

Adaro's January-June coal output and sales rose from a year earlier on firm export and domestic demand. Production rose by 7pc to 35.74mn t from 33.41mn t.

By Antonio delos Reyes