Agritrade Resources, a coal miner in Indonesia with mainland China as one of its top markets, aims to raise output and sales by 30 per cent despite slowing Chinese consumption because of rising demand for less polluting coal.
Ng Xin-wei, the chief executive of the Hong Kong-listed company, said it planned to mine and sell 4.5 million to 5 million tonnes of coal during this financial year to March, up from 3.8 million tonnes and 2.8 million tonnes in the past two financial years.
"Indonesia is close to both India and China, and its coal production cost is among the lowest in the world as 99 per cent of its output is from surface mining," Ng told the South China Morning Post. "It is cheaper to import seaborne coal into south China than from north China via railways."
Most of the coal powers the national grid. The mainland's electricity output growth slowed to 4.7 per cent in 2012, 7.6 per cent last year and 5.7 per cent in this year's first five months, from 12 to 13 per cent in 2010 and 2011. This in turn saw lower coal demand as some 75 per cent of the nation's power is generated by coal.
But the mainland imported 57.6 million tonnes of brown coal - with a relatively low heating value - from Indonesia last year, up from 50 million tonnes in 2012 and 35.7 million tonnes in 2011. Despite the lower heating value, most of the coal imported from Indonesia is blended with domestic coal to reduce pollutants.
Agritrade is controlled by companies owned by the Ng family's Agritrade International and Singaporean businessman Rashid Maidin's WSJ International Group. Both companies are commodities trading and logistics firms.
Agritrade Resources earlier this month posted a net profit of HK$115.2 million in the year to March, more than double the profit of HK$53.5 million in the previous year.
Gross profit margin grew to 31.8 per cent from 29.4 per cent. Average selling price of about HK$242 per tonne was steady from HK$243 in the previous year, given the weak global coal market which saw big price falls of coal produced in nations which are located farther from major markets.
Chief financial officer Ashok Sahoo said the firm's average production cost fell to US$25.50 a tonne from US$34.50 in 2010, thanks to fixed cost savings from rising production scales, and efficiencies from the acquisition of its own road transport and shipping facilities.
Beijing last year considered limiting the import of coal with low-heating values to stem surging imports and support domestic miners suffering from sharp falls in profits and coal prices.