Bumi expects to increase production of coal as it posts underlying earnings

Bumi said it expected to produce 86 million tonnes of coal this year, up from 77 million, when posting its first interim results since the thermal coal producer listed under its new name in June – giving Indonesia’s politically connected Bakrie family a foothold in London.

“Despite high levels of rainfall in the first quarter, a significant amount of the shortfall was made up in the second quarter,” chief executive Ari Hudaya said. “Higher volumes in the second half, coupled with record coal prices, should ensure a strong overall performance for 2011.”

Bumi said thermal coal prices should remain strong over the short and medium term on higher demand from Asia and Eur- ope.

“India in particular is expected to increase its level of thermal coal imports over the next few years with a major planned increase in electricity capacity addition,” it said.

About 90 per cent of coal sales by value were exported, while a 33 per cent increase in coal prices outweighed higher production costs.

Rothschild joined forces with the Bakrie Group last year as Vallar bet heavily on Indonesia, the world’s largest thermal coal exporter. It took a 25 per cent stake in coal miner Bumi Resources, Asia’s biggest thermal coal exporter, and a 75 per cent stake in Berau Coal Energy.

Bumi now owns over 30 per cent of Bumi Resources, as well as a 75 per cent stake in Bumi Resources Minerals, as a result of a deal in June to simplify its structure and pave the way for a FTSE 100 entrance.

Its stake in Berau now stands at 85 per cent.

It expects to enter the FTSE all-share index on September 19.

Bumi plans to raise the stake in Bumi Resources, in which commodities trader Glencore is the third-largest investor, to 50 per cent as soon as possible, Hudaya said.