This is the impact of rising coal prices on United Tractors mining service activities

The increase in coal prices that has occurred since the beginning of 2021 has become a positive catalyst for mining companies.However, for companies engaged in the mining services sector, the increase in coal prices does not necessarily encourage their business activities.

This is also felt by PT United Tractors Tbk (UNTR) through its subsidiary, PT Pamapersada Nusantara.

Based on United Tractors’ monthly report, the mining contractor segment through Pamapersada Nusantara recordedoverburden removalvolumein May 2021 of 69.8 million bank cubic meters (bcm).

This realization slightly increased from the previous month which was 69.4 million bcm.If accumulated from January-May 2021, stripping activity decreased by 6% on an annual basis (yoy) to 329.4 million bcm.

Meanwhile, Pama’s coal production volume in May 2021 experienced a slight increase of 9.9 million tons from the previous 9.8 million tons in April 2021. As for theyear to date(ytd), thisoverburden removalslightly increased 0.86% compared to the same period. the previous year to 46.6 million tons.

If you look at the trend of Pama’s coal production volume from the end of December 2020 to May 2021, it does not experience a significant increase or tends to be conservative.

United Tractors Corporate Secretary Sara Loebis said the coal production and stripping activities followed the plans of the client or mine owner.”The conservative increase may be because there is already a quota from the government,” he told, Friday (23/7).

Therefore, UNTR does not go overboard with Pama’s coal production target.Sara said that her party projects Pama’s coal production to be approximately the same as 2020.

In contrast to mining services activities, the heavy equipment sales business segment experienced a significant increase in the first five months of this year.Sara did not deny that the increase in sales of heavy equipment was influenced by rising commodity prices.

In the January-May 2021 period, UNTR heavy equipment sales rose 22% yoy to 1,076 units.In the same period last year, sales of heavy equipment amounted to 777 units.The increase in sales of heavy equipment was supported by two sectors, namely mining and construction.

“In both sectors, this is due to the efforts of the equipment owners to renew or replace the old heavy equipment,” concluded Sara.

The reason is that in 2020 thisreplacementactivitywas delayed due to low commodity prices and the adjustment of work patterns to the pandemic situation.