Collapse in coal prices spurring distress for Indonesian miners

Bloomberg

The global collapse in coal prices this year has dealt a particularly heavy blow to miners in Indonesia, the top exporter and one of the largest producers of the fuel.
Bonds from the country’s financially weak miners have suffered more than peers elsewhere in Asia due to a lack of diversification and state backing that many competitors enjoy. Prices of thermal coal — the kind burned by power plants — have slumped about 33% this year, and at least four US firms have gone bankrupt.
As some lenders look to stop financing coal power plants and investors are under more pressure to “go green,” companies that mine or use coal are left with fewer funding options.
“Among the Indonesia coal names, some are facing severe stress,” said Bharat Shettigar, head of Asia ex-China corporate credit research at Standard Chartered Plc. “If prices stay depressed for the next 12 to 18 months, there could be restructuring of some US dollar bonds in the Indonesia coal sector.”
Bonds sold by Indonesia coal miners Geo Energy Resources Ltd, PT ABM Investama and PT Bumi Resources have slumped in the past six months.
Geo Energy Resources, which has operations in Kalimantan, faces a potential early redemption of its bonds in April 2021 if it fails to meet certain minimum coal-reserve conditions.
That will be a “crucial liquidity point” for the company, according to Trung Nguyen, analyst at Lucror Analytics. Geo Energy said that its cash balance was $199.6 million as of June 30, and it only needs to generate $100 million from its mines in three years to repay the $300 million bonds due in October 2022.