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Why Invest in Adaro?

The Power of Positive Energy


Each time we ship Envirocoal, the cleanest thermal coal available on the export market, on schedule and as ordered to our loyal customers, we deliver positive energy.

In the passionate work of each of our employees, in the way we conduct ourselves, in the impact that we have on those around us and in the contributions we make to society, we deliver positive energy.

As we turn a non-renewable resource into a renewable one by building strong, healthy communities surrounding our operations, as we create maximum sustainable value from Indonesian coal, we deliver positive energy.

Here are six core reasons to believe in us:

Despite renewables push, the energy sector in emerging Asian countries will still rely on coal as an affordable and reliable source of electricity. Southeast Asia and South Asia regions are the pockets of growth for thermal coal demand going forward. Indonesia as the largest exporter of thermal coal, has strong geographical advantage to cater to these Asian customers.

 

As a natural extension to our thermal coal operations, we have begun to produce metallurgical coal to satisfy the needs of emerging markets in Asia. In 2018, we added a significant metallurgical coal asset into our portfolio through the acquisition of Kestrel coal mine so that our products portfolio now spans from sub-bituminous thermal coal for power generation to premium hard coking coal product, an essential, non-substitutable component in steel-making. The acquisition has also grown our coal resources to 15.47 billion tonnes and coal reserves to 1.52 billion tonnes (not equity adjusted).

Our internationally trademarked Envirocoal is among the lowest-pollutant coal available in the global seaborne thermal coal market due to its ultra-low sulphur, ash and nitrogen content. Envirocoal thus provides excellent economic and technical benefits to our customers, most of which are sovereign-backed power utilities. On top of the reliable supply we provide them with, Envirocoal’s low-pollutant content allows them to meet their countries’ stringent emission standards and to lower their operating costs. Our coal’s ultra-low ash content reduces ash disposal costs, and ultralow sulphur helps reduce reliance on high-cost desulphurization equipment.

The business environment and competitive landscape is constantly evolving, and how a company deals with these changes determines its success in sustainable value creation. Therefore we have to be able to continuously challenge ourselves to constantly improve, in order to adapt to these changes.

Now we run a business model that includes eight business pillars, and we continue to seek growth opportunities in each and every one of them. We recognize that coal is cyclical and our non-coal mining pillars provide us with stable earnings base which support our profitability, hence counter balance the volatility of coal. In 2018, our non-coal mining pillars accounted for approximately 20% of our operational EBITDA.

Indonesia currently has ~60 GW of electricity installed, roughly half of which is coal fired. The country expects an additional 35 GW of capacity, of which 20 GW is coal fired. Research from IHS Markit shows 300 GW of new coal-fired power plants are under construction in Asia today. We are a firm believer on the Asia growth story and expect Southeast Asia to be one of the key growth drivers while traditional markets in Japan, South Korea and Taiwan will continue to be significant consumers of coal.

Most of these new coal-fired power stations use super critical or ultra-super critical boiler technology, and our coal, with its ultra-low pollutant content, fits nicely with the specific requirements of these boilers. Our proximity to major pockets of growth in Asia also offers benefits in terms of freight and transportation costs.
Since going public in 2008, Adaro Energy has experienced the rough cycles of the industry but never have we compromised our commitment to pay dividend to our shareholders. We have cumulatively paid a total of US$1.2 billion in dividends with average payout ratio of 39%.

Our focus is to create long-term value for all of our shareholders who have been very supportive to us in our endeavors to create maximum sustainable value from the Indonesian coal, energy and infrastructure sectors. Adaro Energy is committed to pay cash dividend each year and as a result we deliver among the best dividend yield in the country’s coal mining sector. We will remain disciplined to ensure the balance between the money reinvested into the business to capitalize growth opportunities and the returns distributed to shareholders.
 
Last modified on May 7, 2019, 3:27 pm | 102305