Price of Industrial Fuel Rises, Samindo Has Spent Up to Rp 400 Billion This Year


KONTAN.CO.ID - JAKARTA. The increase in world oil prices which continued to approach US $ 80 per barrel triggered an increase in the price of industrial diesel fuel.

As a result of the increase in diesel fuel prices, PT Samindo Resources Tbk (MYOH), which operates 133 dump trucks and 18 excavators, was affected. This year even Samindo has to prepare large funds for the cost of diesel fuel.

The Director of PT Samindo Resources Tbk explained that the increase in world oil prices followed by rising fuel prices and the skyrocketing rupiah exchange rate were a challenge for the mining services industry. Moreover, BBM is a major component in material costs in mining service companies.

"On average, the contribution of material costs to the total production of mining service companies reaches 40%," Ahmad Saleh told, Friday (7/20).

In the beginning of 2018 the price of industrial diesel is still around Rp 6,000 per liter, but in mid 2018 the price of industrial diesel has reached Rp 8,000 per liter.

As a result, it must prepare funds only for Solar around Rp. 300 billion-Rp. 400 billion for this year. "Within a year we can use 48-50 million liters of diesel per year," Saleh said.

According to Saleh, the impact of the skyrocketing world oil prices and the rupiah exchange rate not only on the price of fuel. Some of the spare parts used for heavy equipment must be imported from abroad. "Therefore, the soaring rupiah exchange rate will automatically drive up the price of spare parts," he said.

Currently the rupiah exchange rate has reached above the level of Rp. 14,515 per US dollar from the previous level of Rp. 13,300-13,500. Looking at the situation, Saleh said, his party had taken four strategic steps to make cost efficiency.

First, Samindo management buys large quantities of fuel by considering the prediction of fuel prices in the next few months. The purchase of large quantities of fuel also gets a discount so that it can save the cost of buying fuel.

"We also have a team that monitors prices, for example prices will rise, we will buy two or a month before the price goes up. It's quite a difference, "he said.

Secondly, Samindo consistently maintains roads, one of which is regulating the level of slope. The degree of road slope is quite significant in influencing fuel consumption. "The high slope of the road automatically increases the power used, which automatically increases fuel consumption," he said.

Third, road maintenance also affects tire usage. Continuous road maintenance has successfully extended the duration of tire usage. "At present, tire changes occur every six months, before tire changes are made every four months," Saleh said.

Fourth, management also instructed heavy equipment drivers to turn off the engine during shift shifts. Mining operations take place over 24 hours in three shifts. "The dump truck wants to know, every 1 hour edit 80 liters of diesel fuel," he added.

Saleh explained, with these four efforts, he hopes to be able to use fuel efficiency by 5% of the total usage of 48-50 million liters this year. "We continue to maintain 1 bank cubic meter dredging (bcm) using only 0.9 liters of diesel fuel, not to 1 liter," Saleh said. Just as long as you know for 1 bcm it is equal to 2.4 tons per cubic.

As for the rough service fees for 1 bcm dredging, the cost is US $ 1.5 to US $ 2.5. While transportation costs from stock pile to the port can reach US $ 2.

The increase in mining service fees requested by Samindo has been carried out this year. "As it really can't go up in price again because we have increased when coal prices rose early last year," said Samindo Investor Relations Ahmad Zaki.

This year, Samindo projects overburden removal of 54 million bank cubic meters of bcm, consisting of 49 million bcm for PT Kideco Jaya Agung and 5 million bcm for PT Gunung Bayan Pratama (a subsidiary of PT Bayan Resources Tbk), up from last year amounting to 48 million bcm Kideco and 2.5 million bcm of Gunung Bayan Pratama.

While coal production throughout 2018 is projected to reach 10.9 million tons. Until the first quarter, coal production only reached 2 million tons.

Zaki stated, for the first semester of 2018 production and company performance had not been seen because the data from management had not yet arrived. But seeing the performance of the I-2018 quarter and last year, coupled with rising coal prices, the company's performance is predicted to rise also in the first half of 2018. "I think our performance is still good," he added.