Coal companies' cash balance could fund Indonesia’s green transition

The combined cash balance amounted to $6.8b in the first quarter. 

The combined cash balance of eight coal companies in Indonesia, amounting $6.8b, could accelerate its clean energy transition, a report found. 

According to the Institute of Energy Economics and Analysis (IEEFA), the cash balance of the companies could also help repay financial debt. 

The report analysed the financial performance of ABM Investama, Adaro Energy, Bayan Resources, Geo Energy Resources, Harum Energy, Indika Energy, ITMG, and PTBA. 

"In the event that there is conflict resolution, coupled with the EU’s commitment to decarbonize, coal prices are likely to normalize from current levels longer term,” Ghee Peh, energy finance analyst, IEEFA, said. 

“Coal companies should not miss the opportunity now to diversify away from coal before the cost to transition gets higher.”

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According to Peh, coal companies in the country benefitted from the surge in coal prices, which grew to $92 per tonne in the first quarter. This reflected a 29% growth compared to the average price seen in 2021. 

Indonesia will continue to benefit from high coal prices as countries import from the country with markets, such as Japan, Korea, and Taiwan, looking to phase out Russian coal imports in the second half of the year. 

“Shipping routes to North Asia will become longer from Australia and Indonesia, compared to Russia,” Peh also said. 

“Also, India buying more coal from Russia will result in delays to shipping routes as Indonesia is closer.”