Bayan declared force majeur. Bayan Resources (BYAN IJ) announced force majeur on coal shipment from its Gunung Bayan coal mine in Kalimantan, stating heavy rains causing floods on hauling roads from pit to its coal terminal. Management stated that some shipments to Malaysia and Italy would be delayed.
This would be the second time in the last 24 months. The last one happened in 3Q08 after Bayan's Wahana mine was flooded. Note also that Bayan announced the force majeur only a week after securing bank loan, US$300m, from Standard Chartered, SMBC, and ANZ.
Implication to volume? Gunung bayan is supposed to produce around 4mt this year, from total target of around 14m tonnes. Assuming one month of access closure then that should translate to 300kt to 350kt of volume loss. We heard that this force majeur might affect around 3 to 4 shipments, and hence total volume impacted is likely be less than 350kt or 2.5% of total output.
Net impact to Bayan earnings could be greater than production loss. Note that Gunung Bayan mines produces the company’s best product, very high CV hence much higher price than Bayan's other mines.
Any other mines affected? This time of the year is normally the start of dry season and we have heard a bit of heavier-than-normal rain hitting Kalimantan Island over the past 2-3 weeks. Checking operations of the listed coal names, none seem to be affected much. ITM stated that its Jorong mine operation, which has been prone to wetter than normal season, has been slowed by rains but not stopping. There are some mines, non-listed mines that have been affected by this heavy rain.
Contractors affected? Worth mentioning that Buma, a subsidiary of Delta Dunia, and Petrosea, owned by Indika, are contractors in Gunung Bayan mine. There should be some impact to their business, though floods have affected mostly hauling roads and less on the pit.
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