Sales at United Tractors, the nation’s largest heavy-equipment distributor, dropped by 31 percent in August, amid a global drop in prices for commodities including coal and iron that might be curbing demand for tractors and trucks.
Sale of heavy equipment fell to 402 units last month from 589 units in the same period last year, the company said in a statement published in its website on Wednesday. It didn’t provide a reason for the decline. Still, sales in August were unchanged from July, it said.
Falling coal prices in the global market have affected production of coal producers in Indonesia, particularly on Kalimantan island, which is home to the country’s biggest coal producers like Bumi Resources, Kaltim Prima Coal and Harum Energy.
East Kalimantan Governor Awang Faroek Ishak said early this month that the regional government might limit annual coal output from the region to 150 million metric tons to preserve the resource and spur the development of alternative energy.
East Kalimantan province, the country’s top coal producer, is expected to produce 220 million tons of power-station coal this year, Bloomberg reported citing governor Ishak as saying in Balikpapan, in East Kalimantan.
Indonesia is the world’s second-biggest shipper of thermal coal, with 20.8 billion tons of proven coal reserves, according to the Energy and Mineral Resources Ministry. Production by Indonesia’s coal miners reached 150 million metric tons in the January-June period, which was equivalent to 45.2 percent of the country’s total target, according to data from the Energy Ministry.
United Tractors is also expanding its revenue base from heavy-equipment sales, and it has two mining units: Prima Multi Mineral and Tuah Turangga Agung.
United Tractors said last week that it paid $51 million to complete the 100 percent acquisition of Borneo Berkat Makmur, another coal miner in Kalimantan.
Contribution of the coal-mining operations to the company’s overall revenue remains small. Coal mining accounted for 11.5 percent of the company’s total first-half revenue of Rp 30.61 trillion ($3.2 billion). Sales of heavy equipment continue to dominate its business, followed by mining contracting services. Revenue in the mining division rose 29 percent to Rp 3.52 trillion. Sales by volume, though, rose 38 percent to 3.05 million tons.