(Bloomberg) -- PT United Tractors is in “full throttle” for new metals and renewable assets as the Indonesian company aims to cut its reliance on coal to half the total income by 2030.

The unit of the nation’s biggest carmaker PT Astra International is actively looking to purchase a nickel mine in Indonesia, a gold mine of at least 2 million ounces of reserves and a copper asset in either Australia or Canada, President Director Frans Kesuma said in an interview in Jakarta. United Tractors currently earns 75% of its total revenue from coal mining and services.  

Coal producers across Indonesia, the world’s top exporter of thermal coal, are using the windfall profits they made from surging commodity prices to begin a green shift while banks tighten their purses on new coal investments. Fellow coal miners PT Indika Energy and PT Bumi Resources are also expanding into renewable energy and metal mining businesses, intensifying market competition.

“It’s like we have to run, but our shoes fall off,” said Kesuma on Monday, referring to the rush to cleaner energy. The company, which also sells heavy equipment, won’t make any new investment in the fossil fuel, he said, declining to say if it plans to dispose of its current coal assets. 

“We will not drastically drop our existing businesses because the fact is that they are the ones generating the cash for our future growth,” added Finance Director Iwan Hadiantoro.

United Tractors stock climbed the most in a month on Tuesday, up 3.2% to close at 950 rupiah.  

The company is also looking to build large-scale solar and hydro power projects after its $11.2 million purchase of a stake in hydropower infrastructure firm PT Arkora Hydro.

United Tractors plans to finance the new projects using mainly cash, with a standby loan facility from several banks on hand for bigger deals, said Hadiantoro. It could allocate up to $1 billion to acquire two metal mines. United Tractors is also considering issuing a green bond of $250 million to $500 million to fund large renewable energy projects, he said.

Other points from the interview

  • United Tractors is nearly doubling 2023 capex to $1 billion to $1.2 billion from this year, of which $800 million will be used to repair its heavy machinery, and the rest for exploration of Martabe gold mine in North Sumatra
  • Company is also revising up this year’s heavy equipment sales target to 5,750 units from 5,500, as it secures more supply
  • It sees 2023 heavy equipment sales slowing down to 5,500 as construction firms slow down projects ahead of the 2024 national elections

(Updates with share move in sixth paragraph.)

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