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Reuters
40 minutes ago
- Business
- Reuters
Indonesia nickel slump piles pressure on coal miners hit by falling exports
SINGAPORE/JAKARTA, July 30 (Reuters) - Indonesia's coal producers are trapped between the rock of falling exports and a hard place of peaking demand from the nickel smelters that had been driving the fuel's consumption domestically, creating a growth conundrum for the companies. Coal is Indonesia's biggest export earner, making $30.49 billion in 2024, and plunging revenues from the sector would have disproportionately bad effects on the country's commodity-dependent economy, Southeast Asia's biggest. With lower profit margins leading to dropping share prices, coal's woes point to a future of workforce cuts, slowing output and fewer contributions to government coffers at a time when President Prabowo Subianto is starting up ambitious spending plans. Electricity-hungry smelters, most of which process nickel, have been the fastest growing demand source for Indonesian coal. However, that demand will peak at 84.2 million tons by 2026 and fall to 78.6 million tons in 2027, according to the Indonesian Coal Miners Association (ICMA), because of nickel industry overcapacity and the potential implementation of stricter emissions regulations. At the same time, Indonesian coal exports through June this year are down 12.6% from a year earlier by volume, data from Kpler showed, with government data showing the value of exports through May down 19.1%. Exports to China, the country's biggest coal buyer, fell by 30% from a year earlier in June, Chinese government data showed, as it relies on more domestic output and takes advantage of low prices to import higher quality coal from elsewhere. "Indonesian coal miners are taking steps to diversify their business to hedge against a steeply falling demand for low- to mid-grade coal," said Manish Gupta, senior analyst for Asia thermal coal research at Wood Mackenzie. "We don't expect the growth in captive (plant) addition from nickel smelting to continue going forward," he said, using the industry jargon for power plants connected to nickel smelting sites, known as captive plants. Indonesia's expanding nickel smelting industry had propelled a three-fold increase in Indonesia's captive coal-fired capacity to 16.6 gigawatts (GW) in 2024, from 5.5 GW in 2019, according to the coal plant tracker from Global Energy Monitor. But as nickel prices have fallen due to increasing overcapacity and lower stainless steel imports by China, Indonesian smelters have idled some facilities. In June, smelting inactivity at Indonesian nickel pig iron operations was 9% higher than a year earlier, the highest in two years, mainly as the country's biggest nickel producer Tsingshan Holdings likely halted output at its joint venture plants at Morowali Industrial Park, data from geospatial analytics firm Earth-i showed. H. Kristiono, the deputy chairman of the ICMA, which includes Adaro ( opens new tab, Bayan ( opens new tab and Bukit Asam ( opens new tab as well as foreign traders Adani Global and Trafigura, still expects the smelter industry's coal-fired power capacity to grow despite the underutilisation, although at a slower rate than previously estimated and still doubling by the end of the decade. Coal will remain the dominant power fuel source for the nickel sector because of challenges to switching to other sources, little progress connecting sites to the national grid and Indonesia's resistance to stricter regulations. About 6 GW of capacity, or 46% of all coal-fired power plants under construction in Indonesia, are planned for Central Sulawesi and North Maluku provinces, where nickel processing is concentrated, according to the Global Coal Monitor. Overall though, the combination of lower exports and slower captive power demand growth is pressuring Indonesia's coal producers who are also being squeezed by higher government payments and rising fuel costs. Profit margins at major miner Bayan has fallen for three years and state-owned Bukit Asam's first quarter margins fell below the annual averages for every year since 2010, LSEG data showed, due to increased royalty payments and rising machinery costs. Shares of Indonesia's top five coal miners by output are down 1% to 18% this year, underperforming broader market (.JKSE), opens new tab growth of nearly 7%. Adaro is down 18%, while Golden Energy Mines ( opens new tab and Bukit Asam have lost more than a tenth of their value since the beginning of this year. The companies did not respond to requests seeking comment. In April, Indonesia announced new royalty rates for coal, nickel and other minerals to support Prabowo's higher spending. While some big coal miners saw their effective royalty rate drop, others faced a 1 percentage point increase from April. In 2024, royalties made up 16% of the average coal producer's cost structure, the highest among major Indonesian commodities, according to Australia-based Energy Shift Institute. Jakarta is also considering export duties on coal shipments for certain price levels to boost state coffers, at a time when miners already face higher fuel costs due to the removal of biodiesel subsidies. Some coal miners looking to weather the downturn are exploring diversification options, but progress has been slow, analysts say. Bukit Asam, for example, said in May it is considering a $3.1 billion investment in a plant to convert coal to synthetic natural gas. "Producers are eyeing a mix of downstream options, renewables opportunities, or investments in alternate commodities," Wood Mackenzie's Gupta said.
The Star
5 days ago
- Business
- The Star
Bankable sustainability
Chasing capital through ESG — Malaysian firms are realigning their strategies as green finance takes centre stage PALM oil giants, solar startups, data centre developers and more operate in vastly different industries. Yet, besides revenue growth, earnings and returns, they are all chasing another thing in common — green capital. Green capital refers to funding dedicated to projects or companies that generate measurable environmental benefits, such as renewable energy or sustainable agriculture. This capital is often channeled through instruments like green bonds or sustainability-linked sukuk, which link financing to ESG performance. These companies aren't the only ones. From pioneering the world's first green sukuk to seeing bonds oversubscribed by sustainability-hungry investors, more and more companies are discovering that in today's economy, chasing green is ethical and good business. But there is a catch. Sustainability is not bankable unless it is credible, structured and certified. That is why companies are moving towards aligning with global standards like the International Capital Market Association (ICMA) Green Bond Principles and the Asean Green Bond Standards to polish their ESG credentials and open doors to new pools of capital. Green bonds and ESG-linked sukuk are debt instruments designed to raise funds specifically for projects with environmental and social benefits. Unlike conventional bonds, their terms often include commitments to achieve defined ESG targets, making them appealing to investors seeking both financial returns and measurable impact. A financial enabler It was not long ago when Malaysian corporations viewed ESG as a reporting obligation and tedious checklist. That narrative has shifted since then. Today, ESG has become a strategic lever for accessing capital, managing risk and signaling long-term value to investors. Bank Negara Malaysia (BNM) Governor Datuk Seri Abdul Rasheed Ghaffour said the central bank has found there has been uptake in green and transition related financing and solutions. 'Financial institutions are increasing their offering of green and transition related financing and solutions. These point towards the financial sector making steady progress in supporting Malaysia's orderly transition to a greener economy. 'On green financing, we see growing demand and uptake of funds made under BNM's Low Carbon Transition Facility and High Tech and Green Facility. Similarly, we saw further progress in the Greening Value Chain programme with over 150 SMEs having begun reporting emissions data,' he said in his foreword of the BNM Annual Report 2024. Meanwhile, according to the International Finance Corporation (IFC)—the largest global development institution focused on the private sector in emerging markets and a member of the World Bank Group—ESG integration in emerging markets is increasingly driven by the demand of international investors and access to global capital markets—not purely by regulation. In IFC's Emerging Market Green Bonds 2023-2024 Report, it was stated that this shift is particularly visible in Malaysia, where more corporates are using ESG-linked tools such as green bonds, sustainability-linked sukuk, and ESG-themed funds to unlock capital. Companies with credible sustainability frameworks can tap into larger and more diverse pools of investors—many of whom are actively reallocating capital toward climate-positive and socially responsible investments, it noted. Insights from the Climate Bonds Initiative's Asean Sustainable Finance State of the Market 2022 show that Asean countries are intensifying their positioning for green and sustainable finance, which is gaining traction with the private sector. It was noted that nearly half of Malaysian companies surveyed are investing in new technologies and upskilling to protect their future business, a sign of corporate action beyond public sector mandates. What is driving the demand? ESG-linked instruments are increasingly valued for ethical reasons as well as their ability to deliver climate resilience, social impact, and sustainable long-term returns. The Global Sustainable Investment Alliance's Global Sustainable Investment Review 2023 points to investors' growing insistence on clear disclosures and impact measurement, further driving demand for ESG-linked products that meet internationally recognised standards. Meanwhile, over 80% of asset owners have integrated ESG factors into their investment decisions, driven by evolving client demands and tighter regulatory requirements, PwC's Global ESG Survey 2023 found. IFC's Emerging Market Green Bonds 2023–2024 report highlights how robust regulatory frameworks, such as the Asean Green Bond Standards, underpin investor confidence by ensuring transparency and credibility. Companies demonstrating strong ESG credentials benefit from lower capital costs and superior valuation, encouraging issuers to adopt ESG-linked financing, stated McKinsey's The ESG Premium: New Perspectives on Value and Performance report. Meanwhile, Deloitte has highlighted that sustainability-linked bonds (SLBs) have emerged as strategic financing instruments that align corporate sustainability goals with financial performance. These bonds adjust interest rates based on whether issuers meet predefined ESG targets—creating a direct financial incentive for achieving sustainability outcomes. Making ESG bankable Investors today demand clear, verified impact metrics that demonstrate real progress on environmental, social, and governance goals. Aligning with internationally recognised standards, such as the ICMA Green Bond Principles and the Asean Sustainability Taxonomy, is critical. These frameworks guide issuers to set clear, time-bound sustainability KPIs—from emissions reduction targets to renewable energy usage—that resonate with global investors. Credibility is key. According to Securities Commission Malaysia, obtaining third-party assurance for ESG disclosures enhances investor confidence and reduces perceived risks. Firms like CIMB's ESG advisory unit offer expert guidance to help corporations develop transparent, investor-aligned sustainability frameworks. World Bank has emphasised that standardised, transparent ESG disclosures are essential to reducing issuance premiums and attracting cross-border investment. It notes that credible sustainability reporting is critical for unlocking sustainable finance across sovereigns, corporates, and financial institutions. Malaysian issuers leading the way Malaysia has emerged as a pioneer in Asean's sustainable finance space, with corporates actively issuing green bonds and sustainability-linked sukuk to fund low-carbon projects and future-proof their business models. The country made global headlines in 2017 when Tadau Energy Sdn Bhd issued the world's first green SRI sukuk to finance a solar photovoltaic plant in Sabah. Since then, a growing number of issuers—including Quantum Solar Park, PNB Merdeka Ventures, UiTM Solar Power and Sinar Kamiri—have followed suit, funding solar farms, green buildings, and hydropower projects. YTL Power International Bhd issued a RM1.5bil sustainability-linked sukuk, where interest rates are tied to achieving verified ESG targets. CIMB Group Holdings Bhd has advised on numerous green and sustainability-linked instruments and developed one of the region's most comprehensive sustainable finance frameworks. Cagamas Bhd, the national mortgage corporation, has issued both green and social bonds, showcasing how ESG funding can be channeled into housing access and environmental impact. More recently, companies have begun adopting outcome-based financing. Yinson Holdings Bhd issued Malaysia's first sustainability-linked sukuk in 2021, a RM1bil deal with coupon rates tied to achieving ESG targets. Cenviro Sdn Bhd and Sunway REIT have also entered the market with performance-linked sukuk, signaling a shift toward ESG accountability. Green projects by the billions Malaysia is steadily positioning itself as a regional leader in sustainable infrastructure, driven by a surge of large-scale green investments aligned with national decarbonisation goals. These projects, backed by both domestic conglomerates and global investors, are reshaping the country's industrial and energy landscape. One of the most significant commitments to date is from Saudi Arabia's ACWA Power, which signed a Memorandum of Understanding with the Malaysian Investment Development Authority (MIDA) in May 2025 to invest up to US$10bil in developing 12.5 gigawatts of renewable energy capacity by 2040. Meanwhile, Khazanah Nasional Bhd, via UEM Group Bhd, is spearheading a RM6bil, 1 GW hybrid solar project with a 16.2ha renewable energy industrial park in Gerbang Nusajaya, Johor. Led by UEM Sunrise in partnership with ITRAMAS, CMECWUXI, and Blueleaf Energy (part of Macquarie's Green Investment Group), the project supports Malaysia's National Energy Transition Roadmap. SD Guthrie Bhd, formerly known as Sime Darby Plantation Bhd, is building a 404.7ha industrial zone in Perak, with 267.1ha dedicated to solar generation under its net-zero roadmap. YTL Power is also advancing a 500MW solar-powered data centre campus in Kulai, Johor—a project valued at over RM20bil in collaboration with NVIDIA. Supporting these headline initiatives are waste-to-energy facilities in Selangor and Sarawak, alongside hydropower and floating solar projects. Still, it is essential to differentiate between green infrastructure and ESG-linked finance: The former delivers environmental outcomes, while the latter ties financial terms to measurable ESG performance targets. A greener financial future Looking ahead, green and ESG-linked finance is poised to reshape capital flows and corporate priorities. However, it is not without fault lines. Uneven disclosure standards, greenwashing, and a growing gap between ESG rhetoric and results threaten to erode trust. While Malaysia makes strides, the market still grapples with questions of depth, integrity and real impact. Investors are watching but so are sceptics. As ESG becomes a powerful lever for raising capital, the line between genuine sustainability and opportunistic branding is blurring. The question remains—are ESG labels financing a better future or simply financing business as usual under a greener name?
Business Recorder
08-07-2025
- Business
- Business Recorder
CDC facilitates ICMA international elections
KARACHI: Central Depository Company of Pakistan Limited (CDC) has successfully facilitated the Institute of Cost & Management Accountants of Pakistan (ICMA) International Branch Council Elections 2025. The elections were conducted seamlessly across six strategic locations-including Saudi Arabia, the United Arab Emirates, Karachi, Lahore, Multan, and Faisalabad-marking a milestone in cross-border digital governance. Held on a single day, the elections unified the ICMA International community through a secure, transparent, and fully digitised voting process. Leveraging CDC's robust digital infrastructure, the initiative exemplified how strategic technology partnerships can transform institutional governance-enabling professional bodies to operate with greater inclusivity, efficiency, and integrity. Electronic voting was made available through an enhanced, state-of-the-art e-Voting platform by CDC, accessible both online and via designated ICMA institute booths. Voters received real-time support throughout the process, ensuring accessibility and participation regardless of geography or technical familiarity. The platform was specifically upgraded to meet ICMA International's requirements, including the display of candidate names alongside photographs and built-in controls to ensure accurate ballot submissions aligned with the number of eligible candidates. CDC has been offering e-Voting service to multiple listed companies through its wholly-owned subsidiary CDC Share Registrar. Commenting on the achievement, Badiuddin Akber, CEO of CDC, has said that this successful execution reaffirms CDC's commitment to supporting democratic processes across diverse sectors. 'By enabling a cross-border election through secure and inclusive digital means, we continue to demonstrate the far-reaching impact of Pakistan's capital market infrastructure. Our vision extends beyond the conventional role of a depository—towards shaping institutional trust, accountability, and governance at every level', he added. This collaboration not only reflects CDC's technological leadership but also underscores its role as an enabler of institutional transparency, innovation, and inclusive governance. As the sole securities depository of Pakistan, CDC has continually expanded its mandate-introducing a range of transformative digital solutions including Emlaak Financials, Asaan Connect, eIPO, CDC Access, Dividend Repository, and e-Meeting. These platforms are designed to simplify investor access, digitize market processes, and enhance operational efficiency across the financial ecosystem. Anchored in trust, resilience, and forward-looking partnerships, CDC remains committed to building platforms that meet the evolving needs of stakeholders-both within and beyond the capital market. Copyright Business Recorder, 2025
Bahrain This Week
24-06-2025
- Business
- Bahrain This Week
Infracorp Unveils Bahrain's First Sustainable Sukuk at UN Workshop
Infracorp, a leading specialised company in investing in the infrastructure and sustainable development sector, has announced its participation in a United Nations workshop recently held in Bahrain to highlight the Kingdom's contribution to global efforts in financing sustainable development. The company presented its pioneering experience in issuing Bahrain's first sustainable sukuk. Infracorp took part in a panel discussion entitled 'Innovative Financing Instruments: SDG-Linked Bonds and Sukuk'. Ms. Zeeba Askar, Chief Sustainability and Investment Officer at Infracorp, delivered a presentation titled 'Bahrain's First Sustainable Sukuk'. She outlined the company's transition from green sukuk to a broader sustainable sukuk framework in line with international trends for financing projects with environmental and social impact. Ms. Askar confirmed that Infracorp's sustainable sukuk framework is fully aligned with the ICMA's Green, Social and Sustainability Bond Principles, supports Bahrain's Economic Vision 2030 and is consistent with the United Nations SDGs. She added that the framework's governance is underpinned by an independent, accredited external opinion to ensure transparency and credibility. The company has mapped key performance indicators, adopted a rigorous project-selection mechanism based on expected outcomes, and issues regular reports to measure each project's environmental and social impact. Commenting on the occasion, Ms Askar said: 'Our objective went beyond issuing a conventional finance instrument; it was about setting a standard for what a Sustainable Sukuk should represent. We carefully built a framework aligned with Bahrain's Economic Vision 2030 and the UN Sustainable Development Goals, with measurable KPIs mapped across every eligible project. The result is a Sukuk rooted in transparency, governed by rigor, and driven by real-world impact.' The workshop highlighted Bahrain's leading efforts in development finance, including Islamic finance, SDG-linked bonds and the fintech sector, ahead of the fourth International Conference on Financing for Development (FfD4), scheduled to take place in Seville, Spain, from June 30 to July 3, 2025. It brought together UN officials, public-sector representatives and private-sector partners to discuss the Kingdom's participation in the conference. FfD4 will serve as a pivotal platform to assess progress on global commitments to finance sustainable development and to address challenges that have emerged since the adoption of the Addis Ababa Action Agenda in 2015. The conference will gather high-level representatives from governments, international and regional organisations, financial and commercial institutions, the private sector, civil society and the United Nations system.
Biz Bahrain
12-06-2025
- Business
- Biz Bahrain
Infracorp Showcases the Kingdom's First Sustainable Sukuk
Infracorp, a leading specialised company in investing in the infrastructure and sustainable development sector, has announced its participation in a United Nations workshop recently held in Bahrain to highlight the Kingdom's contribution to global efforts in financing sustainable development. The company presented its pioneering experience in issuing Bahrain's first sustainable sukuk. Infracorp took part in a panel discussion entitled 'Innovative Financing Instruments: SDG-Linked Bonds and Sukuk'. Ms. Zeeba Askar, Chief Sustainability and Investment Officer at Infracorp, delivered a presentation titled 'Bahrain's First Sustainable Sukuk'. She outlined the company's transition from green sukuk to a broader sustainable sukuk framework in line with international trends for financing projects with environmental and social impact. Ms. Askar confirmed that Infracorp's sustainable sukuk framework is fully aligned with the ICMA's Green, Social and Sustainability Bond Principles, supports Bahrain's Economic Vision 2030 and is consistent with the United Nations SDGs. She added that the framework's governance is underpinned by an independent, accredited external opinion to ensure transparency and credibility. The company has mapped key performance indicators, adopted a rigorous project-selection mechanism based on expected outcomes, and issues regular reports to measure each project's environmental and social impact. Commenting on the occasion, Ms Askar said: 'Our objective went beyond issuing a conventional finance instrument; it was about setting a standard for what a Sustainable Sukuk should represent. We carefully built a framework aligned with Bahrain's Economic Vision 2030 and the UN Sustainable Development Goals, with measurable KPIs mapped across every eligible project. The result is a Sukuk rooted in transparency, governed by rigor, and driven by real-world impact.' The workshop highlighted Bahrain's leading efforts in development finance, including Islamic finance, SDG-linked bonds and the fintech sector, ahead of the fourth International Conference on Financing for Development (FfD4), scheduled to take place in Seville, Spain, from June 30 to July 3, 2025. It brought together UN officials, public-sector representatives and private-sector partners to discuss the Kingdom's participation in the conference. FfD4 will serve as a pivotal platform to assess progress on global commitments to finance sustainable development and to address challenges that have emerged since the adoption of the Addis Ababa Action Agenda in 2015. The conference will gather high-level representatives from governments, international and regional organisations, financial and commercial institutions, the private sector, civil society and the United Nations system.
