Delta Dunia completes acquisition of Atlantic Carbon

PT Delta Dunia Makmur, through American Anthracite SPV I, LLC, an entity controlled by PT Bukit Makmur Internasional (BUMA International), has completed the acquisition of Atlantic Carbon Group, Inc. (ACG) for USD 122.4 million.

With this move, Delta Dunia Group becomes the owner of four UHG anthracite mines in Pennsylvania (USA) and a key player in the global UHG anthracite market, which is crucial for the production of low-carbon steel (LC steel).

The agreement expands the Company’s operations from a mining services provider to a global mine owner. It diversifies the Group’s business into future-oriented commodities, allowing it to capitalize on opportunities in a key mining region. The acquisition of ACG also accelerates the Group’s strategy to diversify its geographic footprint and reduce its reliance on thermal coal in its revenue mix.

Atlantic Carbon Group is not only strategically important, but also serves as a value-adding acquisition for the Group in terms of valuation, leverage and earnings impact, while expanding relationships with key customers and stakeholders. The addition of ACG is expected to generate $120-130 million in Group revenues per year from 2024 to 2028. Furthermore, it significantly diversifies Delta Dunia Group’s revenue mix, increasing non-thermal revenue from 19 percent in FY2023 to 28 percent in FY2024, which is in line with the Group’s strategic objectives of reducing its dependence on thermal coal.

Ronald Sutardja, President and Director of Delta Dunia Group, said the acquisition represents a key milestone in the company’s strategic expansion and diversification efforts. The long life of the four active ACG mines, sufficient for more than 25 years of mining and capable of supporting production of up to 25 million tons of LC steel per year, combined with strong market demand for UHG anthracite.

“This acquisition positions us well for sustainable future growth. The acquisition enables ACG and BUMA’s operations in Indonesia and Australia, as well as our related businesses, to synergistically leverage their extensive experience, best practices and innovative approaches in safety, mining operations and management,” he said in a statement on Monday, July 1, 2024.

BUMA has a strong track record of integrating and growing portfolio companies post-acquisition and expects to do the same with ACG. Building on this capability, BUMA has significantly expanded its global footprint from Indonesia with the acquisition of BUMA Australia in 2021. Since then, BUMA has not only established a presence in one of the world’s leading mining hubs, but has also expanded its services portfolio to include metallurgical coal. This strategic expansion has resulted in BUMA Australia’s order book quadrupling by 2022, significantly improving the Group’s operational efficiency.

ACG, known for its strong market position, supported by strong anthracite demand and over 30 years of operational excellence, brings significant value to the Group. With 150 employees and an experienced management team, ACG has secured long-term contracts with industry leaders to support its growth.

The expansion into the US market enables the Group to meet the growing demand for UHG anthracite, which is essential for the production of electric arc furnaces (EAF) and LC steel. Anthracite exports from the US increased by 10.6 percent CAGR from FY14 to FY2023, with EAF furnaces driving future capacity expansions in the US and Europe.

China, the world’s largest steel producer, has also outlined plans to increase arc furnace production to 15 percent of total steel production by 2025 and then further increase that share to 20 percent by 2030. The UK and German governments are also promoting a shift from blast furnaces to arc furnaces, which will further boost demand for high-quality ACG anthracite.