KUALA LUMPUR: TAS Offshore Bhd (TOB) is confident of securing more tugboat contracts from Indonesia, as the country's coal mining sector is likely to increase demand for more tugboats, which are crucial in coal transportation.

Chairman Datu Mohammed Sepuan Anu said the rising natural gas prices had intensified gas-to-coal switching in many countries. India's economic expansion is supporting the world's coal consumption this year.

He said that Indonesia, which exports the most coal globally in tonnage, has benefited the most from the global race for coal.

According to an International Energy Agency (IEA) report, global coal demand will return to its all-time high in 2022. Despite all the negativity, Indonesian coal producers are looking to seize this opportunity to take advantage of rising demand and surging prices.

"Our company is looking forward to reaping further benefits from this development," he said in the annual report filed to Bursa Malaysia.

Sarawak-based TOB is involved in shipbuilding operations, construction of tugboats for the mineral ore industries, harbour tugs for port operations and landing crafts that various industries can use for transportation.

The company's shipbuilding generates about 98.01 per cent of the revenue, while ship repair activities contribute approximately 0.76 per cent of the financial year (FY) 2022 revenue.

TOB recorded revenues of RM57.50 million for FY22, an increase of RM22.60 million or 64.74 per cent as compared to RM34.90

million recorded for FY21.

The increase in revenue was mainly attributed to the increase in the number of vessels being delivered.

The loss before tax for FY22 stood at RM0.81 million, compared to a profit of RM2.83 million for FY21.

Moving on to challenges, TOB noted that concerns about the environmental impacts of coal combustion, including perceived implications for global climate change, have resulted in increased coal combustion regulations in many countries.

Further, the increased adoption of renewable energy-based power plants will likely hurt the coal market in the long run.

However, there is a rise in Indonesia's nickel supply whereby the country could reach 60 per cent of the global nickel supply by 2025 compared with 30 per cent in 2020, according to Macquarie Group Ltd analyst Jim Lennon.

Nickel demand for batteries used in electric vehicles is growing rapidly. UK-based energy research and consultancy company Wood Mackenzie estimates the world will need an additional 1.65 million tonnes of nickel between 2026 to 2038, most of which is expected to come from Indonesia.

"Hence, we foresee the demand for tugboats will be sustainable as tugboats are essential for inter-island transportation of bulk materials in Indonesia," Mohammed Sepuan said.

Demand for coal in India, the world's second-biggest coal importer, is expected to rise almost 10 per cent by the end of 2022 as the country's economy expands and electricity use increases.

Markets were tight even before the Ukraine war as soaring natural gas prices in Europe and Asia in late 2021 intensified gas-to-coal switching in many countries.

According to the Indonesia Coal Mining Association (APBI), the government has approved increasing coal production amid surging demand and persistent supply disruptions exacerbated by the war in Eastern Europe.

TOB also noted that, given the expected recovery of the global economy, the company is actively prospecting new clients from new market segments to add to its customer base to enhance sales growth and profitability.

"Overall, the company is positive about our ability to remain resilient during these challenging times," he said.