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Though coal is the most carbon-intensive fossil fuel, it accounts for around a third of global electricity generation, according to the International Energy Agency (IEA). Demand for coal has been rising in Asia, with the three largest coal producers—China, India, and Indonesia—producing record amounts in 2022. Particularly, in Indonesia, increased electrification and new coal-fired power plants ensure the demand for coal. One company that benefits from this demand is Singapore Exchange (SGX)-listed Resources Global Development (SGX: QSD). Listed on the Catalist in January 2020, Resources Global Development (RGD) engages in procuring thermal coal from coal mines located in South Kalimantan for sale to primarily domestic coal traders operating in various industries like nickel smelting and cement manufacturing. RSD also operates coal shipping services, such as chartering services and transshipment services, between coal mines located in South Kalimantan and the Java and Sulawesi islands in Indonesia. As of February 2024, RSD owns a fleet of 22 vessels, comprising 21 tugboats and one bulk carrier, with a further 9 more vessels to progressively roll out by the end of 2024. Here are 5 things to know about RSD if you are interested in the energy sector. We provide chartering and transshipment services to our customers. Our 22 vessels (21 sets of Tug and Barge, and 1 Bulk Carrier), ply the Indonesian waters. Apart from coal, we also ship other commodities such as sand, bauxite, nickel and granite. As our focus is currently within Indonesia, we are directly correlated to the demand and supply of the local shipping market, instead of the global shipping market. One factor driving our profitability is that our Trading and Shipping businesses are complementary in nature. This allows us to derive cost efficiencies and extract more value from the supply chain. Source: SGX–The process of RGD’s chartering and transshipment services to Indonesia. By diversifying into coal mining, we are adding another synergistic income pillar and creating a vertically integrated business model. The acquisition will also further strengthen our existing Trading and Shipping businesses. This is because our growing number of vessels can be deployed to transport coal from our coal mines to our customers. This inhouse cargo capability will not only create revenue synergies but also set us apart from our peers. The vertical integration will also allow us to derive economies of scale for our operations. Indonesia aims to establish itself as a leading manufacturing centre for electric vehicles (EV) and batteries, with nickel playing a pivotal role in this strategic initiative. We are a proxy to the country’s growing EV production, which is fueling coal demand. Our customers currently supply coal to nickel smelters. Additionally, Indonesia is a resource-rich country. With its ambition to be a hub for EV manufacturing, the movement of different resources such as coal, bauxite, cobalt and copper (which are important components of EV batteries) within the Indonesian archipelago is expected to increase, benefitting our Shipping business. Our operations and growth are mainly funded using cash generated internally from operations, while a small portion from short-term loans. Movement of interest rates are therefore very well managed. We have also explored other fund-raising options, for example, the upcoming Placement. We look forward to commence production at our coal mines, estimated to be towards the later part of 2024, subject to weather conditions. By then, our two engines of growth will drive us forward. For Shipping, 9 more sets of tugboat and barge will be rolled out in 2024, which will in turn raise our carrying capacity by a further 30% to around 300,000 DWT. For coal handling (which involves both coal mining and trading), the estimated proven and probable reserves of 162 million tonnes at our mines will also augment our growth. It's free! Don't miss out on the latest financial market movements. FSMOne aims to help investors around the world invest globally and profitably, follow for bite-sized finance analyses and exclusive happenings.