Opinion Towards PT Bukit Asam's Business Diversification

PT Bukit Asam's Slogan Beyond Coal 

I've watched a webinar that were talking about Indonesia's future energy management. Mr Arviyan Arifin as a President Director of PT Bukit Asam is one of panelist who gave a presentation about the company which he had been lead.

PT Bukit Asam is a coal mining company, but now, they’re expanding their business sector, not only in coal sector but also dealing with other energy infrastructure such as photovoltaics and waste-powered electricity generator. 

Diversification can rather be explained by the benefits of internal capital markets and barriers to business growth like market size and concentration. [1]

A old anonym English proverbs said, “don’t put all your eggs in one basket,”

The coordinated risk management hypothesis implies a negative relation between underwriting risk and investment risk [2]. So based with this hypothesis, I guess that diversified business just like this would be in more risk compared if they’re not diversifying their business.  

References

[1]            Thomas R. Berry‐Stölzle  Andre P. Liebenberg  Joseph S. Ruhland  David W. Sommer, Determinants of Corporate Diversification: Evidence From the Property–Liability Insurance Industry, The Journal Of Risk and Insurance, 20 June 2011, https://doi.org/10.1111/j.1539-6975.2011.01423.x

[2]            Catherine M. Schrand, Haluk Unal. Hedging and Coordinated Risk Management: Evidence From Thrift Conversions, January 1996