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Tuesday, 11 June 13
COAL: NO SIGN OF RECOVERY - GABRIELLA
 COALspot.com: We attended the 19th Annual Coaltrans Asia Conference, where we found most of the speakers were not very optimistic on the outlook for coal mining in the months ahead. The main concern is abundant supply outreaching demand growth.
We maintain an UNDERWEIGHT recommendation on the sector.
However, for investors still seeking some exposure to the coal mining sector, PTBA is a solid defensive play given:
1) its low cost structure and defensive earnings,
2) its abundant reserves supporting strong production growth and
3) its strong balance sheet. Going forward, we foresee further declines in EPS due to continued depressed coal prices which will result in lower Target Prices from current levels. Below are some key takeaways:
Coal Mining Conditions in Indonesia as the biggest exporter
As of May 2013, Indonesia’s coal resources amounted to 159bn tons with coal reserves of 32bn tons – about 3% of the world’s coal reserves. Presently, there are 76 Coal Agreements (PKP2B) and 3,892 coal licenses (IUP). Most of them are for operations in Kalimantan and Sumatra. The majority are in Kalimantan which has 61 PKP2B (80%) and 2,670 IUP (69%). All in all, Kalimantan accounts for around 90% of the total national coal production. Most of the IUP (around 80%) are at the exploration stage with the rest in the production stage. There are problems with around 400 IUP. Most of the coal production is undertaken by coal agreement holders and SOE (which account for around 70% of the national coal production).
Fuelling Indonesia’s domestic coal demand: an additional 55GW of power generation capacity
Indonesia’s electricity demand growth is still high (9.4% per year), with PLN, the state electricity company as the biggest coal buyer in Indonesia (66mn tons in 2013). PLN has stated that electricity supply in Indonesia will continue to rely on coal fired power plants (CFPP) for at least the next 10 years given the relatively cheap production costs involved. By 2020, PLN expects total additional power generation capacity to reach 55GW (PLN: 31GW, IPP: 24GW). Of this amount, 35GW or 65% is expected to come from coal power plants translating into additional coal demand of around 100mn tons p.a.
China’s Coal Import Restrictions: 50mn tons from Indonesia
From 2010 to 2012, China’s thermal coal imports increased each year, more than doubling from 71mn tons to 155mn tons, with Indonesia’s thermal coal amounting to 54% of the total in 2012. This year, China is expected to import 380mn tons of coal in total (+31% or half last year’s growth rate). One of the hot issues being discussed was China’s coal import restrictions stipulating: 1) a minimum CV of 3,750kcal/kg (NAR), 2) maximum sulphur content of 2% and 3) maximum ash content of 25%. Around 30% of China’s steam coal imports - or about 50mn tons coming from Indonesia - were lignite. India would benefit from China implementing an imports ban as it would mean lower prices. In 1Q13, however, China’s coal imports still showed an increase of 30% yoy.
Future of Indonesia’s low rank coal
The government seeks a greater role for domestic coal, especially in LRC (mine mouth power plants, gasification, liquefaction). Indonesia has abundant low rank coal resources, accounting for 40% of Indonesia’s total resources, with medium and high rank coal accounting for about 50% and 10%, respectively. There is a need to foster greater international cooperation to develop the technology for the utilization of low rank coal for domestic needs by implementing Clean Coal Technologies with build operate transfer schemes (BOT schemes) to improve calorific value and efficiency.
A Challenging Outlook
The outlook for coal mining will remain challenging, in our view, given the currently depressed coal prices (down 5% average YTD) and persistent global economic headwinds. China and India combined account for more than 30% of the world’s seaborne import volume. Their dominance is expected to continue with potential growth seen in India. Environmental and Regulatory issues will limit coal imports growth, however, as reflected in China’s draft proposal for a ban on imports and the current development of Hydropower and Nuclear generation.
Adding to the woes, Indonesia’s new draft regulation (increasing coal royalties, export quotas) has worsened the investment climate for coal producers in the country.
The author of this article Ms. Maureen Natasha, an equity analyst in PT Danareksa Sekuritas. Danareksa is a pioneering Indonesian financial institution and was the first to introduce mutual funds in Indonesia. It was also the first to launch a US Dollar-denominated fixed-income fund and promote syariah-based investments. Today, Danareksa is the only local company to offer direct market access services to clients worldwide and has grown to become the company that has underwritten the most equity and debt placements in Indonesia.
Views and opinions / conclusion expressed herein are personal views of the author and not that of COALspot.com. This article is subject to disclaimer terms of PT. Danareksa Sekuritas.
If you believe an article violates your rights or the rights of others, please contact us.
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Wednesday, 22 November 23
INDIA: GOVERNMENT PLANS 1.4 BILLION TONNE COAL OUTPUT BY 2027 - LIVEMINT
The Union coal ministry on Monday announced plans to increase India’s coal production to 1.404 billion tonne by 2027, with an eye to further ...
Wednesday, 22 November 23
OBLIGATION. INDONESIA AIMS TO START COLLECTING LEVIES FROM COAL MINERS IN JANUARY - REUTERS
Indonesia plans to start collecting levies from coal miners in January to be used to compensate miners who sell coal to the state utility at lower ...
Tuesday, 21 November 23
INDIAN COAL POWER PLANTS’ CAPACITY UTILISATION WILL IMPROVE TO 65% THIS FISCAL: - CRISIL
Coal-based thermal power units’ plant load factor (PLF) or capacity utilisation will improve to 65 percent in the current fiscal year despite ...
Tuesday, 14 November 23
CAPITAL PRODUCT PARTNERS L.P. ANNOUNCES TRANSFORMATIVE TRANSACTION INCLUDING THE ACQUISITION OF 11 NEWBUILD LNG CARRIERS FOR $3.1 BILLION
Capital Product Partners L.P. announced that it has entered into an umbrella agreement (the “Umbrella Agreement”) with Capital Maritime ...
Tuesday, 14 November 23
COAL INDIA BEATS Q2 PROFIT VIEW ON HIGH POWER DEMAND AMID WEAK MONSOON - REUTERS
Coal India on Friday reported better-than-expected second-quarter profit, helped by high power demand and boosted production amid a weak monsoon.
...
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- Simpson Spence & Young - Indonesia
- Indian Energy Exchange, India
- Aboitiz Power Corporation - Philippines
- Kapuas Tunggal Persada - Indonesia
- Binh Thuan Hamico - Vietnam
- Salva Resources Pvt Ltd - India
- Global Coal Blending Company Limited - Australia
- Madhucon Powers Ltd - India
- Posco Energy - South Korea
- Leighton Contractors Pty Ltd - Australia
- Kumho Petrochemical, South Korea
- PetroVietnam Power Coal Import and Supply Company
- Jaiprakash Power Ventures ltd
- Indian Oil Corporation Limited
- Africa Commodities Group - South Africa
- McConnell Dowell - Australia
- Gujarat Electricity Regulatory Commission - India
- Mercator Lines Limited - India
- Alfred C Toepfer International GmbH - Germany
- Sojitz Corporation - Japan
- GN Power Mariveles Coal Plant, Philippines
- Xindia Steels Limited - India
- Energy Link Ltd, New Zealand
- Sakthi Sugars Limited - India
- SMC Global Power, Philippines
- PTC India Limited - India
- Larsen & Toubro Limited - India
- Australian Coal Association
- Bayan Resources Tbk. - Indonesia
- Ministry of Finance - Indonesia
- Kobexindo Tractors - Indoneisa
- Directorate Of Revenue Intelligence - India
- Bharathi Cement Corporation - India
- Marubeni Corporation - India
- The Treasury - Australian Government
- CNBM International Corporation - China
- Meenaskhi Energy Private Limited - India
- Miang Besar Coal Terminal - Indonesia
- Karaikal Port Pvt Ltd - India
- International Coal Ventures Pvt Ltd - India
- Gujarat Sidhee Cement - India
- Semirara Mining Corp, Philippines
- Mercuria Energy - Indonesia
- Minerals Council of Australia
- Energy Development Corp, Philippines
- Ministry of Mines - Canada
- Kideco Jaya Agung - Indonesia
- PNOC Exploration Corporation - Philippines
- Therma Luzon, Inc, Philippines
- Uttam Galva Steels Limited - India
- Latin American Coal - Colombia
- Oldendorff Carriers - Singapore
- Holcim Trading Pte Ltd - Singapore
- Indonesian Coal Mining Association
- Tamil Nadu electricity Board
- Kartika Selabumi Mining - Indonesia
- Intertek Mineral Services - Indonesia
- Bukit Makmur.PT - Indonesia
- Altura Mining Limited, Indonesia
- Cement Manufacturers Association - India
- Kaltim Prima Coal - Indonesia
- Bukit Baiduri Energy - Indonesia
- Ministry of Transport, Egypt
- Savvy Resources Ltd - HongKong
- Petrochimia International Co. Ltd.- Taiwan
- Siam City Cement - Thailand
- Bulk Trading Sa - Switzerland
- Ind-Barath Power Infra Limited - India
- Electricity Authority, New Zealand
- The University of Queensland
- Central Electricity Authority - India
- MS Steel International - UAE
- Ceylon Electricity Board - Sri Lanka
- Parliament of New Zealand
- India Bulls Power Limited - India
- AsiaOL BioFuels Corp., Philippines
- Sindya Power Generating Company Private Ltd
- Metalloyd Limited - United Kingdom
- Mintek Dendrill Indonesia
- Sinarmas Energy and Mining - Indonesia
- San Jose City I Power Corp, Philippines
- GAC Shipping (India) Pvt Ltd
- Thai Mozambique Logistica
- Gujarat Mineral Development Corp Ltd - India
- Petron Corporation, Philippines
- Manunggal Multi Energi - Indonesia
- Pendopo Energi Batubara - Indonesia
- New Zealand Coal & Carbon
- Bukit Asam (Persero) Tbk - Indonesia
- Malabar Cements Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Eastern Coal Council - USA
- Heidelberg Cement - Germany
- Vedanta Resources Plc - India
- South Luzon Thermal Energy Corporation
- Directorate General of MIneral and Coal - Indonesia
- IHS Mccloskey Coal Group - USA
- Kepco SPC Power Corporation, Philippines
- Rashtriya Ispat Nigam Limited - India
- Aditya Birla Group - India
- OPG Power Generation Pvt Ltd - India
- Videocon Industries ltd - India
- Edison Trading Spa - Italy
- Electricity Generating Authority of Thailand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Coalindo Energy - Indonesia
- Samtan Co., Ltd - South Korea
- Semirara Mining and Power Corporation, Philippines
- ASAPP Information Group - India
- Chettinad Cement Corporation Ltd - India
- Central Java Power - Indonesia
- Interocean Group of Companies - India
- Rio Tinto Coal - Australia
- Thiess Contractors Indonesia
- Commonwealth Bank - Australia
- Orica Australia Pty. Ltd.
- Bank of Tokyo Mitsubishi UFJ Ltd
- Star Paper Mills Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Bhushan Steel Limited - India
- Deloitte Consulting - India
- Wilmar Investment Holdings
- Standard Chartered Bank - UAE
- Eastern Energy - Thailand
- Goldman Sachs - Singapore
- Power Finance Corporation Ltd., India
- Formosa Plastics Group - Taiwan
- Romanian Commodities Exchange
- SN Aboitiz Power Inc, Philippines
- Attock Cement Pakistan Limited
- The State Trading Corporation of India Ltd
- Bhoruka Overseas - Indonesia
- Vizag Seaport Private Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Singapore Mercantile Exchange
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Baramulti Group, Indonesia
- Independent Power Producers Association of India
- Grasim Industreis Ltd - India
- London Commodity Brokers - England
- Orica Mining Services - Indonesia
- SMG Consultants - Indonesia
- Iligan Light & Power Inc, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Meralco Power Generation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Asmin Koalindo Tuhup - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Chamber of Mines of South Africa
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- GMR Energy Limited - India
- Bangladesh Power Developement Board
- Anglo American - United Kingdom
- Tata Chemicals Ltd - India
- Port Waratah Coal Services - Australia
- Krishnapatnam Port Company Ltd. - India
- Billiton Holdings Pty Ltd - Australia
- Medco Energi Mining Internasional
- Sree Jayajothi Cements Limited - India
- Maheswari Brothers Coal Limited - India
- Carbofer General Trading SA - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Dalmia Cement Bharat India
- Ambuja Cements Ltd - India
- Global Business Power Corporation, Philippines
- Economic Council, Georgia
- Merrill Lynch Commodities Europe
- Karbindo Abesyapradhi - Indoneisa
- Riau Bara Harum - Indonesia
- PowerSource Philippines DevCo
- Renaissance Capital - South Africa
- Jindal Steel & Power Ltd - India
- Barasentosa Lestari - Indonesia
- Mjunction Services Limited - India
- Planning Commission, India
- ICICI Bank Limited - India
- Timah Investasi Mineral - Indoneisa
- Sical Logistics Limited - India
- Bhatia International Limited - India
- TeaM Sual Corporation - Philippines
- Coal and Oil Company - UAE
- White Energy Company Limited
- Trasteel International SA, Italy
- Indogreen Group - Indonesia
- Sarangani Energy Corporation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Borneo Indobara - Indonesia
- Price Waterhouse Coopers - Russia
- GVK Power & Infra Limited - India
- Cigading International Bulk Terminal - Indonesia
- LBH Netherlands Bv - Netherlands
- Globalindo Alam Lestari - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Lanco Infratech Ltd - India
- Indo Tambangraya Megah - Indonesia
- Banpu Public Company Limited - Thailand
- Makarim & Taira - Indonesia
- Straits Asia Resources Limited - Singapore
- CIMB Investment Bank - Malaysia
- European Bulk Services B.V. - Netherlands
- Jorong Barutama Greston.PT - Indonesia
- Australian Commodity Traders Exchange
- Siam City Cement PLC, Thailand
- Parry Sugars Refinery, India
- Toyota Tsusho Corporation, Japan
- Bahari Cakrawala Sebuku - Indonesia
- Global Green Power PLC Corporation, Philippines
- Georgia Ports Authority, United States
- Pipit Mutiara Jaya. PT, Indonesia
- IEA Clean Coal Centre - UK
- Indika Energy - Indonesia
- Agrawal Coal Company - India
- Essar Steel Hazira Ltd - India
- Coastal Gujarat Power Limited - India
- Antam Resourcindo - Indonesia
- VISA Power Limited - India
- Wood Mackenzie - Singapore
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