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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, 21 October 20
INDIA: THE COMMERCIALISATION OF COAL BLOCKS WILL BENEFIT THE ECONOMY - HINDU BUSINESS LINE
As the government of India receives 76 bids for 23 coal mines against the 38 up on auction, what does this commercialisation of coal block allocati ...
Wednesday, 21 October 20
MARKET INSIGHT - INTERMODAL
The second wave of COVID-19 is now a reality; offices are closing again, and stricter rules and regulations are being implemented in public spaces. ...
Tuesday, 20 October 20
CHINA TAIYUAN COAL TRANSACTION PRICE INDEX UP 0.82 PCT - XINHUA
China Taiyuan coal transaction price index stood at 127.49 points Monday, up 0.82 percent week on week.
The index, released by China ...
Tuesday, 20 October 20
BIMCO 'SHIPLEASE' TERM SHEET - WATSON FARLEY & WILLIAMS
KNOWLEDGE TO ELEVATE
The ever-growing importance of sale and leaseback transactions as an alternative to financing ships by way of loan, makes ...
Friday, 16 October 20
KOMIPO ON BEHALF OF K GENCO'S INVITED BIDS FOR TOTAL 715,000 MT MIN. 5,700 NAR COAL FOR DECEMBER
COALspot.com: Korea Midland Power Co., Ltd (KOMIPO) on behalf of EWP, KOSPO, KOSEP and KOWEPO has issued an international tender for total 715,000& ...
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- PTC India Limited - India
- Riau Bara Harum - Indonesia
- San Jose City I Power Corp, Philippines
- Sakthi Sugars Limited - India
- Siam City Cement PLC, Thailand
- ICICI Bank Limited - India
- Indian Oil Corporation Limited
- Anglo American - United Kingdom
- Sree Jayajothi Cements Limited - India
- Intertek Mineral Services - Indonesia
- Makarim & Taira - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Asmin Koalindo Tuhup - Indonesia
- Merrill Lynch Commodities Europe
- Karbindo Abesyapradhi - Indoneisa
- Maharashtra Electricity Regulatory Commission - India
- Indika Energy - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Sical Logistics Limited - India
- Videocon Industries ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Port Waratah Coal Services - Australia
- Globalindo Alam Lestari - Indonesia
- Thai Mozambique Logistica
- Madhucon Powers Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- European Bulk Services B.V. - Netherlands
- Ambuja Cements Ltd - India
- Directorate Of Revenue Intelligence - India
- Straits Asia Resources Limited - Singapore
- Sinarmas Energy and Mining - Indonesia
- Petron Corporation, Philippines
- Formosa Plastics Group - Taiwan
- Sindya Power Generating Company Private Ltd
- Bukit Asam (Persero) Tbk - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Semirara Mining and Power Corporation, Philippines
- Borneo Indobara - Indonesia
- Interocean Group of Companies - India
- Indian Energy Exchange, India
- London Commodity Brokers - England
- Minerals Council of Australia
- Georgia Ports Authority, United States
- Samtan Co., Ltd - South Korea
- GMR Energy Limited - India
- CNBM International Corporation - China
- Star Paper Mills Limited - India
- Bhushan Steel Limited - India
- Bangladesh Power Developement Board
- Therma Luzon, Inc, Philippines
- MS Steel International - UAE
- Grasim Industreis Ltd - India
- Oldendorff Carriers - Singapore
- Rio Tinto Coal - Australia
- AsiaOL BioFuels Corp., Philippines
- Xindia Steels Limited - India
- Bulk Trading Sa - Switzerland
- Kalimantan Lumbung Energi - Indonesia
- Orica Australia Pty. Ltd.
- Karaikal Port Pvt Ltd - India
- Chamber of Mines of South Africa
- Binh Thuan Hamico - Vietnam
- Bank of Tokyo Mitsubishi UFJ Ltd
- Global Green Power PLC Corporation, Philippines
- Wilmar Investment Holdings
- Renaissance Capital - South Africa
- Thiess Contractors Indonesia
- Electricity Generating Authority of Thailand
- McConnell Dowell - Australia
- Australian Commodity Traders Exchange
- Semirara Mining Corp, Philippines
- Coal and Oil Company - UAE
- Miang Besar Coal Terminal - Indonesia
- IEA Clean Coal Centre - UK
- Mintek Dendrill Indonesia
- GAC Shipping (India) Pvt Ltd
- Kumho Petrochemical, South Korea
- Dalmia Cement Bharat India
- Edison Trading Spa - Italy
- Commonwealth Bank - Australia
- Ministry of Transport, Egypt
- Vizag Seaport Private Limited - India
- Kaltim Prima Coal - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Sarangani Energy Corporation, Philippines
- Africa Commodities Group - South Africa
- Altura Mining Limited, Indonesia
- OPG Power Generation Pvt Ltd - India
- Tata Chemicals Ltd - India
- Goldman Sachs - Singapore
- Lanco Infratech Ltd - India
- Marubeni Corporation - India
- Jorong Barutama Greston.PT - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- LBH Netherlands Bv - Netherlands
- Mjunction Services Limited - India
- Carbofer General Trading SA - India
- Deloitte Consulting - India
- Metalloyd Limited - United Kingdom
- Planning Commission, India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Ceylon Electricity Board - Sri Lanka
- Toyota Tsusho Corporation, Japan
- Banpu Public Company Limited - Thailand
- Timah Investasi Mineral - Indoneisa
- Krishnapatnam Port Company Ltd. - India
- PetroVietnam Power Coal Import and Supply Company
- Coalindo Energy - Indonesia
- Indo Tambangraya Megah - Indonesia
- Romanian Commodities Exchange
- Bahari Cakrawala Sebuku - Indonesia
- Indogreen Group - Indonesia
- Essar Steel Hazira Ltd - India
- Antam Resourcindo - Indonesia
- Power Finance Corporation Ltd., India
- White Energy Company Limited
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- VISA Power Limited - India
- Maheswari Brothers Coal Limited - India
- Iligan Light & Power Inc, Philippines
- The Treasury - Australian Government
- Tamil Nadu electricity Board
- Eastern Energy - Thailand
- Kartika Selabumi Mining - Indonesia
- Kobexindo Tractors - Indoneisa
- Jaiprakash Power Ventures ltd
- Cement Manufacturers Association - India
- Ind-Barath Power Infra Limited - India
- Bayan Resources Tbk. - Indonesia
- SMC Global Power, Philippines
- Economic Council, Georgia
- Trasteel International SA, Italy
- Energy Link Ltd, New Zealand
- Meralco Power Generation, Philippines
- CIMB Investment Bank - Malaysia
- Simpson Spence & Young - Indonesia
- Central Java Power - Indonesia
- IHS Mccloskey Coal Group - USA
- Siam City Cement - Thailand
- Bharathi Cement Corporation - India
- Malabar Cements Ltd - India
- Meenaskhi Energy Private Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Mercator Lines Limited - India
- Jindal Steel & Power Ltd - India
- Central Electricity Authority - India
- Agrawal Coal Company - India
- The State Trading Corporation of India Ltd
- Bhoruka Overseas - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Global Coal Blending Company Limited - Australia
- Attock Cement Pakistan Limited
- Bhatia International Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Independent Power Producers Association of India
- Gujarat Sidhee Cement - India
- SMG Consultants - Indonesia
- Larsen & Toubro Limited - India
- Medco Energi Mining Internasional
- GVK Power & Infra Limited - India
- Kepco SPC Power Corporation, Philippines
- Singapore Mercantile Exchange
- Wood Mackenzie - Singapore
- Neyveli Lignite Corporation Ltd, - India
- The University of Queensland
- ASAPP Information Group - India
- Aditya Birla Group - India
- South Luzon Thermal Energy Corporation
- Pendopo Energi Batubara - Indonesia
- Barasentosa Lestari - Indonesia
- Parliament of New Zealand
- Vijayanagar Sugar Pvt Ltd - India
- Eastern Coal Council - USA
- New Zealand Coal & Carbon
- Billiton Holdings Pty Ltd - Australia
- Sojitz Corporation - Japan
- Coastal Gujarat Power Limited - India
- Ministry of Finance - Indonesia
- Parry Sugars Refinery, India
- Salva Resources Pvt Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Price Waterhouse Coopers - Russia
- Savvy Resources Ltd - HongKong
- GN Power Mariveles Coal Plant, Philippines
- PowerSource Philippines DevCo
- Gujarat Mineral Development Corp Ltd - India
- PNOC Exploration Corporation - Philippines
- Posco Energy - South Korea
- Ministry of Mines - Canada
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Leighton Contractors Pty Ltd - Australia
- International Coal Ventures Pvt Ltd - India
- Kideco Jaya Agung - Indonesia
- Orica Mining Services - Indonesia
- Australian Coal Association
- Electricity Authority, New Zealand
- SN Aboitiz Power Inc, Philippines
- Bukit Makmur.PT - Indonesia
- Global Business Power Corporation, Philippines
- Rashtriya Ispat Nigam Limited - India
- Heidelberg Cement - Germany
- Latin American Coal - Colombia
- Indonesian Coal Mining Association
- Cigading International Bulk Terminal - Indonesia
- Uttam Galva Steels Limited - India
- Standard Chartered Bank - UAE
- Bukit Baiduri Energy - Indonesia
- Vedanta Resources Plc - India
- Aboitiz Power Corporation - Philippines
- Baramulti Group, Indonesia
- India Bulls Power Limited - India
- Mercuria Energy - Indonesia
- Energy Development Corp, Philippines
- TeaM Sual Corporation - Philippines
- Manunggal Multi Energi - Indonesia
- Chettinad Cement Corporation Ltd - India
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