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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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Thursday, 10 September 20
U.S. COAL PRODUCTION IN 2020 TO BE 511 MMST, 28 PER CENT LOWER THAN IN 2019 - EIA
EIA expects total U.S. coal production in 2020 to be 511 million short tons (MMst), 194 MMst (28%) lower than in 2019. Mitigation efforts related t ...
Thursday, 10 September 20
DRY BULK SHIPPING: CHINA'S DEMAND KEEPING THE DRY BULK MARKET GOING - PETER SAND | BIMCO
Overview
An impressive recovery in Chinese dry bulk imports has protected the industry from the effects of falling demand in the rest of the wo ...
Thursday, 10 September 20
TANKER SHIPPING: FREIGHT RATES BACK AT LOSS-MAKING LEVELS AFTER 12 VERY PROFITABLE MONTHS - BIMCO
Overview
A stunningly strong 12 months for the tanker shipping industry is now being replaced by lower freight rates, as lower oil product ...
Thursday, 10 September 20
INDIA'S COAL IMPORTS STUMBLE IN AUGUST, RAISING RISK OF SLOW RECOVERY - REFINITIV | BANCHERO COSTA
After posting a mild recovery in July, India's coal imports have stumbled in August as the South Asian nation battles to restart it ...
Thursday, 10 September 20
THE FIRST 8 MONTHS OF 2020, INDONESIA EXPORTED 217.4 MLN TONNES OF COAL BASED ON REFINITIV - BANCHERO COSTA
The coal market has been hit by a weaker global economy as a result of COVID-19 pandemic and falling industrial electricity demand ...
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- Madhucon Powers Ltd - India
- Siam City Cement - Thailand
- Globalindo Alam Lestari - Indonesia
- Binh Thuan Hamico - Vietnam
- AsiaOL BioFuels Corp., Philippines
- Ministry of Mines - Canada
- GMR Energy Limited - India
- IHS Mccloskey Coal Group - USA
- Orica Australia Pty. Ltd.
- PowerSource Philippines DevCo
- Indian Oil Corporation Limited
- Latin American Coal - Colombia
- Semirara Mining Corp, Philippines
- Lanco Infratech Ltd - India
- Marubeni Corporation - India
- Cigading International Bulk Terminal - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Siam City Cement PLC, Thailand
- Jorong Barutama Greston.PT - Indonesia
- Kideco Jaya Agung - Indonesia
- Sakthi Sugars Limited - India
- Bulk Trading Sa - Switzerland
- PNOC Exploration Corporation - Philippines
- VISA Power Limited - India
- Savvy Resources Ltd - HongKong
- Straits Asia Resources Limited - Singapore
- Intertek Mineral Services - Indonesia
- European Bulk Services B.V. - Netherlands
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Alfred C Toepfer International GmbH - Germany
- Indo Tambangraya Megah - Indonesia
- SMC Global Power, Philippines
- Ambuja Cements Ltd - India
- Mintek Dendrill Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- GAC Shipping (India) Pvt Ltd
- OPG Power Generation Pvt Ltd - India
- McConnell Dowell - Australia
- Deloitte Consulting - India
- Coalindo Energy - Indonesia
- ICICI Bank Limited - India
- Metalloyd Limited - United Kingdom
- Kalimantan Lumbung Energi - Indonesia
- Pendopo Energi Batubara - Indonesia
- Global Business Power Corporation, Philippines
- Holcim Trading Pte Ltd - Singapore
- Kaltim Prima Coal - Indonesia
- Tata Chemicals Ltd - India
- Economic Council, Georgia
- Sojitz Corporation - Japan
- Jaiprakash Power Ventures ltd
- Toyota Tsusho Corporation, Japan
- The University of Queensland
- Karbindo Abesyapradhi - Indoneisa
- Bangladesh Power Developement Board
- Offshore Bulk Terminal Pte Ltd, Singapore
- Australian Coal Association
- Cement Manufacturers Association - India
- Therma Luzon, Inc, Philippines
- The Treasury - Australian Government
- Energy Link Ltd, New Zealand
- Thiess Contractors Indonesia
- Medco Energi Mining Internasional
- Vijayanagar Sugar Pvt Ltd - India
- Gujarat Sidhee Cement - India
- Antam Resourcindo - Indonesia
- Trasteel International SA, Italy
- Heidelberg Cement - Germany
- TNB Fuel Sdn Bhd - Malaysia
- Wilmar Investment Holdings
- Jindal Steel & Power Ltd - India
- Bukit Makmur.PT - Indonesia
- Parry Sugars Refinery, India
- Romanian Commodities Exchange
- Coastal Gujarat Power Limited - India
- Krishnapatnam Port Company Ltd. - India
- Kobexindo Tractors - Indoneisa
- Formosa Plastics Group - Taiwan
- IEA Clean Coal Centre - UK
- Neyveli Lignite Corporation Ltd, - India
- Electricity Authority, New Zealand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Samtan Co., Ltd - South Korea
- Minerals Council of Australia
- Maheswari Brothers Coal Limited - India
- Ministry of Transport, Egypt
- Goldman Sachs - Singapore
- Banpu Public Company Limited - Thailand
- Manunggal Multi Energi - Indonesia
- India Bulls Power Limited - India
- Central Java Power - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Kartika Selabumi Mining - Indonesia
- Indika Energy - Indonesia
- GVK Power & Infra Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Standard Chartered Bank - UAE
- Essar Steel Hazira Ltd - India
- Star Paper Mills Limited - India
- Indogreen Group - Indonesia
- Commonwealth Bank - Australia
- Videocon Industries ltd - India
- Ceylon Electricity Board - Sri Lanka
- Bukit Baiduri Energy - Indonesia
- Directorate Of Revenue Intelligence - India
- Aditya Birla Group - India
- Kohat Cement Company Ltd. - Pakistan
- Meenaskhi Energy Private Limited - India
- Asmin Koalindo Tuhup - Indonesia
- London Commodity Brokers - England
- Uttam Galva Steels Limited - India
- Global Coal Blending Company Limited - Australia
- Kapuas Tunggal Persada - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Bhushan Steel Limited - India
- Planning Commission, India
- New Zealand Coal & Carbon
- Kumho Petrochemical, South Korea
- Renaissance Capital - South Africa
- Georgia Ports Authority, United States
- Energy Development Corp, Philippines
- Singapore Mercantile Exchange
- Australian Commodity Traders Exchange
- Anglo American - United Kingdom
- Interocean Group of Companies - India
- Larsen & Toubro Limited - India
- San Jose City I Power Corp, Philippines
- Xindia Steels Limited - India
- Sarangani Energy Corporation, Philippines
- Makarim & Taira - Indonesia
- Chamber of Mines of South Africa
- Billiton Holdings Pty Ltd - Australia
- The State Trading Corporation of India Ltd
- ASAPP Information Group - India
- Sinarmas Energy and Mining - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sindya Power Generating Company Private Ltd
- South Luzon Thermal Energy Corporation
- Port Waratah Coal Services - Australia
- Leighton Contractors Pty Ltd - Australia
- Timah Investasi Mineral - Indoneisa
- Aboitiz Power Corporation - Philippines
- Orica Mining Services - Indonesia
- Bharathi Cement Corporation - India
- Directorate General of MIneral and Coal - Indonesia
- Rio Tinto Coal - Australia
- Eastern Energy - Thailand
- Indian Energy Exchange, India
- Oldendorff Carriers - Singapore
- Iligan Light & Power Inc, Philippines
- Ind-Barath Power Infra Limited - India
- Indonesian Coal Mining Association
- Altura Mining Limited, Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Ministry of Finance - Indonesia
- Thai Mozambique Logistica
- Kepco SPC Power Corporation, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Petron Corporation, Philippines
- Bhatia International Limited - India
- Tamil Nadu electricity Board
- Agrawal Coal Company - India
- GN Power Mariveles Coal Plant, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bhoruka Overseas - Indonesia
- Sical Logistics Limited - India
- Wood Mackenzie - Singapore
- Coal and Oil Company - UAE
- Central Electricity Authority - India
- CNBM International Corporation - China
- Bank of Tokyo Mitsubishi UFJ Ltd
- Rashtriya Ispat Nigam Limited - India
- Chettinad Cement Corporation Ltd - India
- Barasentosa Lestari - Indonesia
- Global Green Power PLC Corporation, Philippines
- Vedanta Resources Plc - India
- Electricity Generating Authority of Thailand
- Dalmia Cement Bharat India
- Eastern Coal Council - USA
- Posco Energy - South Korea
- Miang Besar Coal Terminal - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Attock Cement Pakistan Limited
- Meralco Power Generation, Philippines
- Grasim Industreis Ltd - India
- MS Steel International - UAE
- CIMB Investment Bank - Malaysia
- Simpson Spence & Young - Indonesia
- Gujarat Electricity Regulatory Commission - India
- SN Aboitiz Power Inc, Philippines
- Carbofer General Trading SA - India
- Africa Commodities Group - South Africa
- Bayan Resources Tbk. - Indonesia
- Sree Jayajothi Cements Limited - India
- Riau Bara Harum - Indonesia
- Borneo Indobara - Indonesia
- Independent Power Producers Association of India
- Edison Trading Spa - Italy
- LBH Netherlands Bv - Netherlands
- Malabar Cements Ltd - India
- Mjunction Services Limited - India
- International Coal Ventures Pvt Ltd - India
- PTC India Limited - India
- Power Finance Corporation Ltd., India
- Parliament of New Zealand
- Salva Resources Pvt Ltd - India
- Merrill Lynch Commodities Europe
- TeaM Sual Corporation - Philippines
- SMG Consultants - Indonesia
- White Energy Company Limited
- Baramulti Group, Indonesia
- Price Waterhouse Coopers - Russia
- Gujarat Mineral Development Corp Ltd - India
- Mercuria Energy - Indonesia
- Vizag Seaport Private Limited - India
- Mercator Lines Limited - India
- Karaikal Port Pvt Ltd - India
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