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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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Tuesday, 14 November 23
CHINA'S BELT AND ROAD INITIATIVE TURNS AWAY FROM COAL - WOOD MACKENZIE
Ambitious, contentious and big spending, China’s Belt and Road Initiative (BRI) is 10 years old. In that time, China has splashed more than U ...
Friday, 10 November 23
THE COMMODITIES FEED: OIL UNDER PRESSURE - ING
Energy – Brent plummets
The oil market came under significant pressure yesterday. ICE Brent settled 4.19% lower on the day and ...
Friday, 10 November 23
COAL USE AT U.S. POWER PLANTS CONTINUES DOWNWARD SPIRAL; FULL IMPACT ON MINES TO BE FELT IN 2024 - IEEFA
This year, the use of coal by the U.S.’s power producers has been so anemic that the fuel has not achieved a 20% market share in any month so ...
Friday, 10 November 23
INDIA: NATIONAL COAL INDEX RISES 3.83 POINTS IN SEPTEMBER AMID HIGHER DEMAND - LIVEMINT
The National Coal Index (NCI) rose 3.83 points to 143.91 in September amid growing demand for coal.
The union coal ministry on Tuesd ...
Thursday, 09 November 23
WE'RE PRODUCING TOO MUCH COAL, OIL AND GAS, REPORT SAYS - WSJ
World leaders pledged in 2015 to reduce emissions in a combined effort to limit climate change.
Now they are stepping up production ...
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- GAC Shipping (India) Pvt Ltd
- Formosa Plastics Group - Taiwan
- Bhoruka Overseas - Indonesia
- Coal and Oil Company - UAE
- Madhucon Powers Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Marubeni Corporation - India
- Binh Thuan Hamico - Vietnam
- Indian Oil Corporation Limited
- Aboitiz Power Corporation - Philippines
- Ministry of Finance - Indonesia
- Bharathi Cement Corporation - India
- Makarim & Taira - Indonesia
- Bukit Baiduri Energy - Indonesia
- Heidelberg Cement - Germany
- Price Waterhouse Coopers - Russia
- Bangladesh Power Developement Board
- Sarangani Energy Corporation, Philippines
- Intertek Mineral Services - Indonesia
- MS Steel International - UAE
- Thiess Contractors Indonesia
- SN Aboitiz Power Inc, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Borneo Indobara - Indonesia
- TeaM Sual Corporation - Philippines
- Larsen & Toubro Limited - India
- The University of Queensland
- Kumho Petrochemical, South Korea
- Deloitte Consulting - India
- International Coal Ventures Pvt Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Trasteel International SA, Italy
- Bulk Trading Sa - Switzerland
- Electricity Authority, New Zealand
- Indonesian Coal Mining Association
- Siam City Cement - Thailand
- Rashtriya Ispat Nigam Limited - India
- Kobexindo Tractors - Indoneisa
- Australian Coal Association
- Singapore Mercantile Exchange
- LBH Netherlands Bv - Netherlands
- New Zealand Coal & Carbon
- Minerals Council of Australia
- Tamil Nadu electricity Board
- Parry Sugars Refinery, India
- CIMB Investment Bank - Malaysia
- PowerSource Philippines DevCo
- PetroVietnam Power Coal Import and Supply Company
- Maheswari Brothers Coal Limited - India
- Africa Commodities Group - South Africa
- Baramulti Group, Indonesia
- Global Coal Blending Company Limited - Australia
- Ceylon Electricity Board - Sri Lanka
- Kepco SPC Power Corporation, Philippines
- Sinarmas Energy and Mining - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Therma Luzon, Inc, Philippines
- Meenaskhi Energy Private Limited - India
- SMC Global Power, Philippines
- Posco Energy - South Korea
- Gujarat Mineral Development Corp Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Vijayanagar Sugar Pvt Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Wood Mackenzie - Singapore
- Holcim Trading Pte Ltd - Singapore
- ASAPP Information Group - India
- Parliament of New Zealand
- Asmin Koalindo Tuhup - Indonesia
- Latin American Coal - Colombia
- Samtan Co., Ltd - South Korea
- Kalimantan Lumbung Energi - Indonesia
- Sree Jayajothi Cements Limited - India
- Ministry of Transport, Egypt
- London Commodity Brokers - England
- Coalindo Energy - Indonesia
- Kideco Jaya Agung - Indonesia
- Kartika Selabumi Mining - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Semirara Mining and Power Corporation, Philippines
- Indika Energy - Indonesia
- Indogreen Group - Indonesia
- Semirara Mining Corp, Philippines
- Jindal Steel & Power Ltd - India
- Interocean Group of Companies - India
- Romanian Commodities Exchange
- Cement Manufacturers Association - India
- PNOC Exploration Corporation - Philippines
- Australian Commodity Traders Exchange
- Jaiprakash Power Ventures ltd
- OPG Power Generation Pvt Ltd - India
- Bhatia International Limited - India
- Central Java Power - Indonesia
- Edison Trading Spa - Italy
- Karaikal Port Pvt Ltd - India
- Attock Cement Pakistan Limited
- Agrawal Coal Company - India
- Globalindo Alam Lestari - Indonesia
- Mintek Dendrill Indonesia
- VISA Power Limited - India
- Carbofer General Trading SA - India
- Salva Resources Pvt Ltd - India
- South Luzon Thermal Energy Corporation
- Miang Besar Coal Terminal - Indonesia
- Dalmia Cement Bharat India
- Petron Corporation, Philippines
- Standard Chartered Bank - UAE
- Malabar Cements Ltd - India
- Commonwealth Bank - Australia
- Kaltim Prima Coal - Indonesia
- Economic Council, Georgia
- Energy Development Corp, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Bukit Makmur.PT - Indonesia
- Vedanta Resources Plc - India
- Iligan Light & Power Inc, Philippines
- San Jose City I Power Corp, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Leighton Contractors Pty Ltd - Australia
- Aditya Birla Group - India
- Mercator Lines Limited - India
- Gujarat Sidhee Cement - India
- Thai Mozambique Logistica
- Grasim Industreis Ltd - India
- ICICI Bank Limited - India
- Kapuas Tunggal Persada - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Alfred C Toepfer International GmbH - Germany
- Indo Tambangraya Megah - Indonesia
- Wilmar Investment Holdings
- Tata Chemicals Ltd - India
- Essar Steel Hazira Ltd - India
- Rio Tinto Coal - Australia
- Indian Energy Exchange, India
- Bahari Cakrawala Sebuku - Indonesia
- Eastern Energy - Thailand
- Simpson Spence & Young - Indonesia
- Ambuja Cements Ltd - India
- Bayan Resources Tbk. - Indonesia
- Uttam Galva Steels Limited - India
- GMR Energy Limited - India
- Star Paper Mills Limited - India
- Meralco Power Generation, Philippines
- Energy Link Ltd, New Zealand
- Mercuria Energy - Indonesia
- Siam City Cement PLC, Thailand
- Ministry of Mines - Canada
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Antam Resourcindo - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Merrill Lynch Commodities Europe
- Coastal Gujarat Power Limited - India
- Chamber of Mines of South Africa
- Metalloyd Limited - United Kingdom
- Toyota Tsusho Corporation, Japan
- Electricity Generating Authority of Thailand
- Bukit Asam (Persero) Tbk - Indonesia
- IHS Mccloskey Coal Group - USA
- Independent Power Producers Association of India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Medco Energi Mining Internasional
- Manunggal Multi Energi - Indonesia
- Mjunction Services Limited - India
- Orica Mining Services - Indonesia
- Orica Australia Pty. Ltd.
- Maharashtra Electricity Regulatory Commission - India
- Global Business Power Corporation, Philippines
- SMG Consultants - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Oldendorff Carriers - Singapore
- Chettinad Cement Corporation Ltd - India
- Lanco Infratech Ltd - India
- PTC India Limited - India
- Timah Investasi Mineral - Indoneisa
- Sical Logistics Limited - India
- Videocon Industries ltd - India
- Bhushan Steel Limited - India
- Ind-Barath Power Infra Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Savvy Resources Ltd - HongKong
- Power Finance Corporation Ltd., India
- The Treasury - Australian Government
- Riau Bara Harum - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Directorate Of Revenue Intelligence - India
- Port Waratah Coal Services - Australia
- IEA Clean Coal Centre - UK
- McConnell Dowell - Australia
- Altura Mining Limited, Indonesia
- White Energy Company Limited
- The State Trading Corporation of India Ltd
- Renaissance Capital - South Africa
- Jorong Barutama Greston.PT - Indonesia
- Global Green Power PLC Corporation, Philippines
- Pendopo Energi Batubara - Indonesia
- Straits Asia Resources Limited - Singapore
- Central Electricity Authority - India
- Barasentosa Lestari - Indonesia
- Goldman Sachs - Singapore
- Sakthi Sugars Limited - India
- Eastern Coal Council - USA
- European Bulk Services B.V. - Netherlands
- GVK Power & Infra Limited - India
- Vizag Seaport Private Limited - India
- Planning Commission, India
- CNBM International Corporation - China
- Anglo American - United Kingdom
- Xindia Steels Limited - India
- Sindya Power Generating Company Private Ltd
- Banpu Public Company Limited - Thailand
- India Bulls Power Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sojitz Corporation - Japan
- Georgia Ports Authority, United States
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