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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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Monday, 24 June 24
PHILIPPINES COAL SUPPLY ENOUGH UNTIL 2030 - PHILSTAR GLOBAL
The country’s existing coal-fired power plants are sufficient to ensure enough base load capacity in the next six years, Energy Secretary Rap ...
Friday, 14 June 24
NEXTDECADE, SAUDI ARAMCO SIGN 20-YEAR LNG SUPPLY DEAL - REUTERS
U.S. liquefied natural gas (LNG) provider NextDecade has signed a non-binding agreement with Saudi Aramco 2222.SE to supply 1.2 million tonnes per ...
Friday, 14 June 24
NEWBUILDING PRICES CLIMB 3% TO HIGHEST LEVEL IN 16 YEARS - NIELS RASMUSSEN
“Since the start of the year, newbuilding prices have risen 3% to their highest level since 2008. Compared to their most recent low in late 2 ...
Friday, 14 June 24
INDIA TARGETS HIGHER DOMESTIC COAL PRODUCTION, REDUCED IMPORTS: GOVT - REUTERS
India wants to reduce coal imports and increase domestic production, federal coal minister G. Kishan Reddy said on Thursday.
The cou ...
Thursday, 13 June 24
US LNG TO ASIA FOR POWER GENERATION EXPECTED TO CUT EMISSIONS VERSUS COAL - RYSTAD ENERGY
The value-chain emissions of liquified natural gas (LNG) are lower on average than for coal-fired power generation, even when the fuel is shipp ...
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- Bukit Makmur.PT - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Kobexindo Tractors - Indoneisa
- Australian Commodity Traders Exchange
- Altura Mining Limited, Indonesia
- Agrawal Coal Company - India
- Toyota Tsusho Corporation, Japan
- GAC Shipping (India) Pvt Ltd
- Coastal Gujarat Power Limited - India
- Borneo Indobara - Indonesia
- Jindal Steel & Power Ltd - India
- Global Green Power PLC Corporation, Philippines
- Intertek Mineral Services - Indonesia
- Karaikal Port Pvt Ltd - India
- Semirara Mining Corp, Philippines
- Central Java Power - Indonesia
- Bangladesh Power Developement Board
- Riau Bara Harum - Indonesia
- Parry Sugars Refinery, India
- SMG Consultants - Indonesia
- Attock Cement Pakistan Limited
- Tata Chemicals Ltd - India
- Salva Resources Pvt Ltd - India
- Indonesian Coal Mining Association
- OPG Power Generation Pvt Ltd - India
- SMC Global Power, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Australian Coal Association
- New Zealand Coal & Carbon
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Malabar Cements Ltd - India
- Lanco Infratech Ltd - India
- Chamber of Mines of South Africa
- CIMB Investment Bank - Malaysia
- Sarangani Energy Corporation, Philippines
- Coalindo Energy - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Bulk Trading Sa - Switzerland
- McConnell Dowell - Australia
- Holcim Trading Pte Ltd - Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- Directorate General of MIneral and Coal - Indonesia
- Marubeni Corporation - India
- Uttam Galva Steels Limited - India
- Dalmia Cement Bharat India
- Bharathi Cement Corporation - India
- Commonwealth Bank - Australia
- Indian Energy Exchange, India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- The State Trading Corporation of India Ltd
- Directorate Of Revenue Intelligence - India
- Ambuja Cements Ltd - India
- Sindya Power Generating Company Private Ltd
- Oldendorff Carriers - Singapore
- GN Power Mariveles Coal Plant, Philippines
- Kepco SPC Power Corporation, Philippines
- Sinarmas Energy and Mining - Indonesia
- IEA Clean Coal Centre - UK
- Singapore Mercantile Exchange
- Mercuria Energy - Indonesia
- Vizag Seaport Private Limited - India
- Mintek Dendrill Indonesia
- Star Paper Mills Limited - India
- Kartika Selabumi Mining - Indonesia
- The University of Queensland
- Vijayanagar Sugar Pvt Ltd - India
- Meralco Power Generation, Philippines
- Renaissance Capital - South Africa
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- CNBM International Corporation - China
- Central Electricity Authority - India
- Semirara Mining and Power Corporation, Philippines
- Siam City Cement PLC, Thailand
- Sakthi Sugars Limited - India
- Rio Tinto Coal - Australia
- London Commodity Brokers - England
- Wilmar Investment Holdings
- Kumho Petrochemical, South Korea
- Carbofer General Trading SA - India
- The Treasury - Australian Government
- Tamil Nadu electricity Board
- Offshore Bulk Terminal Pte Ltd, Singapore
- ASAPP Information Group - India
- Deloitte Consulting - India
- Siam City Cement - Thailand
- South Luzon Thermal Energy Corporation
- Straits Asia Resources Limited - Singapore
- Sical Logistics Limited - India
- Economic Council, Georgia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Ministry of Finance - Indonesia
- Savvy Resources Ltd - HongKong
- Medco Energi Mining Internasional
- Eastern Coal Council - USA
- Standard Chartered Bank - UAE
- Wood Mackenzie - Singapore
- Kaltim Prima Coal - Indonesia
- TeaM Sual Corporation - Philippines
- Kideco Jaya Agung - Indonesia
- Bhatia International Limited - India
- Independent Power Producers Association of India
- Heidelberg Cement - Germany
- Jaiprakash Power Ventures ltd
- Kapuas Tunggal Persada - Indonesia
- Gujarat Electricity Regulatory Commission - India
- GVK Power & Infra Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Georgia Ports Authority, United States
- Cigading International Bulk Terminal - Indonesia
- Planning Commission, India
- Baramulti Group, Indonesia
- Anglo American - United Kingdom
- Jorong Barutama Greston.PT - Indonesia
- Bukit Baiduri Energy - Indonesia
- Trasteel International SA, Italy
- Madhucon Powers Ltd - India
- San Jose City I Power Corp, Philippines
- Mjunction Services Limited - India
- Ministry of Transport, Egypt
- Miang Besar Coal Terminal - Indonesia
- India Bulls Power Limited - India
- MS Steel International - UAE
- Indo Tambangraya Megah - Indonesia
- Energy Link Ltd, New Zealand
- Interocean Group of Companies - India
- Ceylon Electricity Board - Sri Lanka
- Electricity Authority, New Zealand
- Rashtriya Ispat Nigam Limited - India
- Formosa Plastics Group - Taiwan
- International Coal Ventures Pvt Ltd - India
- Bhoruka Overseas - Indonesia
- Petron Corporation, Philippines
- Iligan Light & Power Inc, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- LBH Netherlands Bv - Netherlands
- PNOC Exploration Corporation - Philippines
- Krishnapatnam Port Company Ltd. - India
- Banpu Public Company Limited - Thailand
- Global Business Power Corporation, Philippines
- Bhushan Steel Limited - India
- ICICI Bank Limited - India
- IHS Mccloskey Coal Group - USA
- Goldman Sachs - Singapore
- Leighton Contractors Pty Ltd - Australia
- Makarim & Taira - Indonesia
- Orica Mining Services - Indonesia
- Posco Energy - South Korea
- Indian Oil Corporation Limited
- Vedanta Resources Plc - India
- AsiaOL BioFuels Corp., Philippines
- Samtan Co., Ltd - South Korea
- European Bulk Services B.V. - Netherlands
- Binh Thuan Hamico - Vietnam
- Coal and Oil Company - UAE
- Maheswari Brothers Coal Limited - India
- Thai Mozambique Logistica
- VISA Power Limited - India
- Edison Trading Spa - Italy
- Meenaskhi Energy Private Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- PTC India Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Alfred C Toepfer International GmbH - Germany
- Ministry of Mines - Canada
- Videocon Industries ltd - India
- Pendopo Energi Batubara - Indonesia
- Therma Luzon, Inc, Philippines
- Aboitiz Power Corporation - Philippines
- Chettinad Cement Corporation Ltd - India
- Eastern Energy - Thailand
- PowerSource Philippines DevCo
- Indogreen Group - Indonesia
- GMR Energy Limited - India
- Manunggal Multi Energi - Indonesia
- Larsen & Toubro Limited - India
- SN Aboitiz Power Inc, Philippines
- Parliament of New Zealand
- Minerals Council of Australia
- Neyveli Lignite Corporation Ltd, - India
- Gujarat Sidhee Cement - India
- Electricity Generating Authority of Thailand
- Essar Steel Hazira Ltd - India
- Cement Manufacturers Association - India
- Orica Australia Pty. Ltd.
- Simpson Spence & Young - Indonesia
- Metalloyd Limited - United Kingdom
- Timah Investasi Mineral - Indoneisa
- Bayan Resources Tbk. - Indonesia
- Globalindo Alam Lestari - Indonesia
- Ind-Barath Power Infra Limited - India
- Power Finance Corporation Ltd., India
- Merrill Lynch Commodities Europe
- Karbindo Abesyapradhi - Indoneisa
- Kalimantan Lumbung Energi - Indonesia
- Mercator Lines Limited - India
- Price Waterhouse Coopers - Russia
- Billiton Holdings Pty Ltd - Australia
- Latin American Coal - Colombia
- White Energy Company Limited
- Thiess Contractors Indonesia
- Xindia Steels Limited - India
- Aditya Birla Group - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Energy Development Corp, Philippines
- Indika Energy - Indonesia
- Sojitz Corporation - Japan
- Barasentosa Lestari - Indonesia
- Sree Jayajothi Cements Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Global Coal Blending Company Limited - Australia
- Port Waratah Coal Services - Australia
- Africa Commodities Group - South Africa
- Maharashtra Electricity Regulatory Commission - India
- Antam Resourcindo - Indonesia
- Grasim Industreis Ltd - India
- Romanian Commodities Exchange
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