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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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Friday, 02 February 24
DRY BULK MARKET: THE DOWNWARD REVISION IN THE GROWTH OF CAPESIZE TONNE DAYS IN JANUARY WITH THE BCI DROPPING - MARIA BERTZELETOU
In the last week of January, the dry freight market sustained weakness in the Capesize segment, while the number of ballasters in the Southeast (SE ...
Friday, 02 February 24
COAL INDIA ACHIEVES NEARLY 80% OF ITS FY24 PRODUCTION TARGET IN TEN MONTHS - CNBCTV18
For the month of January, the company’s production grew by 9.1% from the same period last year to 78.4 Million Tonnes (MT), from 71.9 MT last ...
Thursday, 01 February 24
CHINA'S WIND, SOLAR CAPACITY TO OVERTAKE COAL IN 2024 - INDUSTRY BODY, REUTERS REPORTED
China’s installed wind and solar capacity is expected to overtake coal for the first time this year, according to industry forecasts.
&nb ...
Thursday, 01 February 24
ANTI-DEDUCTION CLAUSES: CAN A CHARTERER WITHHOLD HIRE WITHOUT AN OWNER'S CONSENT? - SKULD
KNOWLEDGE TO ELEVATE
Summary
In The Anna Dorothea, the Court found that where a charterparty provides that no deduction from hire may be m ...
Thursday, 01 February 24
INDIA REBUILDS COAL STOCKS TO ENSURE ELECTRIC RELIABILITY - REUTERS
India’s electricity supply is much more comfortable at the start of 2024 than in either 2023 or 2022 as coal production has ramped up and the ...
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- Star Paper Mills Limited - India
- Billiton Holdings Pty Ltd - Australia
- Energy Link Ltd, New Zealand
- Sindya Power Generating Company Private Ltd
- Siam City Cement PLC, Thailand
- Aditya Birla Group - India
- Bukit Makmur.PT - Indonesia
- Manunggal Multi Energi - Indonesia
- India Bulls Power Limited - India
- GMR Energy Limited - India
- Formosa Plastics Group - Taiwan
- Renaissance Capital - South Africa
- Simpson Spence & Young - Indonesia
- Maheswari Brothers Coal Limited - India
- Wood Mackenzie - Singapore
- Posco Energy - South Korea
- Madhucon Powers Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Karaikal Port Pvt Ltd - India
- Agrawal Coal Company - India
- Lanco Infratech Ltd - India
- Indogreen Group - Indonesia
- The Treasury - Australian Government
- Alfred C Toepfer International GmbH - Germany
- Power Finance Corporation Ltd., India
- Electricity Authority, New Zealand
- Semirara Mining Corp, Philippines
- Minerals Council of Australia
- Asmin Koalindo Tuhup - Indonesia
- Merrill Lynch Commodities Europe
- Rashtriya Ispat Nigam Limited - India
- Mintek Dendrill Indonesia
- Parry Sugars Refinery, India
- Bayan Resources Tbk. - Indonesia
- Standard Chartered Bank - UAE
- Kideco Jaya Agung - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Toyota Tsusho Corporation, Japan
- Mercuria Energy - Indonesia
- Coalindo Energy - Indonesia
- Orica Australia Pty. Ltd.
- Malabar Cements Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Metalloyd Limited - United Kingdom
- Latin American Coal - Colombia
- Bangladesh Power Developement Board
- Coal and Oil Company - UAE
- Salva Resources Pvt Ltd - India
- PNOC Exploration Corporation - Philippines
- Central Electricity Authority - India
- Africa Commodities Group - South Africa
- Altura Mining Limited, Indonesia
- Vedanta Resources Plc - India
- Meenaskhi Energy Private Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Miang Besar Coal Terminal - Indonesia
- Energy Development Corp, Philippines
- SMC Global Power, Philippines
- ASAPP Information Group - India
- Bulk Trading Sa - Switzerland
- Planning Commission, India
- Global Green Power PLC Corporation, Philippines
- Banpu Public Company Limited - Thailand
- Indonesian Coal Mining Association
- Essar Steel Hazira Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Sakthi Sugars Limited - India
- Intertek Mineral Services - Indonesia
- Marubeni Corporation - India
- New Zealand Coal & Carbon
- ICICI Bank Limited - India
- IEA Clean Coal Centre - UK
- International Coal Ventures Pvt Ltd - India
- Samtan Co., Ltd - South Korea
- Holcim Trading Pte Ltd - Singapore
- Jindal Steel & Power Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Riau Bara Harum - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Jaiprakash Power Ventures ltd
- TeaM Sual Corporation - Philippines
- Orica Mining Services - Indonesia
- Chamber of Mines of South Africa
- Leighton Contractors Pty Ltd - Australia
- Sree Jayajothi Cements Limited - India
- Ceylon Electricity Board - Sri Lanka
- Kartika Selabumi Mining - Indonesia
- Aboitiz Power Corporation - Philippines
- Barasentosa Lestari - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Kepco SPC Power Corporation, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Vizag Seaport Private Limited - India
- SN Aboitiz Power Inc, Philippines
- PTC India Limited - India
- CNBM International Corporation - China
- Siam City Cement - Thailand
- Xindia Steels Limited - India
- Uttam Galva Steels Limited - India
- Borneo Indobara - Indonesia
- Ministry of Transport, Egypt
- Pipit Mutiara Jaya. PT, Indonesia
- Independent Power Producers Association of India
- Therma Luzon, Inc, Philippines
- Larsen & Toubro Limited - India
- Rio Tinto Coal - Australia
- Jorong Barutama Greston.PT - Indonesia
- Sical Logistics Limited - India
- Grasim Industreis Ltd - India
- Trasteel International SA, Italy
- Semirara Mining and Power Corporation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Indika Energy - Indonesia
- Binh Thuan Hamico - Vietnam
- Wilmar Investment Holdings
- Straits Asia Resources Limited - Singapore
- European Bulk Services B.V. - Netherlands
- Australian Coal Association
- Antam Resourcindo - Indonesia
- San Jose City I Power Corp, Philippines
- AsiaOL BioFuels Corp., Philippines
- Singapore Mercantile Exchange
- White Energy Company Limited
- Savvy Resources Ltd - HongKong
- Timah Investasi Mineral - Indoneisa
- Bukit Baiduri Energy - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Australian Commodity Traders Exchange
- Globalindo Alam Lestari - Indonesia
- Cement Manufacturers Association - India
- The State Trading Corporation of India Ltd
- Kumho Petrochemical, South Korea
- Mercator Lines Limited - India
- Deloitte Consulting - India
- Dalmia Cement Bharat India
- Coastal Gujarat Power Limited - India
- Bhoruka Overseas - Indonesia
- VISA Power Limited - India
- Attock Cement Pakistan Limited
- GN Power Mariveles Coal Plant, Philippines
- Heidelberg Cement - Germany
- GAC Shipping (India) Pvt Ltd
- Baramulti Group, Indonesia
- Thai Mozambique Logistica
- Pendopo Energi Batubara - Indonesia
- Sojitz Corporation - Japan
- Ind-Barath Power Infra Limited - India
- Sarangani Energy Corporation, Philippines
- Edison Trading Spa - Italy
- Maharashtra Electricity Regulatory Commission - India
- South Luzon Thermal Energy Corporation
- Commonwealth Bank - Australia
- Directorate General of MIneral and Coal - Indonesia
- Anglo American - United Kingdom
- Gujarat Sidhee Cement - India
- Kaltim Prima Coal - Indonesia
- Carbofer General Trading SA - India
- PetroVietnam Power Coal Import and Supply Company
- Electricity Generating Authority of Thailand
- Indian Energy Exchange, India
- IHS Mccloskey Coal Group - USA
- Chettinad Cement Corporation Ltd - India
- Makarim & Taira - Indonesia
- Tamil Nadu electricity Board
- GVK Power & Infra Limited - India
- Petron Corporation, Philippines
- Bhushan Steel Limited - India
- Meralco Power Generation, Philippines
- Global Business Power Corporation, Philippines
- CIMB Investment Bank - Malaysia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Directorate Of Revenue Intelligence - India
- Bharathi Cement Corporation - India
- Cigading International Bulk Terminal - Indonesia
- Georgia Ports Authority, United States
- MS Steel International - UAE
- Bhatia International Limited - India
- OPG Power Generation Pvt Ltd - India
- Global Coal Blending Company Limited - Australia
- Romanian Commodities Exchange
- Ministry of Mines - Canada
- Tata Chemicals Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Eastern Energy - Thailand
- Price Waterhouse Coopers - Russia
- Mjunction Services Limited - India
- Iligan Light & Power Inc, Philippines
- Gujarat Electricity Regulatory Commission - India
- Eastern Coal Council - USA
- Ministry of Finance - Indonesia
- Kobexindo Tractors - Indoneisa
- Thiess Contractors Indonesia
- Goldman Sachs - Singapore
- Ambuja Cements Ltd - India
- Videocon Industries ltd - India
- The University of Queensland
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Oldendorff Carriers - Singapore
- Parliament of New Zealand
- Indian Oil Corporation Limited
- Port Waratah Coal Services - Australia
- McConnell Dowell - Australia
- PowerSource Philippines DevCo
- Medco Energi Mining Internasional
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kalimantan Lumbung Energi - Indonesia
- Central Java Power - Indonesia
- London Commodity Brokers - England
- Indo Tambangraya Megah - Indonesia
- Interocean Group of Companies - India
- LBH Netherlands Bv - Netherlands
- SMG Consultants - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Economic Council, Georgia
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