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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, 28 June 13
U.S. PRODUCED 1.52 PERCENT LESS COAL WEEK ON WEEK
COALspot.com – United states the world’s second largest coal producer produced totaled approximately 19.40 million short tons (mmst) of ...
Thursday, 27 June 13
US COAL EXPORTS BEATS CHINESE COAL IMPORTS AS THE MOST INFLUENTIAL COAL TRADE - BIMCO
The influence of American coal exports on seaborne transportation has grown significantly over the past decade. In 2002, the US exported 20.1 millio ...
Thursday, 27 June 13
HANDY : USD 12000 FOR SPOT COAL INDO/CHINA AND AROUND USD 13000 INDO/ECI - FEARNLEYS
Handy
Atlantic rates hold well. Continent to Far East is worth more than USD 14k daily whilst USG to Far East pay 23/24k a day. On the route from B ...
Thursday, 27 June 13
DRY BULK CARRIERS DOMINATE NEWBUILDING ORDERS AS SHIP OWNERS ARE ENCOURAGED BY LATEST FREIGHT RATE RALLY - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
Newbuilding orders for dry bulk carriers were already high, compared to last year, prior to the latest rally of the Baltic Dry Index (BDI), which ha ...
Tuesday, 25 June 13
CAPESIZE MARKET TO REMAIN BULLISH SAYS ANALYST - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The dry bulk market has been experiencing its long-awaited rally, with the Baltic Dry Index, the industry's benchmark rising to healthier levels fo ...
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- Cigading International Bulk Terminal - Indonesia
- Lanco Infratech Ltd - India
- New Zealand Coal & Carbon
- Bukit Makmur.PT - Indonesia
- Samtan Co., Ltd - South Korea
- Semirara Mining Corp, Philippines
- London Commodity Brokers - England
- Commonwealth Bank - Australia
- Miang Besar Coal Terminal - Indonesia
- Xindia Steels Limited - India
- Australian Coal Association
- Georgia Ports Authority, United States
- Romanian Commodities Exchange
- Global Business Power Corporation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Gujarat Electricity Regulatory Commission - India
- CIMB Investment Bank - Malaysia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Barasentosa Lestari - Indonesia
- Interocean Group of Companies - India
- Meralco Power Generation, Philippines
- Meenaskhi Energy Private Limited - India
- Kaltim Prima Coal - Indonesia
- Bulk Trading Sa - Switzerland
- Energy Link Ltd, New Zealand
- Makarim & Taira - Indonesia
- SN Aboitiz Power Inc, Philippines
- Energy Development Corp, Philippines
- Power Finance Corporation Ltd., India
- The State Trading Corporation of India Ltd
- Kalimantan Lumbung Energi - Indonesia
- Wood Mackenzie - Singapore
- Goldman Sachs - Singapore
- Central Electricity Authority - India
- Jorong Barutama Greston.PT - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Coastal Gujarat Power Limited - India
- McConnell Dowell - Australia
- IHS Mccloskey Coal Group - USA
- Uttam Galva Steels Limited - India
- Marubeni Corporation - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Indika Energy - Indonesia
- Metalloyd Limited - United Kingdom
- Posco Energy - South Korea
- Kartika Selabumi Mining - Indonesia
- Economic Council, Georgia
- Mintek Dendrill Indonesia
- Orica Australia Pty. Ltd.
- PNOC Exploration Corporation - Philippines
- PetroVietnam Power Coal Import and Supply Company
- Intertek Mineral Services - Indonesia
- South Luzon Thermal Energy Corporation
- Bhatia International Limited - India
- Madhucon Powers Ltd - India
- Baramulti Group, Indonesia
- IEA Clean Coal Centre - UK
- Tamil Nadu electricity Board
- GVK Power & Infra Limited - India
- Tata Chemicals Ltd - India
- Ind-Barath Power Infra Limited - India
- Bhoruka Overseas - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Siam City Cement PLC, Thailand
- Indogreen Group - Indonesia
- Mercator Lines Limited - India
- Bangladesh Power Developement Board
- Vedanta Resources Plc - India
- Ministry of Transport, Egypt
- Aditya Birla Group - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Star Paper Mills Limited - India
- Medco Energi Mining Internasional
- Coalindo Energy - Indonesia
- Chettinad Cement Corporation Ltd - India
- Deloitte Consulting - India
- Indian Energy Exchange, India
- Jaiprakash Power Ventures ltd
- Pendopo Energi Batubara - Indonesia
- Sindya Power Generating Company Private Ltd
- Orica Mining Services - Indonesia
- MS Steel International - UAE
- Straits Asia Resources Limited - Singapore
- SMG Consultants - Indonesia
- Electricity Authority, New Zealand
- Planning Commission, India
- Holcim Trading Pte Ltd - Singapore
- Altura Mining Limited, Indonesia
- Thai Mozambique Logistica
- Standard Chartered Bank - UAE
- Dalmia Cement Bharat India
- San Jose City I Power Corp, Philippines
- Attock Cement Pakistan Limited
- Asmin Koalindo Tuhup - Indonesia
- Anglo American - United Kingdom
- Rashtriya Ispat Nigam Limited - India
- Heidelberg Cement - Germany
- Karaikal Port Pvt Ltd - India
- Indo Tambangraya Megah - Indonesia
- Therma Luzon, Inc, Philippines
- Billiton Holdings Pty Ltd - Australia
- Indian Oil Corporation Limited
- Krishnapatnam Port Company Ltd. - India
- Global Green Power PLC Corporation, Philippines
- Timah Investasi Mineral - Indoneisa
- Sinarmas Energy and Mining - Indonesia
- Parry Sugars Refinery, India
- Pipit Mutiara Jaya. PT, Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Alfred C Toepfer International GmbH - Germany
- Oldendorff Carriers - Singapore
- Directorate Of Revenue Intelligence - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Eastern Coal Council - USA
- Ministry of Mines - Canada
- Mercuria Energy - Indonesia
- Ambuja Cements Ltd - India
- Gujarat Sidhee Cement - India
- Essar Steel Hazira Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Neyveli Lignite Corporation Ltd, - India
- Africa Commodities Group - South Africa
- Petron Corporation, Philippines
- Kideco Jaya Agung - Indonesia
- Price Waterhouse Coopers - Russia
- Bhushan Steel Limited - India
- Thiess Contractors Indonesia
- Mjunction Services Limited - India
- SMC Global Power, Philippines
- Independent Power Producers Association of India
- Bayan Resources Tbk. - Indonesia
- The Treasury - Australian Government
- Rio Tinto Coal - Australia
- Sical Logistics Limited - India
- Larsen & Toubro Limited - India
- Cement Manufacturers Association - India
- Iligan Light & Power Inc, Philippines
- Formosa Plastics Group - Taiwan
- Toyota Tsusho Corporation, Japan
- Trasteel International SA, Italy
- Kumho Petrochemical, South Korea
- CNBM International Corporation - China
- Borneo Indobara - Indonesia
- Wilmar Investment Holdings
- Bukit Baiduri Energy - Indonesia
- Manunggal Multi Energi - Indonesia
- Simpson Spence & Young - Indonesia
- Singapore Mercantile Exchange
- Ministry of Finance - Indonesia
- Kepco SPC Power Corporation, Philippines
- Port Waratah Coal Services - Australia
- Parliament of New Zealand
- Bharathi Cement Corporation - India
- Central Java Power - Indonesia
- Grasim Industreis Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Carbofer General Trading SA - India
- Antam Resourcindo - Indonesia
- ICICI Bank Limited - India
- Edison Trading Spa - Italy
- TeaM Sual Corporation - Philippines
- Karbindo Abesyapradhi - Indoneisa
- Riau Bara Harum - Indonesia
- Indonesian Coal Mining Association
- Sree Jayajothi Cements Limited - India
- Merrill Lynch Commodities Europe
- Vijayanagar Sugar Pvt Ltd - India
- Binh Thuan Hamico - Vietnam
- OPG Power Generation Pvt Ltd - India
- Malabar Cements Ltd - India
- Latin American Coal - Colombia
- White Energy Company Limited
- Savvy Resources Ltd - HongKong
- AsiaOL BioFuels Corp., Philippines
- Siam City Cement - Thailand
- Global Coal Blending Company Limited - Australia
- GN Power Mariveles Coal Plant, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Australian Commodity Traders Exchange
- Agrawal Coal Company - India
- Kohat Cement Company Ltd. - Pakistan
- India Bulls Power Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Eastern Energy - Thailand
- Jindal Steel & Power Ltd - India
- Aboitiz Power Corporation - Philippines
- Ceylon Electricity Board - Sri Lanka
- International Coal Ventures Pvt Ltd - India
- Salva Resources Pvt Ltd - India
- Kobexindo Tractors - Indoneisa
- PTC India Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Sojitz Corporation - Japan
- PowerSource Philippines DevCo
- ASAPP Information Group - India
- Electricity Generating Authority of Thailand
- Gujarat Mineral Development Corp Ltd - India
- Sakthi Sugars Limited - India
- The University of Queensland
- European Bulk Services B.V. - Netherlands
- Maheswari Brothers Coal Limited - India
- Banpu Public Company Limited - Thailand
- Minerals Council of Australia
- Globalindo Alam Lestari - Indonesia
- LBH Netherlands Bv - Netherlands
- Chamber of Mines of South Africa
- GAC Shipping (India) Pvt Ltd
- Vizag Seaport Private Limited - India
- GMR Energy Limited - India
- Videocon Industries ltd - India
- Renaissance Capital - South Africa
- Leighton Contractors Pty Ltd - Australia
- VISA Power Limited - India
- Sarangani Energy Corporation, Philippines
- Coal and Oil Company - UAE
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