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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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- Coastal Gujarat Power Limited - India
- Kapuas Tunggal Persada - Indonesia
- Deloitte Consulting - India
- Independent Power Producers Association of India
- Gujarat Sidhee Cement - India
- Renaissance Capital - South Africa
- Semirara Mining Corp, Philippines
- Economic Council, Georgia
- Medco Energi Mining Internasional
- Bharathi Cement Corporation - India
- Directorate General of MIneral and Coal - Indonesia
- Riau Bara Harum - Indonesia
- TeaM Sual Corporation - Philippines
- Ceylon Electricity Board - Sri Lanka
- Simpson Spence & Young - Indonesia
- Parry Sugars Refinery, India
- Bukit Makmur.PT - Indonesia
- Sojitz Corporation - Japan
- Binh Thuan Hamico - Vietnam
- Therma Luzon, Inc, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Salva Resources Pvt Ltd - India
- Metalloyd Limited - United Kingdom
- Thiess Contractors Indonesia
- Timah Investasi Mineral - Indoneisa
- Semirara Mining and Power Corporation, Philippines
- San Jose City I Power Corp, Philippines
- Kaltim Prima Coal - Indonesia
- Merrill Lynch Commodities Europe
- Krishnapatnam Port Company Ltd. - India
- India Bulls Power Limited - India
- Interocean Group of Companies - India
- Indonesian Coal Mining Association
- Energy Link Ltd, New Zealand
- Vizag Seaport Private Limited - India
- Alfred C Toepfer International GmbH - Germany
- Ambuja Cements Ltd - India
- GVK Power & Infra Limited - India
- Indian Oil Corporation Limited
- Baramulti Group, Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Siam City Cement PLC, Thailand
- Jaiprakash Power Ventures ltd
- TNB Fuel Sdn Bhd - Malaysia
- Kepco SPC Power Corporation, Philippines
- Meenaskhi Energy Private Limited - India
- Global Green Power PLC Corporation, Philippines
- Pendopo Energi Batubara - Indonesia
- Mintek Dendrill Indonesia
- Global Business Power Corporation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Intertek Mineral Services - Indonesia
- Indika Energy - Indonesia
- Directorate Of Revenue Intelligence - India
- Central Java Power - Indonesia
- Wilmar Investment Holdings
- Manunggal Multi Energi - Indonesia
- Heidelberg Cement - Germany
- Leighton Contractors Pty Ltd - Australia
- Rio Tinto Coal - Australia
- Carbofer General Trading SA - India
- Asmin Koalindo Tuhup - Indonesia
- Tata Chemicals Ltd - India
- Central Electricity Authority - India
- Ind-Barath Power Infra Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- PNOC Exploration Corporation - Philippines
- Sical Logistics Limited - India
- White Energy Company Limited
- Meralco Power Generation, Philippines
- Global Coal Blending Company Limited - Australia
- IEA Clean Coal Centre - UK
- Samtan Co., Ltd - South Korea
- Formosa Plastics Group - Taiwan
- Orica Australia Pty. Ltd.
- Parliament of New Zealand
- Edison Trading Spa - Italy
- Ministry of Finance - Indonesia
- Makarim & Taira - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Latin American Coal - Colombia
- Chettinad Cement Corporation Ltd - India
- Goldman Sachs - Singapore
- Kohat Cement Company Ltd. - Pakistan
- Mercuria Energy - Indonesia
- The Treasury - Australian Government
- Ministry of Mines - Canada
- Essar Steel Hazira Ltd - India
- Indian Energy Exchange, India
- IHS Mccloskey Coal Group - USA
- Jorong Barutama Greston.PT - Indonesia
- ICICI Bank Limited - India
- Gujarat Electricity Regulatory Commission - India
- PetroVietnam Power Coal Import and Supply Company
- CNBM International Corporation - China
- Holcim Trading Pte Ltd - Singapore
- Orica Mining Services - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Price Waterhouse Coopers - Russia
- SMG Consultants - Indonesia
- Siam City Cement - Thailand
- The State Trading Corporation of India Ltd
- Sakthi Sugars Limited - India
- Indo Tambangraya Megah - Indonesia
- Altura Mining Limited, Indonesia
- McConnell Dowell - Australia
- Barasentosa Lestari - Indonesia
- LBH Netherlands Bv - Netherlands
- Tamil Nadu electricity Board
- Pipit Mutiara Jaya. PT, Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Planning Commission, India
- MS Steel International - UAE
- Malabar Cements Ltd - India
- Aboitiz Power Corporation - Philippines
- Cigading International Bulk Terminal - Indonesia
- Antam Resourcindo - Indonesia
- Coal and Oil Company - UAE
- Savvy Resources Ltd - HongKong
- Chamber of Mines of South Africa
- Straits Asia Resources Limited - Singapore
- CIMB Investment Bank - Malaysia
- Bukit Asam (Persero) Tbk - Indonesia
- OPG Power Generation Pvt Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Electricity Generating Authority of Thailand
- Kobexindo Tractors - Indoneisa
- Petrochimia International Co. Ltd.- Taiwan
- Karbindo Abesyapradhi - Indoneisa
- Agrawal Coal Company - India
- Madhucon Powers Ltd - India
- Vedanta Resources Plc - India
- Commonwealth Bank - Australia
- Georgia Ports Authority, United States
- Singapore Mercantile Exchange
- Billiton Holdings Pty Ltd - Australia
- Africa Commodities Group - South Africa
- International Coal Ventures Pvt Ltd - India
- Bhoruka Overseas - Indonesia
- Eastern Coal Council - USA
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- PTC India Limited - India
- Indogreen Group - Indonesia
- Bangladesh Power Developement Board
- European Bulk Services B.V. - Netherlands
- London Commodity Brokers - England
- Star Paper Mills Limited - India
- South Luzon Thermal Energy Corporation
- Lanco Infratech Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Larsen & Toubro Limited - India
- Maheswari Brothers Coal Limited - India
- Karaikal Port Pvt Ltd - India
- Uttam Galva Steels Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Bhatia International Limited - India
- Borneo Indobara - Indonesia
- Anglo American - United Kingdom
- Power Finance Corporation Ltd., India
- Sindya Power Generating Company Private Ltd
- PowerSource Philippines DevCo
- Cement Manufacturers Association - India
- Globalindo Alam Lestari - Indonesia
- Bayan Resources Tbk. - Indonesia
- Electricity Authority, New Zealand
- Bulk Trading Sa - Switzerland
- VISA Power Limited - India
- Grasim Industreis Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Rashtriya Ispat Nigam Limited - India
- Posco Energy - South Korea
- Xindia Steels Limited - India
- Wood Mackenzie - Singapore
- Dalmia Cement Bharat India
- Sree Jayajothi Cements Limited - India
- Oldendorff Carriers - Singapore
- AsiaOL BioFuels Corp., Philippines
- Energy Development Corp, Philippines
- Kumho Petrochemical, South Korea
- Port Waratah Coal Services - Australia
- Eastern Energy - Thailand
- Banpu Public Company Limited - Thailand
- Marubeni Corporation - India
- GMR Energy Limited - India
- Aditya Birla Group - India
- ASAPP Information Group - India
- Gujarat Mineral Development Corp Ltd - India
- Mjunction Services Limited - India
- Trasteel International SA, Italy
- Kartika Selabumi Mining - Indonesia
- Mercator Lines Limited - India
- Bukit Baiduri Energy - Indonesia
- SMC Global Power, Philippines
- Jindal Steel & Power Ltd - India
- New Zealand Coal & Carbon
- SN Aboitiz Power Inc, Philippines
- Ministry of Transport, Egypt
- Romanian Commodities Exchange
- GAC Shipping (India) Pvt Ltd
- Kideco Jaya Agung - Indonesia
- Toyota Tsusho Corporation, Japan
- The University of Queensland
- Videocon Industries ltd - India
- Coalindo Energy - Indonesia
- Attock Cement Pakistan Limited
- Iligan Light & Power Inc, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Australian Coal Association
- Thai Mozambique Logistica
- Maharashtra Electricity Regulatory Commission - India
- Australian Commodity Traders Exchange
- Sarangani Energy Corporation, Philippines
- Bhushan Steel Limited - India
- Petron Corporation, Philippines
- Standard Chartered Bank - UAE
- Minerals Council of Australia
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