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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, 14 June 13
U.S. COAL PRODUCTION TOTALED APPROXIMATELY 18.20 MILLION SHORT TONS W/E 8 JUNE 2013
COALspot.com – United states the world’s second largest coal producer produced totaled approximately 18.20 million short tons (mmst) of ...
Thursday, 13 June 13
HANDY: SHORT PERIOD WERE FIXED AT AROUND USD 9000 LEVEL
Handy
Despite falling rates for bigger sizes, the Supras in Atlantic are seeing some improvements with fresh biz. US Gulf positions fetching tick a ...
Thursday, 13 June 13
BIMCO EXPECTS SUBDUED CAPESIZE EARNINGS FOR THE COMING WEEKS - HELLENIC SHIPPING NEWS
Bulk is not only about China even though it is a key driver. In this section, we have taken a closer look at the European seaborne coal markets, whi ...
Thursday, 13 June 13
RIO TINTO AGREES SALE OF EAGLE PROJECT FOR AN ESTIMATED US$325 MILLION IN CASH
COALspot.com - Rio Tinto has reached a binding agreement to sell its Eagle project to Lundin Mining Corporation for an estimated US$325 million in c ...
Thursday, 13 June 13
HARD COAL IMPORTS RISE SHARPLY IN GERMANY IN Q1 2013 - COAL IMPORTERS ASSOCIATION
Coal-fired Power Plants in Germany: Pillars of the Grid and the Energy Turnaround; Hard Coal Consumption and Hard Coal Imports Rise Sharply in Germa ...
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- Kideco Jaya Agung - Indonesia
- Ambuja Cements Ltd - India
- Renaissance Capital - South Africa
- Mercator Lines Limited - India
- Tata Chemicals Ltd - India
- Vedanta Resources Plc - India
- Gujarat Electricity Regulatory Commission - India
- GN Power Mariveles Coal Plant, Philippines
- PNOC Exploration Corporation - Philippines
- Maheswari Brothers Coal Limited - India
- Wood Mackenzie - Singapore
- Kapuas Tunggal Persada - Indonesia
- Edison Trading Spa - Italy
- Agrawal Coal Company - India
- Economic Council, Georgia
- Sindya Power Generating Company Private Ltd
- Coastal Gujarat Power Limited - India
- SMG Consultants - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Directorate Of Revenue Intelligence - India
- Coalindo Energy - Indonesia
- Bharathi Cement Corporation - India
- India Bulls Power Limited - India
- Cement Manufacturers Association - India
- IEA Clean Coal Centre - UK
- Oldendorff Carriers - Singapore
- Rashtriya Ispat Nigam Limited - India
- Indonesian Coal Mining Association
- Orica Australia Pty. Ltd.
- Metalloyd Limited - United Kingdom
- PowerSource Philippines DevCo
- Jorong Barutama Greston.PT - Indonesia
- Wilmar Investment Holdings
- Independent Power Producers Association of India
- TeaM Sual Corporation - Philippines
- Singapore Mercantile Exchange
- Sinarmas Energy and Mining - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Petron Corporation, Philippines
- Bhatia International Limited - India
- Thiess Contractors Indonesia
- Central Electricity Authority - India
- Meralco Power Generation, Philippines
- Coal and Oil Company - UAE
- SMC Global Power, Philippines
- Malabar Cements Ltd - India
- CNBM International Corporation - China
- Price Waterhouse Coopers - Russia
- The Treasury - Australian Government
- Kartika Selabumi Mining - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Merrill Lynch Commodities Europe
- Videocon Industries ltd - India
- Manunggal Multi Energi - Indonesia
- Trasteel International SA, Italy
- Meenaskhi Energy Private Limited - India
- Rio Tinto Coal - Australia
- GAC Shipping (India) Pvt Ltd
- Therma Luzon, Inc, Philippines
- Latin American Coal - Colombia
- Gujarat Mineral Development Corp Ltd - India
- Goldman Sachs - Singapore
- Mintek Dendrill Indonesia
- Global Business Power Corporation, Philippines
- Commonwealth Bank - Australia
- London Commodity Brokers - England
- Vizag Seaport Private Limited - India
- OPG Power Generation Pvt Ltd - India
- Ind-Barath Power Infra Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Jaiprakash Power Ventures ltd
- Simpson Spence & Young - Indonesia
- European Bulk Services B.V. - Netherlands
- Ceylon Electricity Board - Sri Lanka
- Pendopo Energi Batubara - Indonesia
- The State Trading Corporation of India Ltd
- Parliament of New Zealand
- Karbindo Abesyapradhi - Indoneisa
- Neyveli Lignite Corporation Ltd, - India
- ASAPP Information Group - India
- Kohat Cement Company Ltd. - Pakistan
- Sakthi Sugars Limited - India
- LBH Netherlands Bv - Netherlands
- Minerals Council of Australia
- Indian Energy Exchange, India
- Bhushan Steel Limited - India
- Antam Resourcindo - Indonesia
- Sojitz Corporation - Japan
- Directorate General of MIneral and Coal - Indonesia
- Samtan Co., Ltd - South Korea
- Bukit Asam (Persero) Tbk - Indonesia
- Bukit Baiduri Energy - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Deloitte Consulting - India
- GMR Energy Limited - India
- Sarangani Energy Corporation, Philippines
- Electricity Authority, New Zealand
- Parry Sugars Refinery, India
- Baramulti Group, Indonesia
- Holcim Trading Pte Ltd - Singapore
- Offshore Bulk Terminal Pte Ltd, Singapore
- Asmin Koalindo Tuhup - Indonesia
- Star Paper Mills Limited - India
- Energy Development Corp, Philippines
- South Luzon Thermal Energy Corporation
- Thai Mozambique Logistica
- Indian Oil Corporation Limited
- Energy Link Ltd, New Zealand
- Ministry of Mines - Canada
- Australian Coal Association
- McConnell Dowell - Australia
- Central Java Power - Indonesia
- Toyota Tsusho Corporation, Japan
- Anglo American - United Kingdom
- Global Coal Blending Company Limited - Australia
- Miang Besar Coal Terminal - Indonesia
- Bukit Makmur.PT - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Karaikal Port Pvt Ltd - India
- Sree Jayajothi Cements Limited - India
- Kepco SPC Power Corporation, Philippines
- Borneo Indobara - Indonesia
- Power Finance Corporation Ltd., India
- Indika Energy - Indonesia
- Essar Steel Hazira Ltd - India
- Indo Tambangraya Megah - Indonesia
- Iligan Light & Power Inc, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- International Coal Ventures Pvt Ltd - India
- Bhoruka Overseas - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Madhucon Powers Ltd - India
- Ministry of Transport, Egypt
- Dalmia Cement Bharat India
- MS Steel International - UAE
- Tamil Nadu electricity Board
- Australian Commodity Traders Exchange
- Port Waratah Coal Services - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- Siam City Cement PLC, Thailand
- Bank of Tokyo Mitsubishi UFJ Ltd
- Intertek Mineral Services - Indonesia
- ICICI Bank Limited - India
- Bayan Resources Tbk. - Indonesia
- Chettinad Cement Corporation Ltd - India
- Eastern Energy - Thailand
- Bangladesh Power Developement Board
- Standard Chartered Bank - UAE
- Kumho Petrochemical, South Korea
- Aboitiz Power Corporation - Philippines
- Electricity Generating Authority of Thailand
- Romanian Commodities Exchange
- Medco Energi Mining Internasional
- Carbofer General Trading SA - India
- Georgia Ports Authority, United States
- Formosa Plastics Group - Taiwan
- Indogreen Group - Indonesia
- Heidelberg Cement - Germany
- Africa Commodities Group - South Africa
- Ministry of Finance - Indonesia
- Banpu Public Company Limited - Thailand
- Marubeni Corporation - India
- Attock Cement Pakistan Limited
- Bulk Trading Sa - Switzerland
- Chamber of Mines of South Africa
- Mjunction Services Limited - India
- IHS Mccloskey Coal Group - USA
- Grasim Industreis Ltd - India
- Eastern Coal Council - USA
- Globalindo Alam Lestari - Indonesia
- SN Aboitiz Power Inc, Philippines
- Lanco Infratech Ltd - India
- Sical Logistics Limited - India
- New Zealand Coal & Carbon
- Semirara Mining and Power Corporation, Philippines
- White Energy Company Limited
- Mercuria Energy - Indonesia
- Jindal Steel & Power Ltd - India
- Gujarat Sidhee Cement - India
- Riau Bara Harum - Indonesia
- Interocean Group of Companies - India
- Makarim & Taira - Indonesia
- Savvy Resources Ltd - HongKong
- Planning Commission, India
- San Jose City I Power Corp, Philippines
- Leighton Contractors Pty Ltd - Australia
- Global Green Power PLC Corporation, Philippines
- Altura Mining Limited, Indonesia
- Timah Investasi Mineral - Indoneisa
- Aditya Birla Group - India
- Posco Energy - South Korea
- Kaltim Prima Coal - Indonesia
- Orica Mining Services - Indonesia
- Semirara Mining Corp, Philippines
- CIMB Investment Bank - Malaysia
- Straits Asia Resources Limited - Singapore
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Salva Resources Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Bahari Cakrawala Sebuku - Indonesia
- Siam City Cement - Thailand
- Uttam Galva Steels Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Larsen & Toubro Limited - India
- Xindia Steels Limited - India
- Alfred C Toepfer International GmbH - Germany
- VISA Power Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- The University of Queensland
- GVK Power & Infra Limited - India
- Kobexindo Tractors - Indoneisa
- Binh Thuan Hamico - Vietnam
- PTC India Limited - India
- Cigading International Bulk Terminal - Indonesia
- Barasentosa Lestari - Indonesia
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