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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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Wednesday, 12 June 13
INDONESIAN COAL PRICE REFERENCE SLIDES TO 2013 LOW
COALspot.com - Indonesian Coal Price Reference continues to take its lumps this month, dropping about 0.54 % and hitting a 2013 low. The Indonesian ...
Tuesday, 11 June 13
NEWCASTLE PORT SHIPPED MORE COAL WEEK ENDED 11 JUNE 2013
COALspot.com - Newcastle port in Australia has loaded 3,104,509 tons of coal for the week ended 0700 hours 11 June 2013, Newcastle Port Corp. ...
Tuesday, 11 June 13
OUTLOOK FOR CAPESIZES LOOKS GRIM, DESPITE FALLING IRON ORE PRICES - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
Things aren't looking all that rosy for the dry bulk market, despite a stronger volume of iron ore imports during the months of March and April, as ...
Sunday, 09 June 13
CFR SOUTH CHINA COAL SWAP IS UNDER PRESSURE
COALspot.com - Sub-Bit Indonesia coal swaps (FOB ) for average July 2013 delivery have lost 0.03 percent week on week but gained 0.07 pe ...
Sunday, 09 June 13
IRON ORE DEMAND: WEAK; COAL MOVEMENT: STEADY TO INDIA AND CHINA - CAPT. REDDY
COALspot.com - The freight market was fairly steady with BDI up by 0.37 per cent closed at 812 points this week.
The Cape index was also ended in ...
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- Toyota Tsusho Corporation, Japan
- Minerals Council of Australia
- New Zealand Coal & Carbon
- Leighton Contractors Pty Ltd - Australia
- Indian Energy Exchange, India
- Bukit Makmur.PT - Indonesia
- Bhushan Steel Limited - India
- Africa Commodities Group - South Africa
- Indika Energy - Indonesia
- Interocean Group of Companies - India
- Romanian Commodities Exchange
- Globalindo Alam Lestari - Indonesia
- Sree Jayajothi Cements Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Ministry of Mines - Canada
- South Luzon Thermal Energy Corporation
- Ceylon Electricity Board - Sri Lanka
- European Bulk Services B.V. - Netherlands
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Semirara Mining Corp, Philippines
- Energy Link Ltd, New Zealand
- Deloitte Consulting - India
- Timah Investasi Mineral - Indoneisa
- Kepco SPC Power Corporation, Philippines
- GVK Power & Infra Limited - India
- Commonwealth Bank - Australia
- Straits Asia Resources Limited - Singapore
- Banpu Public Company Limited - Thailand
- Bharathi Cement Corporation - India
- Indian Oil Corporation Limited
- Star Paper Mills Limited - India
- Central Java Power - Indonesia
- LBH Netherlands Bv - Netherlands
- SMC Global Power, Philippines
- Coal and Oil Company - UAE
- GN Power Mariveles Coal Plant, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Chettinad Cement Corporation Ltd - India
- PowerSource Philippines DevCo
- Grasim Industreis Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Uttam Galva Steels Limited - India
- GAC Shipping (India) Pvt Ltd
- Jaiprakash Power Ventures ltd
- Electricity Authority, New Zealand
- SMG Consultants - Indonesia
- Xindia Steels Limited - India
- Kideco Jaya Agung - Indonesia
- Jindal Steel & Power Ltd - India
- Energy Development Corp, Philippines
- Port Waratah Coal Services - Australia
- Sojitz Corporation - Japan
- TNB Fuel Sdn Bhd - Malaysia
- Petrochimia International Co. Ltd.- Taiwan
- Singapore Mercantile Exchange
- Barasentosa Lestari - Indonesia
- OPG Power Generation Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- Marubeni Corporation - India
- Mintek Dendrill Indonesia
- Mjunction Services Limited - India
- Global Green Power PLC Corporation, Philippines
- Orica Australia Pty. Ltd.
- Petron Corporation, Philippines
- Salva Resources Pvt Ltd - India
- Mercator Lines Limited - India
- Goldman Sachs - Singapore
- Formosa Plastics Group - Taiwan
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Aboitiz Power Corporation - Philippines
- GMR Energy Limited - India
- Oldendorff Carriers - Singapore
- Parliament of New Zealand
- Lanco Infratech Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Planning Commission, India
- Electricity Generating Authority of Thailand
- Aditya Birla Group - India
- Borneo Indobara - Indonesia
- IEA Clean Coal Centre - UK
- Essar Steel Hazira Ltd - India
- Kaltim Prima Coal - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Tamil Nadu electricity Board
- Georgia Ports Authority, United States
- Kumho Petrochemical, South Korea
- Madhucon Powers Ltd - India
- CNBM International Corporation - China
- Latin American Coal - Colombia
- Rio Tinto Coal - Australia
- Vijayanagar Sugar Pvt Ltd - India
- Global Coal Blending Company Limited - Australia
- Sindya Power Generating Company Private Ltd
- Bangladesh Power Developement Board
- Dalmia Cement Bharat India
- Jorong Barutama Greston.PT - Indonesia
- Binh Thuan Hamico - Vietnam
- Bulk Trading Sa - Switzerland
- Merrill Lynch Commodities Europe
- ICICI Bank Limited - India
- International Coal Ventures Pvt Ltd - India
- San Jose City I Power Corp, Philippines
- Maharashtra Electricity Regulatory Commission - India
- ASAPP Information Group - India
- London Commodity Brokers - England
- Indonesian Coal Mining Association
- VISA Power Limited - India
- Trasteel International SA, Italy
- Meralco Power Generation, Philippines
- Bukit Baiduri Energy - Indonesia
- Sical Logistics Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Posco Energy - South Korea
- Anglo American - United Kingdom
- The Treasury - Australian Government
- Indogreen Group - Indonesia
- Independent Power Producers Association of India
- Antam Resourcindo - Indonesia
- Kapuas Tunggal Persada - Indonesia
- IHS Mccloskey Coal Group - USA
- Pendopo Energi Batubara - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sarangani Energy Corporation, Philippines
- Karbindo Abesyapradhi - Indoneisa
- McConnell Dowell - Australia
- Maheswari Brothers Coal Limited - India
- Standard Chartered Bank - UAE
- Power Finance Corporation Ltd., India
- The University of Queensland
- Sinarmas Energy and Mining - Indonesia
- Ministry of Finance - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Parry Sugars Refinery, India
- Australian Commodity Traders Exchange
- Riau Bara Harum - Indonesia
- Attock Cement Pakistan Limited
- Economic Council, Georgia
- Tata Chemicals Ltd - India
- Orica Mining Services - Indonesia
- Directorate Of Revenue Intelligence - India
- Larsen & Toubro Limited - India
- Indo Tambangraya Megah - Indonesia
- Karaikal Port Pvt Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Asia Pacific Energy Resources Ventures Inc, Philippines
- The State Trading Corporation of India Ltd
- Manunggal Multi Energi - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Australian Coal Association
- Makarim & Taira - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Intertek Mineral Services - Indonesia
- Samtan Co., Ltd - South Korea
- Ind-Barath Power Infra Limited - India
- Eastern Energy - Thailand
- Vedanta Resources Plc - India
- Vizag Seaport Private Limited - India
- Ministry of Transport, Egypt
- Wood Mackenzie - Singapore
- Malabar Cements Ltd - India
- Savvy Resources Ltd - HongKong
- Meenaskhi Energy Private Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Therma Luzon, Inc, Philippines
- PNOC Exploration Corporation - Philippines
- Central Electricity Authority - India
- Chamber of Mines of South Africa
- MS Steel International - UAE
- Iligan Light & Power Inc, Philippines
- India Bulls Power Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Altura Mining Limited, Indonesia
- Gujarat Sidhee Cement - India
- Carbofer General Trading SA - India
- Semirara Mining and Power Corporation, Philippines
- Edison Trading Spa - Italy
- Kalimantan Lumbung Energi - Indonesia
- Ambuja Cements Ltd - India
- Bayan Resources Tbk. - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Wilmar Investment Holdings
- Thiess Contractors Indonesia
- Metalloyd Limited - United Kingdom
- Coastal Gujarat Power Limited - India
- TeaM Sual Corporation - Philippines
- Siam City Cement - Thailand
- Mercuria Energy - Indonesia
- Kobexindo Tractors - Indoneisa
- AsiaOL BioFuels Corp., Philippines
- Bhatia International Limited - India
- Renaissance Capital - South Africa
- Medco Energi Mining Internasional
- SN Aboitiz Power Inc, Philippines
- Eastern Coal Council - USA
- Videocon Industries ltd - India
- Kartika Selabumi Mining - Indonesia
- Heidelberg Cement - Germany
- Coalindo Energy - Indonesia
- Baramulti Group, Indonesia
- Price Waterhouse Coopers - Russia
- Bhoruka Overseas - Indonesia
- Thai Mozambique Logistica
- PetroVietnam Power Coal Import and Supply Company
- Global Business Power Corporation, Philippines
- PTC India Limited - India
- Krishnapatnam Port Company Ltd. - India
- Simpson Spence & Young - Indonesia
- Cement Manufacturers Association - India
- White Energy Company Limited
- Siam City Cement PLC, Thailand
- Agrawal Coal Company - India
- Billiton Holdings Pty Ltd - Australia
- Sakthi Sugars Limited - India
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