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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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Tuesday, 04 June 13
WOOD MACKENZIE SAYS THE CHINA'S THERMAL COAL DEMAND WILL REACH NEARLY 7BTPA BY 2030
COALspot.com - The Illusion of Peak Coal' says that despite efforts to limit coal consumption and seek alternative fuel options, China's strong ap ...
Saturday, 01 June 13
COAL PRICES STRUGGLE TO FIRM UP
COALspot.com - Sub-Bit Indonesia coal swaps (FOB ) for average July 2013 delivery have gained 0.18 percent week on week and 0.03 percent ...
Saturday, 01 June 13
THE FREIGHT MARKET FOR S7 AND S8 SECTORS ARE EXPECTED TO BE SOFT - VISTAAR
COALspot.com – The freights are remains weak week ended 31 May 2013, as BDI fell 2.05 pct and closed at 809 points on 31 May 2013.
The Cape ...
Friday, 31 May 13
US PRODUCED 18.5 MILLION SHORT TONS OF COAL W/E 25 MAY 2013
COALspot.com – United states the world’s second largest coal producer produced totalled approximately 18.50 million short tons (mmst) of ...
Thursday, 30 May 13
HANDY: RBCT ROUND WAS AROUND USD 9K + 300 BB - FEARNRESEARCH
Handy
THE Atlantic market remained flat. The USG-Feast was at USD 19k and Black Sea-Feast was at USD 12k. The Pacific market remained quiet with no ...
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- Cement Manufacturers Association - India
- Global Coal Blending Company Limited - Australia
- Metalloyd Limited - United Kingdom
- Sinarmas Energy and Mining - Indonesia
- Maheswari Brothers Coal Limited - India
- Kumho Petrochemical, South Korea
- London Commodity Brokers - England
- Salva Resources Pvt Ltd - India
- Mercuria Energy - Indonesia
- Africa Commodities Group - South Africa
- Ceylon Electricity Board - Sri Lanka
- Power Finance Corporation Ltd., India
- Dalmia Cement Bharat India
- MS Steel International - UAE
- Kartika Selabumi Mining - Indonesia
- LBH Netherlands Bv - Netherlands
- Tamil Nadu electricity Board
- Eastern Coal Council - USA
- GMR Energy Limited - India
- Baramulti Group, Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Pipit Mutiara Jaya. PT, Indonesia
- Straits Asia Resources Limited - Singapore
- Global Green Power PLC Corporation, Philippines
- San Jose City I Power Corp, Philippines
- Price Waterhouse Coopers - Russia
- Marubeni Corporation - India
- Sakthi Sugars Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kobexindo Tractors - Indoneisa
- Central Electricity Authority - India
- Bhoruka Overseas - Indonesia
- CIMB Investment Bank - Malaysia
- Malabar Cements Ltd - India
- Electricity Authority, New Zealand
- India Bulls Power Limited - India
- Edison Trading Spa - Italy
- Attock Cement Pakistan Limited
- SMG Consultants - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Merrill Lynch Commodities Europe
- PetroVietnam Power Coal Import and Supply Company
- Gujarat Electricity Regulatory Commission - India
- Sarangani Energy Corporation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Sojitz Corporation - Japan
- Semirara Mining Corp, Philippines
- Tata Chemicals Ltd - India
- Banpu Public Company Limited - Thailand
- Indo Tambangraya Megah - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Simpson Spence & Young - Indonesia
- Kaltim Prima Coal - Indonesia
- Coalindo Energy - Indonesia
- Indonesian Coal Mining Association
- GVK Power & Infra Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- ASAPP Information Group - India
- Indian Energy Exchange, India
- Cigading International Bulk Terminal - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Thiess Contractors Indonesia
- Chamber of Mines of South Africa
- Global Business Power Corporation, Philippines
- Coastal Gujarat Power Limited - India
- Mjunction Services Limited - India
- Commonwealth Bank - Australia
- Larsen & Toubro Limited - India
- Energy Development Corp, Philippines
- Madhucon Powers Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Electricity Generating Authority of Thailand
- Wood Mackenzie - Singapore
- Meenaskhi Energy Private Limited - India
- Mercator Lines Limited - India
- Trasteel International SA, Italy
- Grasim Industreis Ltd - India
- Sical Logistics Limited - India
- Kepco SPC Power Corporation, Philippines
- Indogreen Group - Indonesia
- Georgia Ports Authority, United States
- Bukit Makmur.PT - Indonesia
- CNBM International Corporation - China
- Gujarat Mineral Development Corp Ltd - India
- Parliament of New Zealand
- Bayan Resources Tbk. - Indonesia
- IEA Clean Coal Centre - UK
- PTC India Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Port Waratah Coal Services - Australia
- Petron Corporation, Philippines
- Anglo American - United Kingdom
- Orica Australia Pty. Ltd.
- Orica Mining Services - Indonesia
- Essar Steel Hazira Ltd - India
- Sree Jayajothi Cements Limited - India
- Intertek Mineral Services - Indonesia
- Goldman Sachs - Singapore
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Borneo Indobara - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Bahari Cakrawala Sebuku - Indonesia
- Ministry of Transport, Egypt
- Energy Link Ltd, New Zealand
- Leighton Contractors Pty Ltd - Australia
- Bharathi Cement Corporation - India
- Altura Mining Limited, Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Siam City Cement - Thailand
- New Zealand Coal & Carbon
- Binh Thuan Hamico - Vietnam
- Aditya Birla Group - India
- Heidelberg Cement - Germany
- Videocon Industries ltd - India
- AsiaOL BioFuels Corp., Philippines
- Independent Power Producers Association of India
- Standard Chartered Bank - UAE
- Australian Coal Association
- Interocean Group of Companies - India
- Medco Energi Mining Internasional
- Vijayanagar Sugar Pvt Ltd - India
- Central Java Power - Indonesia
- European Bulk Services B.V. - Netherlands
- Ambuja Cements Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Carbofer General Trading SA - India
- SMC Global Power, Philippines
- SN Aboitiz Power Inc, Philippines
- Thai Mozambique Logistica
- Wilmar Investment Holdings
- Vizag Seaport Private Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Bangladesh Power Developement Board
- Jaiprakash Power Ventures ltd
- Alfred C Toepfer International GmbH - Germany
- Indian Oil Corporation Limited
- Deloitte Consulting - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Uttam Galva Steels Limited - India
- Romanian Commodities Exchange
- Karaikal Port Pvt Ltd - India
- Makarim & Taira - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Posco Energy - South Korea
- Rashtriya Ispat Nigam Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Savvy Resources Ltd - HongKong
- Jindal Steel & Power Ltd - India
- Bhushan Steel Limited - India
- Mintek Dendrill Indonesia
- Billiton Holdings Pty Ltd - Australia
- Pendopo Energi Batubara - Indonesia
- GAC Shipping (India) Pvt Ltd
- Ministry of Mines - Canada
- Riau Bara Harum - Indonesia
- Indika Energy - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Timah Investasi Mineral - Indoneisa
- McConnell Dowell - Australia
- Rio Tinto Coal - Australia
- Bhatia International Limited - India
- Singapore Mercantile Exchange
- Meralco Power Generation, Philippines
- Ministry of Finance - Indonesia
- Formosa Plastics Group - Taiwan
- Kideco Jaya Agung - Indonesia
- Siam City Cement PLC, Thailand
- Planning Commission, India
- Agrawal Coal Company - India
- Chettinad Cement Corporation Ltd - India
- Bukit Baiduri Energy - Indonesia
- TeaM Sual Corporation - Philippines
- White Energy Company Limited
- Aboitiz Power Corporation - Philippines
- Jorong Barutama Greston.PT - Indonesia
- Toyota Tsusho Corporation, Japan
- Parry Sugars Refinery, India
- IHS Mccloskey Coal Group - USA
- Holcim Trading Pte Ltd - Singapore
- PowerSource Philippines DevCo
- Minerals Council of Australia
- South Luzon Thermal Energy Corporation
- Samtan Co., Ltd - South Korea
- OPG Power Generation Pvt Ltd - India
- VISA Power Limited - India
- Barasentosa Lestari - Indonesia
- Lanco Infratech Ltd - India
- Latin American Coal - Colombia
- Krishnapatnam Port Company Ltd. - India
- ICICI Bank Limited - India
- Globalindo Alam Lestari - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Economic Council, Georgia
- Gujarat Sidhee Cement - India
- Iligan Light & Power Inc, Philippines
- Vedanta Resources Plc - India
- Oldendorff Carriers - Singapore
- Eastern Energy - Thailand
- Antam Resourcindo - Indonesia
- Ind-Barath Power Infra Limited - India
- Renaissance Capital - South Africa
- The State Trading Corporation of India Ltd
- International Coal Ventures Pvt Ltd - India
- The Treasury - Australian Government
- Star Paper Mills Limited - India
- The University of Queensland
- Coal and Oil Company - UAE
- Sindya Power Generating Company Private Ltd
- Manunggal Multi Energi - Indonesia
- Bulk Trading Sa - Switzerland
- PNOC Exploration Corporation - Philippines
- Asmin Koalindo Tuhup - Indonesia
- Xindia Steels Limited - India
- Directorate Of Revenue Intelligence - India
- Therma Luzon, Inc, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Australian Commodity Traders Exchange
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