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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, 29 May 13
SHIP OWNERS KEEP ON SPENDING ON NEWBUILDINGS AS PRICES ARE DEEMED TOO LOW TO RESIST - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
It's been yet another week on increased newbuilding ordering activity with Hellenic ship owners appearing rathe active, on the back of attractive f ...
Tuesday, 28 May 13
NEWCASTLE PORT SHIPPED 9.76 PERCENT MORE COAL W/E 27 MAY 2013
COALspot.com - Newcastle port in Australia has loaded 2,420,366 tons of coal for week ended 0700 hours 27 May 2013, Newcastle Port Corp. said ...
Sunday, 26 May 13
AMPLE SUPPLY, LOW DEMAND KEEP COAL PRICES UNDER PRESSURE
COALspot.com - Sub-Bit Indonesia coal swaps (FOB ) for average July 2013 delivery have lost 0.07 percent and API 8 CFR South China Coal shipment los ...
Friday, 24 May 13
ENGAGEMENT WITH POTENTIAL STRATEGIC AND OFF TAKE PARTNERS ACCELERATING - REALM RESOURCES
COALspot.com - Following the recent completion of the Feasibility Study, the Realm Resources Ltd. (ASX: RRP) has focused on securing strategic ...
Friday, 24 May 13
US'S COAL PRODUCTION INCREASED WEEK ON WEEK
COALspot.com – United states the world’s second largest coal producer produced totaled approximately 18.90 million short tons (mmst) of ...
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- Aboitiz Power Corporation - Philippines
- India Bulls Power Limited - India
- Singapore Mercantile Exchange
- Karbindo Abesyapradhi - Indoneisa
- London Commodity Brokers - England
- The State Trading Corporation of India Ltd
- Aditya Birla Group - India
- Karaikal Port Pvt Ltd - India
- Banpu Public Company Limited - Thailand
- Power Finance Corporation Ltd., India
- Indo Tambangraya Megah - Indonesia
- Parliament of New Zealand
- Mintek Dendrill Indonesia
- South Luzon Thermal Energy Corporation
- Bhatia International Limited - India
- Holcim Trading Pte Ltd - Singapore
- Dalmia Cement Bharat India
- Port Waratah Coal Services - Australia
- Indogreen Group - Indonesia
- Meenaskhi Energy Private Limited - India
- Attock Cement Pakistan Limited
- Ambuja Cements Ltd - India
- TeaM Sual Corporation - Philippines
- Bukit Baiduri Energy - Indonesia
- Savvy Resources Ltd - HongKong
- ICICI Bank Limited - India
- Salva Resources Pvt Ltd - India
- SMG Consultants - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Grasim Industreis Ltd - India
- Romanian Commodities Exchange
- Straits Asia Resources Limited - Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Coal and Oil Company - UAE
- AsiaOL BioFuels Corp., Philippines
- GMR Energy Limited - India
- Global Green Power PLC Corporation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Goldman Sachs - Singapore
- Gujarat Mineral Development Corp Ltd - India
- Orica Australia Pty. Ltd.
- Formosa Plastics Group - Taiwan
- Global Business Power Corporation, Philippines
- Cigading International Bulk Terminal - Indonesia
- Interocean Group of Companies - India
- Miang Besar Coal Terminal - Indonesia
- Sakthi Sugars Limited - India
- Essar Steel Hazira Ltd - India
- Makarim & Taira - Indonesia
- Marubeni Corporation - India
- Chettinad Cement Corporation Ltd - India
- Commonwealth Bank - Australia
- Manunggal Multi Energi - Indonesia
- Carbofer General Trading SA - India
- Jindal Steel & Power Ltd - India
- Heidelberg Cement - Germany
- Antam Resourcindo - Indonesia
- Central Electricity Authority - India
- Indian Energy Exchange, India
- Mjunction Services Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Indian Oil Corporation Limited
- Pipit Mutiara Jaya. PT, Indonesia
- Bangladesh Power Developement Board
- Barasentosa Lestari - Indonesia
- GVK Power & Infra Limited - India
- Metalloyd Limited - United Kingdom
- New Zealand Coal & Carbon
- Offshore Bulk Terminal Pte Ltd, Singapore
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Deloitte Consulting - India
- Therma Luzon, Inc, Philippines
- Ministry of Mines - Canada
- Timah Investasi Mineral - Indoneisa
- Larsen & Toubro Limited - India
- Economic Council, Georgia
- IEA Clean Coal Centre - UK
- Parry Sugars Refinery, India
- Coastal Gujarat Power Limited - India
- Australian Commodity Traders Exchange
- Wilmar Investment Holdings
- Asmin Koalindo Tuhup - Indonesia
- Kapuas Tunggal Persada - Indonesia
- CIMB Investment Bank - Malaysia
- Eastern Energy - Thailand
- Mercuria Energy - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Vedanta Resources Plc - India
- Madhucon Powers Ltd - India
- CNBM International Corporation - China
- Ministry of Transport, Egypt
- IHS Mccloskey Coal Group - USA
- Georgia Ports Authority, United States
- Chamber of Mines of South Africa
- McConnell Dowell - Australia
- Trasteel International SA, Italy
- Binh Thuan Hamico - Vietnam
- Kobexindo Tractors - Indoneisa
- Coalindo Energy - Indonesia
- Iligan Light & Power Inc, Philippines
- Renaissance Capital - South Africa
- Sical Logistics Limited - India
- Standard Chartered Bank - UAE
- International Coal Ventures Pvt Ltd - India
- Africa Commodities Group - South Africa
- Bukit Makmur.PT - Indonesia
- Agrawal Coal Company - India
- Bayan Resources Tbk. - Indonesia
- Independent Power Producers Association of India
- PetroVietnam Power Coal Import and Supply Company
- White Energy Company Limited
- Wood Mackenzie - Singapore
- Global Coal Blending Company Limited - Australia
- Leighton Contractors Pty Ltd - Australia
- Altura Mining Limited, Indonesia
- Cement Manufacturers Association - India
- Anglo American - United Kingdom
- SN Aboitiz Power Inc, Philippines
- Gujarat Sidhee Cement - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Toyota Tsusho Corporation, Japan
- PNOC Exploration Corporation - Philippines
- Intertek Mineral Services - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Indika Energy - Indonesia
- Sojitz Corporation - Japan
- Edison Trading Spa - Italy
- Borneo Indobara - Indonesia
- Sree Jayajothi Cements Limited - India
- Baramulti Group, Indonesia
- Vizag Seaport Private Limited - India
- Lanco Infratech Ltd - India
- Directorate Of Revenue Intelligence - India
- Videocon Industries ltd - India
- Energy Link Ltd, New Zealand
- Samtan Co., Ltd - South Korea
- Bahari Cakrawala Sebuku - Indonesia
- Bhushan Steel Limited - India
- Ind-Barath Power Infra Limited - India
- Kaltim Prima Coal - Indonesia
- Globalindo Alam Lestari - Indonesia
- Riau Bara Harum - Indonesia
- Thiess Contractors Indonesia
- GAC Shipping (India) Pvt Ltd
- Kumho Petrochemical, South Korea
- Malabar Cements Ltd - India
- Merrill Lynch Commodities Europe
- Tata Chemicals Ltd - India
- Xindia Steels Limited - India
- Simpson Spence & Young - Indonesia
- Star Paper Mills Limited - India
- GN Power Mariveles Coal Plant, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Kideco Jaya Agung - Indonesia
- Petron Corporation, Philippines
- Electricity Authority, New Zealand
- Thai Mozambique Logistica
- The University of Queensland
- Gujarat Electricity Regulatory Commission - India
- Ceylon Electricity Board - Sri Lanka
- Mercator Lines Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Posco Energy - South Korea
- PTC India Limited - India
- ASAPP Information Group - India
- San Jose City I Power Corp, Philippines
- Uttam Galva Steels Limited - India
- Eastern Coal Council - USA
- Price Waterhouse Coopers - Russia
- Tamil Nadu electricity Board
- Bharathi Cement Corporation - India
- OPG Power Generation Pvt Ltd - India
- Energy Development Corp, Philippines
- Kepco SPC Power Corporation, Philippines
- PowerSource Philippines DevCo
- Minerals Council of Australia
- Pendopo Energi Batubara - Indonesia
- Planning Commission, India
- MS Steel International - UAE
- Latin American Coal - Colombia
- Medco Energi Mining Internasional
- SMC Global Power, Philippines
- European Bulk Services B.V. - Netherlands
- Jorong Barutama Greston.PT - Indonesia
- Maheswari Brothers Coal Limited - India
- Electricity Generating Authority of Thailand
- Sarangani Energy Corporation, Philippines
- Kartika Selabumi Mining - Indonesia
- Orica Mining Services - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Krishnapatnam Port Company Ltd. - India
- VISA Power Limited - India
- Semirara Mining and Power Corporation, Philippines
- Rashtriya Ispat Nigam Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Siam City Cement - Thailand
- Petrochimia International Co. Ltd.- Taiwan
- LBH Netherlands Bv - Netherlands
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Indonesian Coal Mining Association
- Semirara Mining Corp, Philippines
- Bulk Trading Sa - Switzerland
- Rio Tinto Coal - Australia
- Sinarmas Energy and Mining - Indonesia
- Jaiprakash Power Ventures ltd
- The Treasury - Australian Government
- Sindya Power Generating Company Private Ltd
- Central Java Power - Indonesia
- Siam City Cement PLC, Thailand
- Australian Coal Association
- Maharashtra Electricity Regulatory Commission - India
- Bhoruka Overseas - Indonesia
- Ministry of Finance - Indonesia
- Oldendorff Carriers - Singapore
- Meralco Power Generation, Philippines
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