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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, 31 January 24
CHINA'S INNER MONGOLIA COAL OUTPUT HIT 1.21B TONS IN 2023 - XINHUA
North China’s Inner Mongolia autonomous region churned out 1.21 billion tons of coal in 2023 as it strives to guarantee the country’s e ...
Wednesday, 31 January 24
GAS EXPORTS COST U.S. CONSUMERS MORE THAN $100 BILLION OVER 16-MONTH PERIOD - IEEFA
Limited Demand Growth Could Dampen the Dry Bulk Market in the Coming Months BIMCOStarting in late 2021—before its invasion of Ukraine—R ...
Tuesday, 30 January 24
LIMITED DEMAND GROWTH COULD DAMPEN THE DRY BULK MARKET IN THE COMING MONTHS - BIMCO
Demand
In our base scenario, we expect cargo demand to grow by 0-1% in 2024 and 0.5-1.5% in 2025. This is a 0.5 percentage point reduction for ...
Friday, 26 January 24
RED SEA DIVERSIONS ADD NEARLY A MILLION DOLLARS PER VOYAGE TO SHIPPING COSTS WHILE DOUBLING TRANSIT TIME - LSEG
The incremental costs of diverting a tanker from Asia to NW Europe via the Cape of Good Hope is accounting for an extra $932,905 USD per voyage whi ...
Friday, 26 January 24
HARD COAL GUARDIAN ANGEL OF THE ENERGY SUPPLY - GERMANY COAL IMPORTERS ASSOCIATION
- No security of supply without hard coal
- The Substitute Power Plant Provision Act (EKBG) must be extended
- Higher grid fees due to the ...
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- Siam City Cement PLC, Thailand
- Cement Manufacturers Association - India
- Cigading International Bulk Terminal - Indonesia
- Bukit Makmur.PT - Indonesia
- Ambuja Cements Ltd - India
- MS Steel International - UAE
- Ind-Barath Power Infra Limited - India
- AsiaOL BioFuels Corp., Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Port Waratah Coal Services - Australia
- Parry Sugars Refinery, India
- Kideco Jaya Agung - Indonesia
- McConnell Dowell - Australia
- Orica Mining Services - Indonesia
- Salva Resources Pvt Ltd - India
- Mercator Lines Limited - India
- Toyota Tsusho Corporation, Japan
- Wilmar Investment Holdings
- Parliament of New Zealand
- Sinarmas Energy and Mining - Indonesia
- Global Business Power Corporation, Philippines
- Heidelberg Cement - Germany
- Rio Tinto Coal - Australia
- Barasentosa Lestari - Indonesia
- Aboitiz Power Corporation - Philippines
- Latin American Coal - Colombia
- Semirara Mining Corp, Philippines
- Rashtriya Ispat Nigam Limited - India
- Indika Energy - Indonesia
- Deloitte Consulting - India
- Oldendorff Carriers - Singapore
- Aditya Birla Group - India
- Agrawal Coal Company - India
- Maheswari Brothers Coal Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Formosa Plastics Group - Taiwan
- Gujarat Mineral Development Corp Ltd - India
- LBH Netherlands Bv - Netherlands
- PNOC Exploration Corporation - Philippines
- Maharashtra Electricity Regulatory Commission - India
- IEA Clean Coal Centre - UK
- Planning Commission, India
- ASAPP Information Group - India
- TeaM Sual Corporation - Philippines
- Leighton Contractors Pty Ltd - Australia
- Posco Energy - South Korea
- Attock Cement Pakistan Limited
- Ceylon Electricity Board - Sri Lanka
- Borneo Indobara - Indonesia
- Ministry of Mines - Canada
- Therma Luzon, Inc, Philippines
- Mjunction Services Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Tata Chemicals Ltd - India
- Sical Logistics Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Jindal Steel & Power Ltd - India
- Eastern Coal Council - USA
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bhushan Steel Limited - India
- Petron Corporation, Philippines
- Kapuas Tunggal Persada - Indonesia
- CIMB Investment Bank - Malaysia
- Merrill Lynch Commodities Europe
- Meralco Power Generation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Pendopo Energi Batubara - Indonesia
- Grasim Industreis Ltd - India
- Karaikal Port Pvt Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bukit Asam (Persero) Tbk - Indonesia
- Simpson Spence & Young - Indonesia
- Banpu Public Company Limited - Thailand
- Krishnapatnam Port Company Ltd. - India
- Global Green Power PLC Corporation, Philippines
- Australian Coal Association
- GAC Shipping (India) Pvt Ltd
- GVK Power & Infra Limited - India
- Kaltim Prima Coal - Indonesia
- Bangladesh Power Developement Board
- VISA Power Limited - India
- Electricity Authority, New Zealand
- Straits Asia Resources Limited - Singapore
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Marubeni Corporation - India
- Independent Power Producers Association of India
- Romanian Commodities Exchange
- Ministry of Transport, Egypt
- Energy Development Corp, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Antam Resourcindo - Indonesia
- Indo Tambangraya Megah - Indonesia
- The University of Queensland
- New Zealand Coal & Carbon
- London Commodity Brokers - England
- OPG Power Generation Pvt Ltd - India
- Bayan Resources Tbk. - Indonesia
- SMC Global Power, Philippines
- Goldman Sachs - Singapore
- Economic Council, Georgia
- Standard Chartered Bank - UAE
- Xindia Steels Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Indian Energy Exchange, India
- Georgia Ports Authority, United States
- Kepco SPC Power Corporation, Philippines
- Eastern Energy - Thailand
- Interocean Group of Companies - India
- Mintek Dendrill Indonesia
- IHS Mccloskey Coal Group - USA
- Central Java Power - Indonesia
- India Bulls Power Limited - India
- Minerals Council of Australia
- Semirara Mining and Power Corporation, Philippines
- Vizag Seaport Private Limited - India
- Bulk Trading Sa - Switzerland
- SN Aboitiz Power Inc, Philippines
- Lanco Infratech Ltd - India
- Iligan Light & Power Inc, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Larsen & Toubro Limited - India
- PowerSource Philippines DevCo
- Ministry of Finance - Indonesia
- Carbofer General Trading SA - India
- Chettinad Cement Corporation Ltd - India
- Vedanta Resources Plc - India
- Central Electricity Authority - India
- Price Waterhouse Coopers - Russia
- Bhatia International Limited - India
- Essar Steel Hazira Ltd - India
- Riau Bara Harum - Indonesia
- Kartika Selabumi Mining - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Savvy Resources Ltd - HongKong
- Jaiprakash Power Ventures ltd
- Energy Link Ltd, New Zealand
- GN Power Mariveles Coal Plant, Philippines
- Metalloyd Limited - United Kingdom
- Anglo American - United Kingdom
- Renaissance Capital - South Africa
- Makarim & Taira - Indonesia
- GMR Energy Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Australian Commodity Traders Exchange
- CNBM International Corporation - China
- Directorate Of Revenue Intelligence - India
- Uttam Galva Steels Limited - India
- Bukit Baiduri Energy - Indonesia
- The State Trading Corporation of India Ltd
- Sakthi Sugars Limited - India
- White Energy Company Limited
- Karbindo Abesyapradhi - Indoneisa
- Sindya Power Generating Company Private Ltd
- Intertek Mineral Services - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Bharathi Cement Corporation - India
- Binh Thuan Hamico - Vietnam
- Coastal Gujarat Power Limited - India
- Baramulti Group, Indonesia
- The Treasury - Australian Government
- Timah Investasi Mineral - Indoneisa
- Manunggal Multi Energi - Indonesia
- Star Paper Mills Limited - India
- Electricity Generating Authority of Thailand
- Global Coal Blending Company Limited - Australia
- Edison Trading Spa - Italy
- Indonesian Coal Mining Association
- Medco Energi Mining Internasional
- International Coal Ventures Pvt Ltd - India
- San Jose City I Power Corp, Philippines
- Bhoruka Overseas - Indonesia
- Commonwealth Bank - Australia
- Tamil Nadu electricity Board
- South Luzon Thermal Energy Corporation
- Videocon Industries ltd - India
- Kohat Cement Company Ltd. - Pakistan
- ICICI Bank Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sree Jayajothi Cements Limited - India
- Coalindo Energy - Indonesia
- Singapore Mercantile Exchange
- Malabar Cements Ltd - India
- Meenaskhi Energy Private Limited - India
- Power Finance Corporation Ltd., India
- Sarangani Energy Corporation, Philippines
- Indian Oil Corporation Limited
- Neyveli Lignite Corporation Ltd, - India
- Thai Mozambique Logistica
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kumho Petrochemical, South Korea
- Altura Mining Limited, Indonesia
- Miang Besar Coal Terminal - Indonesia
- Samtan Co., Ltd - South Korea
- European Bulk Services B.V. - Netherlands
- Wood Mackenzie - Singapore
- Globalindo Alam Lestari - Indonesia
- Sojitz Corporation - Japan
- Madhucon Powers Ltd - India
- Orica Australia Pty. Ltd.
- Bahari Cakrawala Sebuku - Indonesia
- Mercuria Energy - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Gujarat Sidhee Cement - India
- Holcim Trading Pte Ltd - Singapore
- Africa Commodities Group - South Africa
- TNB Fuel Sdn Bhd - Malaysia
- Dalmia Cement Bharat India
- Coal and Oil Company - UAE
- Indogreen Group - Indonesia
- Kobexindo Tractors - Indoneisa
- PTC India Limited - India
- Trasteel International SA, Italy
- Siam City Cement - Thailand
- Chamber of Mines of South Africa
- SMG Consultants - Indonesia
- Thiess Contractors Indonesia
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