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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, 13 February 24
WHAT IS THE OUTLOOK FOR THE NATURAL GAS SPOT PRICE IN 2024 AND 2025? EIA
We expect the U.S. benchmark Henry Hub natural gas spot price to average higher in 2024 and 2025 than in 2023, but to remain lower than $3.00 per m ...
Monday, 12 February 24
US THERMAL COAL EXPORTS HIT 5-YEAR HIGHS AND TOP $5 BLN IN 2023 - REUTERS
United States exporters of thermal coal earned more than $5 billion in 2023 as they shipped out more than 32.5 million metric tons of the high-poll ...
Tuesday, 06 February 24
NEW E-FUELS PROJECT TO MAKE INTERNATIONAL SHIPPING CLIMATE-NEUTRAL - RINA
Transport and trade on the ocean blue must be made much greener. This is the goal of the new €17 million European GAMMA project, where compani ...
Tuesday, 06 February 24
INDIA SEES ANNUAL COAL OUTPUT UP 10.9% IN 2024/25 - REUTERS
India expects domestic coal output to increase by 10.9% to 1.13 billion metric tons in the fiscal year ending March 2025, a senior government offic ...
Tuesday, 06 February 24
INDIA'S COAL PRODUCTION INCREASES BY 10.3% TO 99.73 MILLION TONNE IN JANUARY - PTI
The country’s coal output rose 10.3 per cent to 99.73 Million Tonne (MT) in January, over the same month in the previous fiscal.
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- Eastern Energy - Thailand
- Bulk Trading Sa - Switzerland
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Central Electricity Authority - India
- PTC India Limited - India
- Sree Jayajothi Cements Limited - India
- New Zealand Coal & Carbon
- Gujarat Mineral Development Corp Ltd - India
- Essar Steel Hazira Ltd - India
- Kobexindo Tractors - Indoneisa
- Miang Besar Coal Terminal - Indonesia
- Goldman Sachs - Singapore
- Jindal Steel & Power Ltd - India
- Eastern Coal Council - USA
- MS Steel International - UAE
- Bayan Resources Tbk. - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Samtan Co., Ltd - South Korea
- Indogreen Group - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- GMR Energy Limited - India
- Rashtriya Ispat Nigam Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Port Waratah Coal Services - Australia
- Binh Thuan Hamico - Vietnam
- Standard Chartered Bank - UAE
- Medco Energi Mining Internasional
- Maharashtra Electricity Regulatory Commission - India
- Bhatia International Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Uttam Galva Steels Limited - India
- Billiton Holdings Pty Ltd - Australia
- Karbindo Abesyapradhi - Indoneisa
- Chettinad Cement Corporation Ltd - India
- Kepco SPC Power Corporation, Philippines
- Ministry of Finance - Indonesia
- Siam City Cement - Thailand
- Parliament of New Zealand
- ICICI Bank Limited - India
- San Jose City I Power Corp, Philippines
- Bukit Baiduri Energy - Indonesia
- Coal and Oil Company - UAE
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- GAC Shipping (India) Pvt Ltd
- Asmin Koalindo Tuhup - Indonesia
- Videocon Industries ltd - India
- Ministry of Mines - Canada
- Latin American Coal - Colombia
- Thiess Contractors Indonesia
- Australian Commodity Traders Exchange
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- CNBM International Corporation - China
- Timah Investasi Mineral - Indoneisa
- Bhushan Steel Limited - India
- Pendopo Energi Batubara - Indonesia
- Salva Resources Pvt Ltd - India
- Lanco Infratech Ltd - India
- VISA Power Limited - India
- Coalindo Energy - Indonesia
- Posco Energy - South Korea
- Manunggal Multi Energi - Indonesia
- Indian Oil Corporation Limited
- Toyota Tsusho Corporation, Japan
- Romanian Commodities Exchange
- Simpson Spence & Young - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Tamil Nadu electricity Board
- SMC Global Power, Philippines
- Indo Tambangraya Megah - Indonesia
- Commonwealth Bank - Australia
- Heidelberg Cement - Germany
- Chamber of Mines of South Africa
- Interocean Group of Companies - India
- Krishnapatnam Port Company Ltd. - India
- Bangladesh Power Developement Board
- Directorate Of Revenue Intelligence - India
- AsiaOL BioFuels Corp., Philippines
- SN Aboitiz Power Inc, Philippines
- Metalloyd Limited - United Kingdom
- Global Coal Blending Company Limited - Australia
- Karaikal Port Pvt Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Orica Mining Services - Indonesia
- Central Java Power - Indonesia
- Wilmar Investment Holdings
- Bahari Cakrawala Sebuku - Indonesia
- Mintek Dendrill Indonesia
- Banpu Public Company Limited - Thailand
- The University of Queensland
- GVK Power & Infra Limited - India
- Madhucon Powers Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Agrawal Coal Company - India
- Xindia Steels Limited - India
- European Bulk Services B.V. - Netherlands
- Kideco Jaya Agung - Indonesia
- Energy Link Ltd, New Zealand
- Wood Mackenzie - Singapore
- Global Business Power Corporation, Philippines
- Straits Asia Resources Limited - Singapore
- Electricity Generating Authority of Thailand
- ASAPP Information Group - India
- Kartika Selabumi Mining - Indonesia
- Petron Corporation, Philippines
- Bukit Makmur.PT - Indonesia
- The Treasury - Australian Government
- Indika Energy - Indonesia
- Sindya Power Generating Company Private Ltd
- Bhoruka Overseas - Indonesia
- Iligan Light & Power Inc, Philippines
- Riau Bara Harum - Indonesia
- Baramulti Group, Indonesia
- Siam City Cement PLC, Thailand
- Semirara Mining Corp, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Deloitte Consulting - India
- Intertek Mineral Services - Indonesia
- Cement Manufacturers Association - India
- Orica Australia Pty. Ltd.
- Formosa Plastics Group - Taiwan
- Carbofer General Trading SA - India
- Sical Logistics Limited - India
- London Commodity Brokers - England
- Ambuja Cements Ltd - India
- Sojitz Corporation - Japan
- Attock Cement Pakistan Limited
- McConnell Dowell - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Australian Coal Association
- Mercuria Energy - Indonesia
- Renaissance Capital - South Africa
- Independent Power Producers Association of India
- Kalimantan Lumbung Energi - Indonesia
- Tata Chemicals Ltd - India
- Kapuas Tunggal Persada - Indonesia
- The State Trading Corporation of India Ltd
- International Coal Ventures Pvt Ltd - India
- Coastal Gujarat Power Limited - India
- Gujarat Sidhee Cement - India
- Globalindo Alam Lestari - Indonesia
- Global Green Power PLC Corporation, Philippines
- Indonesian Coal Mining Association
- Borneo Indobara - Indonesia
- Savvy Resources Ltd - HongKong
- Price Waterhouse Coopers - Russia
- Ind-Barath Power Infra Limited - India
- Dalmia Cement Bharat India
- Kohat Cement Company Ltd. - Pakistan
- Kumho Petrochemical, South Korea
- Parry Sugars Refinery, India
- South Luzon Thermal Energy Corporation
- Planning Commission, India
- Marubeni Corporation - India
- Makarim & Taira - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Economic Council, Georgia
- Vizag Seaport Private Limited - India
- Indian Energy Exchange, India
- Antam Resourcindo - Indonesia
- Mjunction Services Limited - India
- Minerals Council of Australia
- LBH Netherlands Bv - Netherlands
- India Bulls Power Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Star Paper Mills Limited - India
- Electricity Authority, New Zealand
- Jaiprakash Power Ventures ltd
- Alfred C Toepfer International GmbH - Germany
- Sarangani Energy Corporation, Philippines
- Ministry of Transport, Egypt
- IEA Clean Coal Centre - UK
- Energy Development Corp, Philippines
- Oldendorff Carriers - Singapore
- Grasim Industreis Ltd - India
- Georgia Ports Authority, United States
- Rio Tinto Coal - Australia
- Semirara Mining and Power Corporation, Philippines
- Meralco Power Generation, Philippines
- Sakthi Sugars Limited - India
- IHS Mccloskey Coal Group - USA
- Therma Luzon, Inc, Philippines
- Malabar Cements Ltd - India
- White Energy Company Limited
- Barasentosa Lestari - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Kaltim Prima Coal - Indonesia
- Maheswari Brothers Coal Limited - India
- Anglo American - United Kingdom
- Africa Commodities Group - South Africa
- Trasteel International SA, Italy
- SMG Consultants - Indonesia
- Aboitiz Power Corporation - Philippines
- PowerSource Philippines DevCo
- Altura Mining Limited, Indonesia
- Larsen & Toubro Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Vedanta Resources Plc - India
- Neyveli Lignite Corporation Ltd, - India
- Edison Trading Spa - Italy
- PNOC Exploration Corporation - Philippines
- CIMB Investment Bank - Malaysia
- Singapore Mercantile Exchange
- Bukit Asam (Persero) Tbk - Indonesia
- Meenaskhi Energy Private Limited - India
- Merrill Lynch Commodities Europe
- Leighton Contractors Pty Ltd - Australia
- Power Finance Corporation Ltd., India
- TeaM Sual Corporation - Philippines
- Mercator Lines Limited - India
- Holcim Trading Pte Ltd - Singapore
- Gujarat Electricity Regulatory Commission - India
- Thai Mozambique Logistica
- Bharathi Cement Corporation - India
- PetroVietnam Power Coal Import and Supply Company
- Aditya Birla Group - India
- OPG Power Generation Pvt Ltd - India
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