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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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Friday, 02 February 24
DRY BULK MARKET: THE DOWNWARD REVISION IN THE GROWTH OF CAPESIZE TONNE DAYS IN JANUARY WITH THE BCI DROPPING - MARIA BERTZELETOU
In the last week of January, the dry freight market sustained weakness in the Capesize segment, while the number of ballasters in the Southeast (SE ...
Friday, 02 February 24
COAL INDIA ACHIEVES NEARLY 80% OF ITS FY24 PRODUCTION TARGET IN TEN MONTHS - CNBCTV18
For the month of January, the company’s production grew by 9.1% from the same period last year to 78.4 Million Tonnes (MT), from 71.9 MT last ...
Thursday, 01 February 24
CHINA'S WIND, SOLAR CAPACITY TO OVERTAKE COAL IN 2024 - INDUSTRY BODY, REUTERS REPORTED
China’s installed wind and solar capacity is expected to overtake coal for the first time this year, according to industry forecasts.
&nb ...
Thursday, 01 February 24
ANTI-DEDUCTION CLAUSES: CAN A CHARTERER WITHHOLD HIRE WITHOUT AN OWNER'S CONSENT? - SKULD
KNOWLEDGE TO ELEVATE
Summary
In The Anna Dorothea, the Court found that where a charterparty provides that no deduction from hire may be m ...
Thursday, 01 February 24
INDIA REBUILDS COAL STOCKS TO ENSURE ELECTRIC RELIABILITY - REUTERS
India’s electricity supply is much more comfortable at the start of 2024 than in either 2023 or 2022 as coal production has ramped up and the ...
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- Globalindo Alam Lestari - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
- MS Steel International - UAE
- Vedanta Resources Plc - India
- Maharashtra Electricity Regulatory Commission - India
- Deloitte Consulting - India
- Ministry of Transport, Egypt
- Neyveli Lignite Corporation Ltd, - India
- Aditya Birla Group - India
- Semirara Mining Corp, Philippines
- Attock Cement Pakistan Limited
- Wilmar Investment Holdings
- Bayan Resources Tbk. - Indonesia
- Riau Bara Harum - Indonesia
- Vizag Seaport Private Limited - India
- The University of Queensland
- International Coal Ventures Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- Intertek Mineral Services - Indonesia
- Bharathi Cement Corporation - India
- Mercator Lines Limited - India
- CNBM International Corporation - China
- Power Finance Corporation Ltd., India
- VISA Power Limited - India
- Kumho Petrochemical, South Korea
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bhatia International Limited - India
- Gujarat Electricity Regulatory Commission - India
- SMC Global Power, Philippines
- Indian Oil Corporation Limited
- Therma Luzon, Inc, Philippines
- Larsen & Toubro Limited - India
- London Commodity Brokers - England
- Interocean Group of Companies - India
- Sindya Power Generating Company Private Ltd
- Xindia Steels Limited - India
- Formosa Plastics Group - Taiwan
- Sinarmas Energy and Mining - Indonesia
- Metalloyd Limited - United Kingdom
- Sical Logistics Limited - India
- Minerals Council of Australia
- Georgia Ports Authority, United States
- Kartika Selabumi Mining - Indonesia
- IHS Mccloskey Coal Group - USA
- Madhucon Powers Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Altura Mining Limited, Indonesia
- Australian Coal Association
- Thiess Contractors Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Mjunction Services Limited - India
- CIMB Investment Bank - Malaysia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Essar Steel Hazira Ltd - India
- Grasim Industreis Ltd - India
- Marubeni Corporation - India
- Orica Australia Pty. Ltd.
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Singapore Mercantile Exchange
- Tata Chemicals Ltd - India
- Bukit Makmur.PT - Indonesia
- Dalmia Cement Bharat India
- Malabar Cements Ltd - India
- PTC India Limited - India
- Timah Investasi Mineral - Indoneisa
- Siam City Cement PLC, Thailand
- LBH Netherlands Bv - Netherlands
- Wood Mackenzie - Singapore
- Simpson Spence & Young - Indonesia
- Indian Energy Exchange, India
- New Zealand Coal & Carbon
- Barasentosa Lestari - Indonesia
- ASAPP Information Group - India
- The State Trading Corporation of India Ltd
- Petrochimia International Co. Ltd.- Taiwan
- Trasteel International SA, Italy
- OPG Power Generation Pvt Ltd - India
- Binh Thuan Hamico - Vietnam
- Energy Link Ltd, New Zealand
- Energy Development Corp, Philippines
- Port Waratah Coal Services - Australia
- Ceylon Electricity Board - Sri Lanka
- PNOC Exploration Corporation - Philippines
- Mercuria Energy - Indonesia
- Bangladesh Power Developement Board
- Independent Power Producers Association of India
- Australian Commodity Traders Exchange
- India Bulls Power Limited - India
- Bhoruka Overseas - Indonesia
- Indo Tambangraya Megah - Indonesia
- Makarim & Taira - Indonesia
- Medco Energi Mining Internasional
- Bukit Asam (Persero) Tbk - Indonesia
- Mintek Dendrill Indonesia
- European Bulk Services B.V. - Netherlands
- Jindal Steel & Power Ltd - India
- Manunggal Multi Energi - Indonesia
- Directorate Of Revenue Intelligence - India
- TeaM Sual Corporation - Philippines
- Sarangani Energy Corporation, Philippines
- Sree Jayajothi Cements Limited - India
- Straits Asia Resources Limited - Singapore
- Global Coal Blending Company Limited - Australia
- Oldendorff Carriers - Singapore
- Pendopo Energi Batubara - Indonesia
- Planning Commission, India
- Gujarat Sidhee Cement - India
- South Luzon Thermal Energy Corporation
- Indogreen Group - Indonesia
- Economic Council, Georgia
- Banpu Public Company Limited - Thailand
- Goldman Sachs - Singapore
- Renaissance Capital - South Africa
- Krishnapatnam Port Company Ltd. - India
- Miang Besar Coal Terminal - Indonesia
- Carbofer General Trading SA - India
- Lanco Infratech Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Merrill Lynch Commodities Europe
- Parry Sugars Refinery, India
- Bhushan Steel Limited - India
- Edison Trading Spa - Italy
- Posco Energy - South Korea
- Global Business Power Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- Kepco SPC Power Corporation, Philippines
- Siam City Cement - Thailand
- Parliament of New Zealand
- Jorong Barutama Greston.PT - Indonesia
- Meralco Power Generation, Philippines
- Latin American Coal - Colombia
- Central Java Power - Indonesia
- Ambuja Cements Ltd - India
- Indika Energy - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Orica Mining Services - Indonesia
- Petron Corporation, Philippines
- Kideco Jaya Agung - Indonesia
- Sakthi Sugars Limited - India
- Ministry of Finance - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- ICICI Bank Limited - India
- Bukit Baiduri Energy - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Price Waterhouse Coopers - Russia
- Electricity Generating Authority of Thailand
- Tamil Nadu electricity Board
- Baramulti Group, Indonesia
- PowerSource Philippines DevCo
- Kobexindo Tractors - Indoneisa
- San Jose City I Power Corp, Philippines
- McConnell Dowell - Australia
- Central Electricity Authority - India
- IEA Clean Coal Centre - UK
- Global Green Power PLC Corporation, Philippines
- Heidelberg Cement - Germany
- Sojitz Corporation - Japan
- Iligan Light & Power Inc, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- AsiaOL BioFuels Corp., Philippines
- SN Aboitiz Power Inc, Philippines
- GMR Energy Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Uttam Galva Steels Limited - India
- Antam Resourcindo - Indonesia
- Cement Manufacturers Association - India
- Chettinad Cement Corporation Ltd - India
- The Treasury - Australian Government
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Africa Commodities Group - South Africa
- Agrawal Coal Company - India
- Karbindo Abesyapradhi - Indoneisa
- Kohat Cement Company Ltd. - Pakistan
- White Energy Company Limited
- Ind-Barath Power Infra Limited - India
- Aboitiz Power Corporation - Philippines
- Electricity Authority, New Zealand
- Standard Chartered Bank - UAE
- Savvy Resources Ltd - HongKong
- Commonwealth Bank - Australia
- Videocon Industries ltd - India
- Coal and Oil Company - UAE
- Indonesian Coal Mining Association
- Borneo Indobara - Indonesia
- Jaiprakash Power Ventures ltd
- Ministry of Mines - Canada
- Gujarat Mineral Development Corp Ltd - India
- Toyota Tsusho Corporation, Japan
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Eastern Energy - Thailand
- GAC Shipping (India) Pvt Ltd
- Thai Mozambique Logistica
- Billiton Holdings Pty Ltd - Australia
- GVK Power & Infra Limited - India
- Cigading International Bulk Terminal - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Vijayanagar Sugar Pvt Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Coalindo Energy - Indonesia
- Karaikal Port Pvt Ltd - India
- SMG Consultants - Indonesia
- Kaltim Prima Coal - Indonesia
- Meenaskhi Energy Private Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kapuas Tunggal Persada - Indonesia
- Anglo American - United Kingdom
- Rio Tinto Coal - Australia
- PetroVietnam Power Coal Import and Supply Company
- Salva Resources Pvt Ltd - India
- Coastal Gujarat Power Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Chamber of Mines of South Africa
- Eastern Coal Council - USA
- Romanian Commodities Exchange
- Samtan Co., Ltd - South Korea
- Star Paper Mills Limited - India
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