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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, 12 June 13
INDONESIAN COAL PRICE REFERENCE SLIDES TO 2013 LOW
COALspot.com - Indonesian Coal Price Reference continues to take its lumps this month, dropping about 0.54 % and hitting a 2013 low. The Indonesian ...
Tuesday, 11 June 13
NEWCASTLE PORT SHIPPED MORE COAL WEEK ENDED 11 JUNE 2013
COALspot.com - Newcastle port in Australia has loaded 3,104,509 tons of coal for the week ended 0700 hours 11 June 2013, Newcastle Port Corp. ...
Tuesday, 11 June 13
OUTLOOK FOR CAPESIZES LOOKS GRIM, DESPITE FALLING IRON ORE PRICES - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
Things aren't looking all that rosy for the dry bulk market, despite a stronger volume of iron ore imports during the months of March and April, as ...
Sunday, 09 June 13
CFR SOUTH CHINA COAL SWAP IS UNDER PRESSURE
COALspot.com - Sub-Bit Indonesia coal swaps (FOB ) for average July 2013 delivery have lost 0.03 percent week on week but gained 0.07 pe ...
Sunday, 09 June 13
IRON ORE DEMAND: WEAK; COAL MOVEMENT: STEADY TO INDIA AND CHINA - CAPT. REDDY
COALspot.com - The freight market was fairly steady with BDI up by 0.37 per cent closed at 812 points this week.
The Cape index was also ended in ...
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- Latin American Coal - Colombia
- SMC Global Power, Philippines
- Petron Corporation, Philippines
- Tamil Nadu electricity Board
- Mercuria Energy - Indonesia
- New Zealand Coal & Carbon
- Bukit Baiduri Energy - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Sarangani Energy Corporation, Philippines
- Romanian Commodities Exchange
- Pendopo Energi Batubara - Indonesia
- Oldendorff Carriers - Singapore
- Kobexindo Tractors - Indoneisa
- PNOC Exploration Corporation - Philippines
- Global Business Power Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
- Holcim Trading Pte Ltd - Singapore
- Maharashtra Electricity Regulatory Commission - India
- Parliament of New Zealand
- Kideco Jaya Agung - Indonesia
- Mercator Lines Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Miang Besar Coal Terminal - Indonesia
- Deloitte Consulting - India
- Price Waterhouse Coopers - Russia
- India Bulls Power Limited - India
- Thai Mozambique Logistica
- Australian Commodity Traders Exchange
- Heidelberg Cement - Germany
- Bhatia International Limited - India
- Chettinad Cement Corporation Ltd - India
- Rio Tinto Coal - Australia
- Sindya Power Generating Company Private Ltd
- Bahari Cakrawala Sebuku - Indonesia
- Eastern Energy - Thailand
- McConnell Dowell - Australia
- Bukit Makmur.PT - Indonesia
- The Treasury - Australian Government
- Renaissance Capital - South Africa
- Planning Commission, India
- Formosa Plastics Group - Taiwan
- San Jose City I Power Corp, Philippines
- TeaM Sual Corporation - Philippines
- Kaltim Prima Coal - Indonesia
- The State Trading Corporation of India Ltd
- Georgia Ports Authority, United States
- Wilmar Investment Holdings
- Indonesian Coal Mining Association
- Antam Resourcindo - Indonesia
- Ministry of Finance - Indonesia
- Meralco Power Generation, Philippines
- Indogreen Group - Indonesia
- Singapore Mercantile Exchange
- Electricity Generating Authority of Thailand
- Samtan Co., Ltd - South Korea
- Semirara Mining Corp, Philippines
- Port Waratah Coal Services - Australia
- Kartika Selabumi Mining - Indonesia
- Xindia Steels Limited - India
- ICICI Bank Limited - India
- Energy Development Corp, Philippines
- Aditya Birla Group - India
- Directorate General of MIneral and Coal - Indonesia
- Sakthi Sugars Limited - India
- Semirara Mining and Power Corporation, Philippines
- Dalmia Cement Bharat India
- Sinarmas Energy and Mining - Indonesia
- Meenaskhi Energy Private Limited - India
- Maheswari Brothers Coal Limited - India
- Savvy Resources Ltd - HongKong
- Indian Energy Exchange, India
- Africa Commodities Group - South Africa
- Orica Mining Services - Indonesia
- Cement Manufacturers Association - India
- Pipit Mutiara Jaya. PT, Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Marubeni Corporation - India
- Bayan Resources Tbk. - Indonesia
- GAC Shipping (India) Pvt Ltd
- Coal and Oil Company - UAE
- SMG Consultants - Indonesia
- Edison Trading Spa - Italy
- Ministry of Mines - Canada
- MS Steel International - UAE
- Tata Chemicals Ltd - India
- Intertek Mineral Services - Indonesia
- Banpu Public Company Limited - Thailand
- Coalindo Energy - Indonesia
- SN Aboitiz Power Inc, Philippines
- Thiess Contractors Indonesia
- International Coal Ventures Pvt Ltd - India
- Power Finance Corporation Ltd., India
- Trasteel International SA, Italy
- Alfred C Toepfer International GmbH - Germany
- Ministry of Transport, Egypt
- Timah Investasi Mineral - Indoneisa
- Kohat Cement Company Ltd. - Pakistan
- Therma Luzon, Inc, Philippines
- Economic Council, Georgia
- Jindal Steel & Power Ltd - India
- Binh Thuan Hamico - Vietnam
- Indo Tambangraya Megah - Indonesia
- Central Java Power - Indonesia
- Iligan Light & Power Inc, Philippines
- Grasim Industreis Ltd - India
- European Bulk Services B.V. - Netherlands
- Coastal Gujarat Power Limited - India
- Essar Steel Hazira Ltd - India
- Altura Mining Limited, Indonesia
- Bangladesh Power Developement Board
- Eastern Coal Council - USA
- Straits Asia Resources Limited - Singapore
- Barasentosa Lestari - Indonesia
- Vedanta Resources Plc - India
- Commonwealth Bank - Australia
- Global Green Power PLC Corporation, Philippines
- PowerSource Philippines DevCo
- Kepco SPC Power Corporation, Philippines
- CIMB Investment Bank - Malaysia
- White Energy Company Limited
- Central Electricity Authority - India
- Indian Oil Corporation Limited
- OPG Power Generation Pvt Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Parry Sugars Refinery, India
- Goldman Sachs - Singapore
- Gujarat Sidhee Cement - India
- Vizag Seaport Private Limited - India
- Sojitz Corporation - Japan
- Gujarat Mineral Development Corp Ltd - India
- Manunggal Multi Energi - Indonesia
- VISA Power Limited - India
- Indika Energy - Indonesia
- Wood Mackenzie - Singapore
- Mjunction Services Limited - India
- Star Paper Mills Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Aboitiz Power Corporation - Philippines
- Minerals Council of Australia
- Electricity Authority, New Zealand
- Orica Australia Pty. Ltd.
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Ind-Barath Power Infra Limited - India
- Billiton Holdings Pty Ltd - Australia
- Larsen & Toubro Limited - India
- Chamber of Mines of South Africa
- Borneo Indobara - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- IEA Clean Coal Centre - UK
- PetroVietnam Power Coal Import and Supply Company
- GMR Energy Limited - India
- Siam City Cement - Thailand
- Bhushan Steel Limited - India
- Anglo American - United Kingdom
- Karaikal Port Pvt Ltd - India
- Riau Bara Harum - Indonesia
- Toyota Tsusho Corporation, Japan
- Agrawal Coal Company - India
- Simpson Spence & Young - Indonesia
- Siam City Cement PLC, Thailand
- Energy Link Ltd, New Zealand
- Baramulti Group, Indonesia
- IHS Mccloskey Coal Group - USA
- Interocean Group of Companies - India
- Ambuja Cements Ltd - India
- Posco Energy - South Korea
- Bulk Trading Sa - Switzerland
- Sical Logistics Limited - India
- Australian Coal Association
- Bukit Asam (Persero) Tbk - Indonesia
- The University of Queensland
- Metalloyd Limited - United Kingdom
- Malabar Cements Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Carbofer General Trading SA - India
- Global Coal Blending Company Limited - Australia
- Globalindo Alam Lestari - Indonesia
- PTC India Limited - India
- Medco Energi Mining Internasional
- Directorate Of Revenue Intelligence - India
- Gujarat Electricity Regulatory Commission - India
- Bhoruka Overseas - Indonesia
- Attock Cement Pakistan Limited
- Videocon Industries ltd - India
- LBH Netherlands Bv - Netherlands
- Merrill Lynch Commodities Europe
- Madhucon Powers Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kapuas Tunggal Persada - Indonesia
- Lanco Infratech Ltd - India
- Mintek Dendrill Indonesia
- London Commodity Brokers - England
- Standard Chartered Bank - UAE
- CNBM International Corporation - China
- GVK Power & Infra Limited - India
- Uttam Galva Steels Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- ASAPP Information Group - India
- Independent Power Producers Association of India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Petrochimia International Co. Ltd.- Taiwan
- Sree Jayajothi Cements Limited - India
- Bharathi Cement Corporation - India
- Makarim & Taira - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Krishnapatnam Port Company Ltd. - India
- Kumho Petrochemical, South Korea
- Jaiprakash Power Ventures ltd
- Cigading International Bulk Terminal - Indonesia
- South Luzon Thermal Energy Corporation
- Salva Resources Pvt Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Neyveli Lignite Corporation Ltd, - India
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