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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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- Aditya Birla Group - India
- Chamber of Mines of South Africa
- Semirara Mining and Power Corporation, Philippines
- The State Trading Corporation of India Ltd
- Iligan Light & Power Inc, Philippines
- Petron Corporation, Philippines
- Jaiprakash Power Ventures ltd
- TNB Fuel Sdn Bhd - Malaysia
- Pipit Mutiara Jaya. PT, Indonesia
- Commonwealth Bank - Australia
- Karbindo Abesyapradhi - Indoneisa
- Vedanta Resources Plc - India
- Videocon Industries ltd - India
- AsiaOL BioFuels Corp., Philippines
- Kideco Jaya Agung - Indonesia
- PNOC Exploration Corporation - Philippines
- Miang Besar Coal Terminal - Indonesia
- CIMB Investment Bank - Malaysia
- Eastern Coal Council - USA
- Dalmia Cement Bharat India
- Simpson Spence & Young - Indonesia
- London Commodity Brokers - England
- Semirara Mining Corp, Philippines
- Altura Mining Limited, Indonesia
- Mjunction Services Limited - India
- Makarim & Taira - Indonesia
- Trasteel International SA, Italy
- Offshore Bulk Terminal Pte Ltd, Singapore
- New Zealand Coal & Carbon
- Australian Coal Association
- GN Power Mariveles Coal Plant, Philippines
- VISA Power Limited - India
- Georgia Ports Authority, United States
- Lanco Infratech Ltd - India
- Essar Steel Hazira Ltd - India
- Ministry of Mines - Canada
- Heidelberg Cement - Germany
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Gujarat Electricity Regulatory Commission - India
- Electricity Authority, New Zealand
- Pendopo Energi Batubara - Indonesia
- Singapore Mercantile Exchange
- Sojitz Corporation - Japan
- Indonesian Coal Mining Association
- Globalindo Alam Lestari - Indonesia
- International Coal Ventures Pvt Ltd - India
- Mintek Dendrill Indonesia
- Orica Mining Services - Indonesia
- Deloitte Consulting - India
- Sindya Power Generating Company Private Ltd
- Energy Link Ltd, New Zealand
- Global Business Power Corporation, Philippines
- Savvy Resources Ltd - HongKong
- Mercator Lines Limited - India
- Marubeni Corporation - India
- Metalloyd Limited - United Kingdom
- Therma Luzon, Inc, Philippines
- Cement Manufacturers Association - India
- Ind-Barath Power Infra Limited - India
- Bulk Trading Sa - Switzerland
- Agrawal Coal Company - India
- Karaikal Port Pvt Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Africa Commodities Group - South Africa
- Sakthi Sugars Limited - India
- Directorate Of Revenue Intelligence - India
- Standard Chartered Bank - UAE
- Global Coal Blending Company Limited - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Ceylon Electricity Board - Sri Lanka
- PowerSource Philippines DevCo
- Riau Bara Harum - Indonesia
- Timah Investasi Mineral - Indoneisa
- White Energy Company Limited
- Goldman Sachs - Singapore
- Posco Energy - South Korea
- Power Finance Corporation Ltd., India
- Coalindo Energy - Indonesia
- Orica Australia Pty. Ltd.
- Baramulti Group, Indonesia
- Malabar Cements Ltd - India
- CNBM International Corporation - China
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- LBH Netherlands Bv - Netherlands
- ICICI Bank Limited - India
- Port Waratah Coal Services - Australia
- GMR Energy Limited - India
- Indian Energy Exchange, India
- Kalimantan Lumbung Energi - Indonesia
- Gujarat Sidhee Cement - India
- Electricity Generating Authority of Thailand
- Kapuas Tunggal Persada - Indonesia
- Bharathi Cement Corporation - India
- Aboitiz Power Corporation - Philippines
- Indogreen Group - Indonesia
- Energy Development Corp, Philippines
- Bukit Baiduri Energy - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Indo Tambangraya Megah - Indonesia
- Sarangani Energy Corporation, Philippines
- GAC Shipping (India) Pvt Ltd
- San Jose City I Power Corp, Philippines
- Bukit Makmur.PT - Indonesia
- SN Aboitiz Power Inc, Philippines
- Australian Commodity Traders Exchange
- Neyveli Lignite Corporation Ltd, - India
- Wood Mackenzie - Singapore
- Meralco Power Generation, Philippines
- Independent Power Producers Association of India
- Attock Cement Pakistan Limited
- Thiess Contractors Indonesia
- Bangladesh Power Developement Board
- Billiton Holdings Pty Ltd - Australia
- Ambuja Cements Ltd - India
- MS Steel International - UAE
- Renaissance Capital - South Africa
- Indian Oil Corporation Limited
- Cigading International Bulk Terminal - Indonesia
- Siam City Cement PLC, Thailand
- Bayan Resources Tbk. - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Oldendorff Carriers - Singapore
- Sical Logistics Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Vizag Seaport Private Limited - India
- Sree Jayajothi Cements Limited - India
- South Luzon Thermal Energy Corporation
- India Bulls Power Limited - India
- IEA Clean Coal Centre - UK
- Holcim Trading Pte Ltd - Singapore
- Tata Chemicals Ltd - India
- Tamil Nadu electricity Board
- OPG Power Generation Pvt Ltd - India
- Kartika Selabumi Mining - Indonesia
- Price Waterhouse Coopers - Russia
- Central Java Power - Indonesia
- Barasentosa Lestari - Indonesia
- GVK Power & Infra Limited - India
- Manunggal Multi Energi - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Indika Energy - Indonesia
- The Treasury - Australian Government
- Parliament of New Zealand
- Eastern Energy - Thailand
- Grasim Industreis Ltd - India
- Bhatia International Limited - India
- Rashtriya Ispat Nigam Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Maharashtra Electricity Regulatory Commission - India
- McConnell Dowell - Australia
- SMC Global Power, Philippines
- Jindal Steel & Power Ltd - India
- Xindia Steels Limited - India
- Formosa Plastics Group - Taiwan
- Samtan Co., Ltd - South Korea
- Wilmar Investment Holdings
- Kobexindo Tractors - Indoneisa
- Global Green Power PLC Corporation, Philippines
- Mercuria Energy - Indonesia
- Intertek Mineral Services - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Toyota Tsusho Corporation, Japan
- Kohat Cement Company Ltd. - Pakistan
- Economic Council, Georgia
- Kumho Petrochemical, South Korea
- Maheswari Brothers Coal Limited - India
- Anglo American - United Kingdom
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Antam Resourcindo - Indonesia
- Uttam Galva Steels Limited - India
- Salva Resources Pvt Ltd - India
- Star Paper Mills Limited - India
- Larsen & Toubro Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Interocean Group of Companies - India
- Coastal Gujarat Power Limited - India
- Madhucon Powers Ltd - India
- Ministry of Transport, Egypt
- Thai Mozambique Logistica
- Chettinad Cement Corporation Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Banpu Public Company Limited - Thailand
- Medco Energi Mining Internasional
- Ministry of Finance - Indonesia
- European Bulk Services B.V. - Netherlands
- PTC India Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Parry Sugars Refinery, India
- ASAPP Information Group - India
- Edison Trading Spa - Italy
- Merrill Lynch Commodities Europe
- Siam City Cement - Thailand
- Bhushan Steel Limited - India
- TeaM Sual Corporation - Philippines
- IHS Mccloskey Coal Group - USA
- Romanian Commodities Exchange
- SMG Consultants - Indonesia
- Binh Thuan Hamico - Vietnam
- The University of Queensland
- Borneo Indobara - Indonesia
- Latin American Coal - Colombia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Kepco SPC Power Corporation, Philippines
- Kaltim Prima Coal - Indonesia
- Meenaskhi Energy Private Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Coal and Oil Company - UAE
- Minerals Council of Australia
- Bhoruka Overseas - Indonesia
- Central Electricity Authority - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Rio Tinto Coal - Australia
- Carbofer General Trading SA - India
- Planning Commission, India
- Straits Asia Resources Limited - Singapore
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