Thursday, 08 March, 2012
Fitch Ratings says Indonesia's coal mining sector should continue to see strong growth prospects but can benefit from clearer and more predictable regulations.
"Fitch expects medium term demand supply dynamics for thermal coal to remain well balanced, leading to healthy prices and strong operational cash flows for Indonesian coal miners," says Shahim Zubair, Associate Director in Fitch's Asia-Pacific Energy & Utilities team. Low production costs are a major advantage for Indonesian coal producers.
In a special report, Fitch notes that the regulatory environment of the Indonesian coal industry is in a state of transition. Further clarity is required on certain major aspects, including the proposed ban on low-rank coal exports. If implemented, the ban can hit certain operators who have significant reserves in low-rank coal. Most of the large coal miners in Indonesia are export-oriented and their coal reserves are either below or marginally above this threshold.
"It is a tough act to balance the health of the industry against long-term domestic energy security of Indonesia" says Mr Zubair. "Fitch believes that Indonesia will take a pragmatic approach to industry regulations as failing to do so can have negative consequences for the sector in the long-run."
Fitch notes the sector's rapid expansion of production and acquisition of coal reserves. A number of operators have acquired, and will continue to acquire, green-field projects which generally entail higher operational and financial risks. However, as long as risks associated with such projects are sufficiently addressed and green-field project development exposure contained, these do not necessarily pose a significant threat to credit profiles.
Credit profiles of Indonesian coal miners remain sub-investment grade, owing to limited mine site diversification, evolving mining regulations, debt-funded expansion and, in some instances, corporate governance issues.
The full report "Indonesia: Coal Mining - Strong Medium-term Outlook; Clearer Regulations Highly Desirable" is available at 'www.fitchratings.com'.
(sourced coalspot.com
Showing posts with label Indonesia. Show all posts
Showing posts with label Indonesia. Show all posts
Thursday, March 8, 2012
Monday, March 5, 2012
Indonseia coal mining profits too high - Minister
Monday, 05 Mar 2012
Indonesia energy and mineral resources deputy minister Widjajono Partowidagdo has criticized coal mining companies for taking too much profit. He said that the profits of these companies reached 66% of total production, while the state only receives 34% of the profit.
He said that “That’s too much. It’s different with the oil and gas industries that provide benefits for the state and the public.”
He added that This condition has led to rapid growth in the mining industry and the high production profit has also seen many Indonesian grow rich, he said. “Look at the list of the richest people in Indonesia according to Forbes magazine. Almost all of them are in the coal mining sector.”
As such, Mr Widjajono said the regulation on profit sharing in the coal mining sector between the government and contractor companies must be revised. He said the Energy Ministry was now drafting a formula for coal mine profit sharing between coal companies and the state.
source:Tempointeractive.co
Indonesia energy and mineral resources deputy minister Widjajono Partowidagdo has criticized coal mining companies for taking too much profit. He said that the profits of these companies reached 66% of total production, while the state only receives 34% of the profit.
He said that “That’s too much. It’s different with the oil and gas industries that provide benefits for the state and the public.”
He added that This condition has led to rapid growth in the mining industry and the high production profit has also seen many Indonesian grow rich, he said. “Look at the list of the richest people in Indonesia according to Forbes magazine. Almost all of them are in the coal mining sector.”
As such, Mr Widjajono said the regulation on profit sharing in the coal mining sector between the government and contractor companies must be revised. He said the Energy Ministry was now drafting a formula for coal mine profit sharing between coal companies and the state.
source:Tempointeractive.co
Saturday, February 18, 2012
Global steam coal prices may zoom if CIL pushes imports
Saturday, 18 Feb 2012
ET reported that International coal prices are likely to move up further as the world's largest producer CIL needs to go on global shopping for the dry fuel to meet the increased demand of the power sector.
A Committee of Secretaries, set up by Prime Minister Manmohan Singh to sort out issues relating to the power sector, has asked CIL to sign Fuel Supply Agreements with power plants that have already been commissioned or would go on stream on or before March 31st 2015 for 20 years.
The analysts said that "It will be a Herculean task for Coal India Ltd to meet the additional obligations since its entire production now gets exhausted to feed the power sector. In the current situation, CIL's only way out is to go for procuring the raw material in countries like Indonesia, Mozambique, Australia and South Africa.”
Analyst said that "The international prices of coal are likely to go up as India's state run miner Coal India looks for procuring in the global market. The demand for coal in India is likely to go up manifold as projects go on stream.”
The international price of coal is now hovering a little over USD 100 per tonne.
(Sourced from ET)
ET reported that International coal prices are likely to move up further as the world's largest producer CIL needs to go on global shopping for the dry fuel to meet the increased demand of the power sector.
A Committee of Secretaries, set up by Prime Minister Manmohan Singh to sort out issues relating to the power sector, has asked CIL to sign Fuel Supply Agreements with power plants that have already been commissioned or would go on stream on or before March 31st 2015 for 20 years.
The analysts said that "It will be a Herculean task for Coal India Ltd to meet the additional obligations since its entire production now gets exhausted to feed the power sector. In the current situation, CIL's only way out is to go for procuring the raw material in countries like Indonesia, Mozambique, Australia and South Africa.”
Analyst said that "The international prices of coal are likely to go up as India's state run miner Coal India looks for procuring in the global market. The demand for coal in India is likely to go up manifold as projects go on stream.”
The international price of coal is now hovering a little over USD 100 per tonne.
(Sourced from ET)
Friday, February 17, 2012
South Korea January coal imports up 3pct
Friday, 17 Feb 2012
South Korea's imports of coal in January rose 3.8 percent to 10.71 million tonnes from 10.32 million tonnes a year earlier, customs data showed on Wednesday.
Details of January imports are as follows
Price in USD
(Sourced from Reuters)
South Korea's imports of coal in January rose 3.8 percent to 10.71 million tonnes from 10.32 million tonnes a year earlier, customs data showed on Wednesday.
Details of January imports are as follows
| | Jan '12 | Price | Jan '11 | Price |
| Australia | 3,761,874 | 161.01 | 3,618,429 | 132.98 |
| Indonesia | 3,236,837 | 96.46 | 3,943,822 | 85.97 |
| Canada | 1,055,996 | 193.90 | 867,003 | 148.93 |
| S. Africa | 1,054,408 | 128.12 | 137,476 | 89.82 |
| Russia | 966,939 | 124.15 | 760,921 | 118.71 |
| U.S. | 414,786 | 230.24 | 419,356 | 232.34 |
| China | 198,533 | 169.62 | 386,113 | 121.76 |
| Malaysia | 22,000 | 90.23 | _ | |
| Colombia | - | 165,025 | 105.81 | |
| Cyprus | - | 23,340 | 216.07 |
Price in USD
(Sourced from Reuters)
Monday, January 30, 2012
TABLE-Japan's December and 2011 coking coal imports by source
Mon Jan 30, 2012
TOKYO, Jan 30 (Reuters) - Following is a table of customs-cleared coking coal imports for December
released by Japan's Ministry of Finance on Monday.Figures are converted from yen to U.S. dollars using Japan Customs' official conversion rate. Volumes areexpressed in tonnes.
TOKYO, Jan 30 (Reuters) - Following is a table of customs-cleared coking coal imports for December
released by Japan's Ministry of Finance on Monday.Figures are converted from yen to U.S. dollars using Japan Customs' official conversion rate. Volumes areexpressed in tonnes.
Country Dec Dec Nov Nov M/M Yr/Yr YTD YTD TD (Yr/Yr %)
Name Tonnes $/Tonne Tonnes $/Tonne % % Tonnes $/Tonne Tonnes
China 77,351 171.74 23,973 178.00 222.7 6.8 1,098,188 251.31 82.2
Indonesia 1,145,693 136.19 1,444,516 150.04 -20.7 -17.0 14,655,845 133.35 -18.4
India - - 3 6,448.47 -99.9
Russia 141,643 214.63 204,243 255.27 -30.6 0.7 2,527,126 249.75 10.0
Canada 672,571 300.59 429,324 287.53 56.7 -18.4 7,344,661 274.40 -14.2
USA 362,264 319.31 682,146 294.51 -46.9 36.1 5,725,355 268.03 111.9
Mexico - - 75,764 304.83
Colombia - - 61,844 300.11
Australia 2,577,034 244.27 3,784,261 263.13 -31.9 -33.5 36,737,577 246.97 -16.5
New Zealand 165,402 276.60 - 418,422 256.38 -11.8
Total 5,141,958 231.98 6,568,463 242.56 -21.7 -21.6 68,644,785 227.74 -10.5
(Sourced Reuters)
Saturday, January 14, 2012
Peabody opens office in Balikpapan
Saturday, 14 Jan 2012
Peabody Energy announced the opening of an office in Balikpapan, Indonesia a seaport city in the East Kalimantan province. The move further expands the company’s presence in the world’s largest supplier of seaborne thermal coal.
Peabody Balikpapan office complements ongoing sourcing and business development activities in Indonesia and supports an office in the capital city of Jakarta. Indonesia is the fastest-growing supplier of thermal coal to both China and India and Peabody is positioning itself to assist local suppliers in moving Indonesian coal throughout the Pacific Rim. The company has secured multiple term offtake agreements from resource-rich East Kalimantan.
Mr Yosef Setiyawan Director of Engineering Indonesia will lead the office and has responsibility for supporting business development and structured transactions. Setiyawan brings extensive experience in mining engineering, technical services and business development from his tenure at BHP Billiton in Australia and Indonesia. He reports to Mr Keith Downham Vice President of Resource Development Indonesia.
Peabody Energy announced the opening of an office in Balikpapan, Indonesia a seaport city in the East Kalimantan province. The move further expands the company’s presence in the world’s largest supplier of seaborne thermal coal.
Peabody Balikpapan office complements ongoing sourcing and business development activities in Indonesia and supports an office in the capital city of Jakarta. Indonesia is the fastest-growing supplier of thermal coal to both China and India and Peabody is positioning itself to assist local suppliers in moving Indonesian coal throughout the Pacific Rim. The company has secured multiple term offtake agreements from resource-rich East Kalimantan.
Mr Yosef Setiyawan Director of Engineering Indonesia will lead the office and has responsibility for supporting business development and structured transactions. Setiyawan brings extensive experience in mining engineering, technical services and business development from his tenure at BHP Billiton in Australia and Indonesia. He reports to Mr Keith Downham Vice President of Resource Development Indonesia.
Friday, December 30, 2011
Coal producers in Indonesia and Vietnam undertake new export strategies
Friday, 30 Dec 2011
It is reported that fast rising economies in Southeast Asia, Indonesia and Vietnam have taken different strategies in handling rising coal demand in the region.
Vietnam has announced that it will calibrate its exports to meet increasing coal demand in the domestic markets. Indonesia, on the other hand plans to increase exports and meet rising demand in the Asia Pacific Region.
The Indonesian Coal Mining Association said Jakarta is expected to upgrade its output in 2012 to no less than as 390 million tonnes of the fuel in 2012 to satisfy demand from Asian buyers particularly India and China.
A related Bloomberg report said the country is estimated to mine 360 million tons this year. Indonesia is still the world largest thermal coal exporter.
Mr Tran Xuan Hoa Vietnam state owned coal exporter Vinacomin chairman said in an annual coal exports report this month that Vietnam, on the other hand, decided to cut down its coal exports and be a net importer to support the growing local industries.
State run Vietnam News Agency reported quoting Vinacomin said coal exports will be slashed by 19.6% to 13.3 million tonnes in 2012 from 16.8 million MT this year.
Vinacomin said Vietnam coal exports will gradually be slashed to 8 million MT in 2013 and between 4 million tonnes and 5 million tonnes from 2015.
(Sourced from community.nasdaq.com)
It is reported that fast rising economies in Southeast Asia, Indonesia and Vietnam have taken different strategies in handling rising coal demand in the region.
Vietnam has announced that it will calibrate its exports to meet increasing coal demand in the domestic markets. Indonesia, on the other hand plans to increase exports and meet rising demand in the Asia Pacific Region.
The Indonesian Coal Mining Association said Jakarta is expected to upgrade its output in 2012 to no less than as 390 million tonnes of the fuel in 2012 to satisfy demand from Asian buyers particularly India and China.
A related Bloomberg report said the country is estimated to mine 360 million tons this year. Indonesia is still the world largest thermal coal exporter.
Mr Tran Xuan Hoa Vietnam state owned coal exporter Vinacomin chairman said in an annual coal exports report this month that Vietnam, on the other hand, decided to cut down its coal exports and be a net importer to support the growing local industries.
State run Vietnam News Agency reported quoting Vinacomin said coal exports will be slashed by 19.6% to 13.3 million tonnes in 2012 from 16.8 million MT this year.
Vinacomin said Vietnam coal exports will gradually be slashed to 8 million MT in 2013 and between 4 million tonnes and 5 million tonnes from 2015.
(Sourced from community.nasdaq.com)
Friday, December 16, 2011
CIL board approves proposal to acquire stakes in overseas firms
Friday, 16 Dec 2011
The Hindu reported that seeking to venture into Australia, Indonesia and United States to scout for mineral resources, Coal India Limited board has approved the proposal to acquire stakes in unlisted firms overseas for valid offers.
The CIL board gave its approval to the issue in wake of the finance ministry having granted approval last month to CIL to go ahead with a buyout of overseas firms that are unlisted.
The board, while granting approval, said CIL could evaluate the offers if only they are valid.
In the first phase of the program, the company will take up three offers in Australia, Indonesia and the US.
CIL has put together a war chest of INR 6,000 crore for acquisition of mines.
(Sourced from thehindu.com)
The Hindu reported that seeking to venture into Australia, Indonesia and United States to scout for mineral resources, Coal India Limited board has approved the proposal to acquire stakes in unlisted firms overseas for valid offers.
The CIL board gave its approval to the issue in wake of the finance ministry having granted approval last month to CIL to go ahead with a buyout of overseas firms that are unlisted.
The board, while granting approval, said CIL could evaluate the offers if only they are valid.
In the first phase of the program, the company will take up three offers in Australia, Indonesia and the US.
CIL has put together a war chest of INR 6,000 crore for acquisition of mines.
(Sourced from thehindu.com)
Monday, December 12, 2011
Weak rupee stalls overseas coal mine buys
Monday, 12 Dec 2011
Indian power producers, which were aggressively bidding for coal assets overseas over the past 12 to 18 months, are ‘fighting shy’ in pursuing further acquisitions, courtesy the rising cost of funding such acquisitions after the nearly 19% drop in the rupee since August, near standstill infrastructure sector, recent changes in rules by suppliers such as Indonesia, Australia and Africa, and a fall in their stock valuations, which reduce the ability of promoters to leverage on their, said investment bankers and consultants.
Mr Kameswara Rao leader for energy, utilities and mining at PwC India said that “Companies which have made big coal mine acquisitions in recent times will be very selective from here on as they need time to digest earlier acquisitions.”
According to Mr Sanjay Sakhuja CEO of Ambit Corporate Finance power and infrastructure companies are going through severe stress now. He said that “I am not anticipating any big mining deals by those firms, which have already swallowed big acquisitions.”
There has been tremendous shortage of domestic coal due various problems, including tighter environmental norms, the controversy surrounding mining licences in Karnataka and security threats from Maoist groups near coal mining areas, forcing private power producers to venture outside to source coal for their power projects.
Mr HK Mittal chairman of Mumbai based Mercator told Financial Chronicle that “Indian companies are going slow with their acquisition plans. There are several issues. Power projects are moving at a snail’s pace. Coal prices have also gone through the roof.”
TATA Power, which had been looking at small mines of around 10 million tonnes annual capacity in South Africa, Indonesia and Australia, may be going slow in any new purchase.
Mr S Ramakrishnan executive director of TATA Power recently told FC that the power sector is going through a tough phase in India. He added that “Buying new coal mines will be on hold till such time issues back home are sorted out. High coal prices and issues related to land acquisition have slowed down activities in the power sector. Poor financial health of distribution companies has led to drop in purchase of electricity by them, and merchant power rates have crashed.”
A Deutsche Bank report early this week said that owing to the ongoing and likely persisting coal shortage, India’s power demand-supply gap may not be bridged even in FY15.
(Sourced from www.mydigitalfc.com)
Indian power producers, which were aggressively bidding for coal assets overseas over the past 12 to 18 months, are ‘fighting shy’ in pursuing further acquisitions, courtesy the rising cost of funding such acquisitions after the nearly 19% drop in the rupee since August, near standstill infrastructure sector, recent changes in rules by suppliers such as Indonesia, Australia and Africa, and a fall in their stock valuations, which reduce the ability of promoters to leverage on their, said investment bankers and consultants.
Mr Kameswara Rao leader for energy, utilities and mining at PwC India said that “Companies which have made big coal mine acquisitions in recent times will be very selective from here on as they need time to digest earlier acquisitions.”
According to Mr Sanjay Sakhuja CEO of Ambit Corporate Finance power and infrastructure companies are going through severe stress now. He said that “I am not anticipating any big mining deals by those firms, which have already swallowed big acquisitions.”
There has been tremendous shortage of domestic coal due various problems, including tighter environmental norms, the controversy surrounding mining licences in Karnataka and security threats from Maoist groups near coal mining areas, forcing private power producers to venture outside to source coal for their power projects.
Mr HK Mittal chairman of Mumbai based Mercator told Financial Chronicle that “Indian companies are going slow with their acquisition plans. There are several issues. Power projects are moving at a snail’s pace. Coal prices have also gone through the roof.”
TATA Power, which had been looking at small mines of around 10 million tonnes annual capacity in South Africa, Indonesia and Australia, may be going slow in any new purchase.
Mr S Ramakrishnan executive director of TATA Power recently told FC that the power sector is going through a tough phase in India. He added that “Buying new coal mines will be on hold till such time issues back home are sorted out. High coal prices and issues related to land acquisition have slowed down activities in the power sector. Poor financial health of distribution companies has led to drop in purchase of electricity by them, and merchant power rates have crashed.”
A Deutsche Bank report early this week said that owing to the ongoing and likely persisting coal shortage, India’s power demand-supply gap may not be bridged even in FY15.
(Sourced from www.mydigitalfc.com)
Wednesday, December 7, 2011
Euro coal price up by 25 to 50 cents with oil gains
Wednesday, 07 Dec 2011
Reuters reported that physical prompt coal prices moved up by around 25 to 50 cents on Monday in line with oil's gains.
No fixed price trades were reported and demand remained minimal in Europe although steady enquiries are still coming through from China for January cargoes and several new Indian tenders have been issued.
One exporter said that "Oil's been the driver again, fundamentals are taking a back seat but the gap between API4 swaps and Richards Bay prices is too wide again and that's putting off buyers.”
Some analysts are forecasting a fall in prices from Q1 due to growing supply and limp demand but they caution that any further surge in oil will keep a floor under coal and stop a drift below $100.
A utility trader said that "South African coal looks on paper as if it's very good value compared with Indonesian into India but it remains to be seen what they'll actually buy.”
Chinese trade importers have said repeatedly during the past few months that they are not looking for spot cargoes due to high port stockpiles and credit issues but China imported a record level of South African coal in October and November.
(Sourced from Thomson Reuters)
Reuters reported that physical prompt coal prices moved up by around 25 to 50 cents on Monday in line with oil's gains.
No fixed price trades were reported and demand remained minimal in Europe although steady enquiries are still coming through from China for January cargoes and several new Indian tenders have been issued.
One exporter said that "Oil's been the driver again, fundamentals are taking a back seat but the gap between API4 swaps and Richards Bay prices is too wide again and that's putting off buyers.”
Some analysts are forecasting a fall in prices from Q1 due to growing supply and limp demand but they caution that any further surge in oil will keep a floor under coal and stop a drift below $100.
A utility trader said that "South African coal looks on paper as if it's very good value compared with Indonesian into India but it remains to be seen what they'll actually buy.”
Chinese trade importers have said repeatedly during the past few months that they are not looking for spot cargoes due to high port stockpiles and credit issues but China imported a record level of South African coal in October and November.
(Sourced from Thomson Reuters)
Tuesday, November 22, 2011
United Tractors to acquire two more mining sites in Kalimantan
Tuesday, 22 Nov 2011
The Jakarta Post reported that publicly listed heavy equipment distributor PT United Tractors, which also has coal mining interests, said is working to acquire two more mining sites in Kalimantan.
Mr Gidion Hasan director of finance and administration at United Tractors said that "One site is a Greenfield in Central Kalimantan and another site is a Brownfield in East Kalimantan."
He declined to reveal the two sites' sizes, saying the company had a confidentiality agreement. He said that "All I can say is that when the company carries out an acquisition, the site must have at least 30 million tonnes of coal reserves. However, it doesn't mean that each of those two sites to be acquired have 30 million tonnes of coal reserves."
Mr Gidion said that the company expected to finish the acquisition process early in 2012. He said that the company would likely maintain next year's capital expenditure at this year's figure of IDR 5 trillion, despite the acquisition plan.
He added that "We can't include spending on the acquisition plan in the capital expenditure because the plan may be accomplished or it may be unsuccessful."
He said that the company would finance the capital expenditure from internal cash, bank loans and the remaining funds from a rights issuance in June.
United Tractors still has IDR 1.77 trillion out of IDR 6.07 trillion gained in the rights issuance, which was the company's fourth. After paying IDR 45.83 billion for fees and expenses for the rights, United Tractors already used IDR 4.25 trillion by September 2011.
United Tractors, through its subsidiary PT Pamapersada Nusantara and PT Tuah Turangga Agung, currently has six concessions areas with a total of up to 369 million tonnes viable coal reserves in Kalimantan and Sumatra.
Mr Gidion said that United Tractors aimed to increase total reserves to up to 500 million tonnes as asked by its parent company, PT Astra International. The company reported coal sales at IDR 3.21 million tons as of September 2011.
Mining contracting division PT Pamapersada Nusantara reported coal production of 63.3 million tonnes by September 2011 and aimed to reach 84 million tonnes by the end of 2011.
United Tractors reported revenue of IDR 39.75 billion in the first nine months of 2011, increasing from IDR 27.81 billion in the same period last year. The company's net profit stood at IDR 4.35 billion by September 2011, rising 49% from IDR 2.96 billion year on year.
Its construction machinery division contributed about 50% of the total revenue, while the mining contracting division added 40% and coal mining 10%.
(Sourced TheJakartaPost)
The Jakarta Post reported that publicly listed heavy equipment distributor PT United Tractors, which also has coal mining interests, said is working to acquire two more mining sites in Kalimantan.
Mr Gidion Hasan director of finance and administration at United Tractors said that "One site is a Greenfield in Central Kalimantan and another site is a Brownfield in East Kalimantan."
He declined to reveal the two sites' sizes, saying the company had a confidentiality agreement. He said that "All I can say is that when the company carries out an acquisition, the site must have at least 30 million tonnes of coal reserves. However, it doesn't mean that each of those two sites to be acquired have 30 million tonnes of coal reserves."
Mr Gidion said that the company expected to finish the acquisition process early in 2012. He said that the company would likely maintain next year's capital expenditure at this year's figure of IDR 5 trillion, despite the acquisition plan.
He added that "We can't include spending on the acquisition plan in the capital expenditure because the plan may be accomplished or it may be unsuccessful."
He said that the company would finance the capital expenditure from internal cash, bank loans and the remaining funds from a rights issuance in June.
United Tractors still has IDR 1.77 trillion out of IDR 6.07 trillion gained in the rights issuance, which was the company's fourth. After paying IDR 45.83 billion for fees and expenses for the rights, United Tractors already used IDR 4.25 trillion by September 2011.
United Tractors, through its subsidiary PT Pamapersada Nusantara and PT Tuah Turangga Agung, currently has six concessions areas with a total of up to 369 million tonnes viable coal reserves in Kalimantan and Sumatra.
Mr Gidion said that United Tractors aimed to increase total reserves to up to 500 million tonnes as asked by its parent company, PT Astra International. The company reported coal sales at IDR 3.21 million tons as of September 2011.
Mining contracting division PT Pamapersada Nusantara reported coal production of 63.3 million tonnes by September 2011 and aimed to reach 84 million tonnes by the end of 2011.
United Tractors reported revenue of IDR 39.75 billion in the first nine months of 2011, increasing from IDR 27.81 billion in the same period last year. The company's net profit stood at IDR 4.35 billion by September 2011, rising 49% from IDR 2.96 billion year on year.
Its construction machinery division contributed about 50% of the total revenue, while the mining contracting division added 40% and coal mining 10%.
(Sourced TheJakartaPost)
Monday, November 21, 2011
Diplomacy for coal's sake
Monday, Nov21, 2011
The Government can take up the issue of coal pricing with Indonesia, the way China backs its businesses.
In August 2009, China arrested four employees of Rio Tinto on charges of stealing trade secrets and taking bribes. The arrests of the Anglo-Australian mining firm's Shanghai-based employees, which included an Australian citizen, were widely seen as action by China in retaliation to the collapse of Rio's proposed deal with Chinese state-owned firm Chinalco a couple of months earlier.
Rio had scrapped Chinalco's $19.5-billion investment in June that year in favour of a tie-up with fellow Anglo-Australian miner BHP Billiton. Despite the prospect of a diplomatic nightmare with one of its largest trading partners, China went ahead with the arrests. Subsequently, just before the trial, the Chinese state dropped the more serious charges of theft of trade secrets, while during the trial the defendants admitted to receiving bribes.
The events that led up to the trial, though, prompted analysts to conclude that the political relationship between Beijing and Canberra had touched “a generational nadir”.
Though the Chinese action was widely seen as an overreaction by the country to an international commercial deal that had gone awry, it is by no means an isolated case. Western powers, especially the US, are known to go to the extreme of orchestrating regime changes in countries if commercial interests of their companies are at stake.
Impact on infrastructure
India has been somewhat passive in its diplomatic overtures and generally indifferent to the fate of its companies abroad. A case in point is the quandary that Indian utilities and trading firms are facing in Indonesia, where a policy change in that country's coal pricing late last year has been applied retrospectively on contracts signed by Indian companies there.
This has created a big question mark for the country's infrastructure sectors, which had been banking heavily on Indonesian coal to tide over a widening domestic production deficit.
Tata Power, Reliance Power, GVK, Lanco and the Adani Group are among utilities that have struck deals in Indonesia during the last couple of years to either buy stakes in coal assets or for long-term supplies. The policy shocker came in September 2010, when the Indonesian Government ratified a new regulation that mandatorily benchmarked all coal offtake deals to international market rates.
The new rule, which was to apply to contracts retrospectively, immediately led to a sudden, unexpected surge in the price of coal. Indian developers had bid for specific domestic projects, based on their agreements with fuel suppliers in Indonesia.
Case for intervention
In light of the big hit on players across the infrastructure sector and the fact that there was such a large exposure of Indian commercial interest in Indonesia, private sector players feel that there perhaps was a case for the Indian Government to intervene through broader diplomatic channels. This is all the more because India is projected to overtake Japan as the biggest buyer of Indonesian coal in 2011, and is widely tipped to stay ahead of China in the competition for coal supplies from Indonesia. A big customer is generally assumed to have a certain clout and advantage.
However, as things stand, New Delhi has decided to mostly stay clear of direct intervention in the matter. That is, with the exception of a letter reportedly written by the Indian Embassy at Jakarta to the Directorate-General of Coal in the Ministry of Energy and Mineral Resources of the Government of Indonesia, seeking certain clarifications on the new regulations. This was at the behest of the Union Power Ministry and the Association of Power Producers, an industry body representing Tata Power, Reliance Power, Lanco and GMR, among others. However, the industry says the intervention is just “too little, too late”.
The clamour for a bit of Government-to-Government lobbying, it is felt, may be effective, especially as efforts are currently on to double bilateral trade between the two nations over the next four years through a comprehensive free trade pact. Also, the bilateral trade between India and Indonesia stood at $13.2 billion in 2010, but it is highly skewed in favour of the latter.
While it goes without saying that it is the sovereign right of a country to decide on how, or on what terms, it will let outsiders exploit its resources, there appear to be some loopholes in the Indonesian Government's stipulation. A diplomatic intervention in the matter, industry players say, could have sent home the message that the Government of India is willing to back up its firms.
Coal imports
In India, of the 43,000 MW of power projects awarded through competitive bidding so far, about 13,000 MW of generation capacity is dependent on imported coal. During the next five years (Twelfth Plan), about 74,000 MW of coal-fired capacity is slated to come up, of which most projects would be forced to run on imported coal.
Back-of-the envelope calculations show that against a projected requirement of 742 million tonnes of thermal coal for fuelling coal-fired stations by the end of the Twelfth Plan, only 527 million tonnes of domestic coal is likely to be available. This translates into a shortfall of 215 million tonnes by 2017. Currently, about 50 per cent of India's imported coal comes from Indonesia and around 5 per cent from Australia. Mozambique and South Africa make up for much of the rest.
The view is that if India is going to be a big importer of natural resources, it should leverage the best commercial terms for itself and its firms — be it State-owned or private. Something that China has been able to master.
Keywords: Anglo-Australian miner, Coal, natural resources, China, trade secrets
The Government can take up the issue of coal pricing with Indonesia, the way China backs its businesses.
In August 2009, China arrested four employees of Rio Tinto on charges of stealing trade secrets and taking bribes. The arrests of the Anglo-Australian mining firm's Shanghai-based employees, which included an Australian citizen, were widely seen as action by China in retaliation to the collapse of Rio's proposed deal with Chinese state-owned firm Chinalco a couple of months earlier.
Rio had scrapped Chinalco's $19.5-billion investment in June that year in favour of a tie-up with fellow Anglo-Australian miner BHP Billiton. Despite the prospect of a diplomatic nightmare with one of its largest trading partners, China went ahead with the arrests. Subsequently, just before the trial, the Chinese state dropped the more serious charges of theft of trade secrets, while during the trial the defendants admitted to receiving bribes.
The events that led up to the trial, though, prompted analysts to conclude that the political relationship between Beijing and Canberra had touched “a generational nadir”.
Though the Chinese action was widely seen as an overreaction by the country to an international commercial deal that had gone awry, it is by no means an isolated case. Western powers, especially the US, are known to go to the extreme of orchestrating regime changes in countries if commercial interests of their companies are at stake.
Impact on infrastructure
India has been somewhat passive in its diplomatic overtures and generally indifferent to the fate of its companies abroad. A case in point is the quandary that Indian utilities and trading firms are facing in Indonesia, where a policy change in that country's coal pricing late last year has been applied retrospectively on contracts signed by Indian companies there.
This has created a big question mark for the country's infrastructure sectors, which had been banking heavily on Indonesian coal to tide over a widening domestic production deficit.
Tata Power, Reliance Power, GVK, Lanco and the Adani Group are among utilities that have struck deals in Indonesia during the last couple of years to either buy stakes in coal assets or for long-term supplies. The policy shocker came in September 2010, when the Indonesian Government ratified a new regulation that mandatorily benchmarked all coal offtake deals to international market rates.
The new rule, which was to apply to contracts retrospectively, immediately led to a sudden, unexpected surge in the price of coal. Indian developers had bid for specific domestic projects, based on their agreements with fuel suppliers in Indonesia.
Case for intervention
In light of the big hit on players across the infrastructure sector and the fact that there was such a large exposure of Indian commercial interest in Indonesia, private sector players feel that there perhaps was a case for the Indian Government to intervene through broader diplomatic channels. This is all the more because India is projected to overtake Japan as the biggest buyer of Indonesian coal in 2011, and is widely tipped to stay ahead of China in the competition for coal supplies from Indonesia. A big customer is generally assumed to have a certain clout and advantage.
However, as things stand, New Delhi has decided to mostly stay clear of direct intervention in the matter. That is, with the exception of a letter reportedly written by the Indian Embassy at Jakarta to the Directorate-General of Coal in the Ministry of Energy and Mineral Resources of the Government of Indonesia, seeking certain clarifications on the new regulations. This was at the behest of the Union Power Ministry and the Association of Power Producers, an industry body representing Tata Power, Reliance Power, Lanco and GMR, among others. However, the industry says the intervention is just “too little, too late”.
The clamour for a bit of Government-to-Government lobbying, it is felt, may be effective, especially as efforts are currently on to double bilateral trade between the two nations over the next four years through a comprehensive free trade pact. Also, the bilateral trade between India and Indonesia stood at $13.2 billion in 2010, but it is highly skewed in favour of the latter.
While it goes without saying that it is the sovereign right of a country to decide on how, or on what terms, it will let outsiders exploit its resources, there appear to be some loopholes in the Indonesian Government's stipulation. A diplomatic intervention in the matter, industry players say, could have sent home the message that the Government of India is willing to back up its firms.
Coal imports
In India, of the 43,000 MW of power projects awarded through competitive bidding so far, about 13,000 MW of generation capacity is dependent on imported coal. During the next five years (Twelfth Plan), about 74,000 MW of coal-fired capacity is slated to come up, of which most projects would be forced to run on imported coal.
Back-of-the envelope calculations show that against a projected requirement of 742 million tonnes of thermal coal for fuelling coal-fired stations by the end of the Twelfth Plan, only 527 million tonnes of domestic coal is likely to be available. This translates into a shortfall of 215 million tonnes by 2017. Currently, about 50 per cent of India's imported coal comes from Indonesia and around 5 per cent from Australia. Mozambique and South Africa make up for much of the rest.
The view is that if India is going to be a big importer of natural resources, it should leverage the best commercial terms for itself and its firms — be it State-owned or private. Something that China has been able to master.
Keywords: Anglo-Australian miner, Coal, natural resources, China, trade secrets
Saturday, November 12, 2011
Banpu poised to gain as demand drives up coal prices
Saturday, 12 Nov' 2011
Banpu Plc, Thailand's biggest coal miner, expects average coal prices next year to be higher than this year's price of US$97 per tonne, thanks to higher regional demand.
Chief financial officer Somruedee Somphong said the company would secure 50% of next year's coal sales contracts by next month.
The company this year expects to sell 40 million tonnes of coal, with 25 million from its five mines in Indonesia. Of the 15 million tonnes sold in Australia, 35% is exported. Mrs Somruedee said the target next year would be 16 million tonnes with 40% exported.
"This will cause average selling prices to increase, as export prices are higher than prices in the domestic market," she said yesterday.
Sales from Indonesia next year are forecast to rise to 27 million tonnes.
Banpu, which last year acquired Australia's Centennial Coal Co, expects a minimal impact from Australia's new clean energy act, which will impose carbon taxes starting in July. It estimated the law would add only 30 cents a tonne to Centennial's cost of production.
Meanwhile, Banpu expects its most recent acquisition of Perth-based Hunnu Coal to be finalised by December. Production will start in 2013 at 3-5 million tonnes per year initially.
Banpu's net profit in the third quarter of this year totalled 4.21 billion baht, a 68.4% decrease from 13.28 billion in the same period last year. However, last year it had an extraordinary gain from selling an 8.72% stake in PT Indo Tambangraya Megah Tbk worth 11.7 billion baht.
Net profit in the third quarter was down 33% from the second quarter.
Nine-month consolidated net profit was 16.53 billion baht (60.83 baht a share), compared with 19.76 billion (72.70 baht a share) in the same period last year.
Sales revenue in the third quarter totalled 30.69 billion baht, a rise of 16.99 billion baht or 124% from the same period last year due to a 117% increase in volume to 10.94 million tonnes.
The average selling price of coal from the company's Indonesian mines rose 27% year-on-year in the third quarter to $98.99 per tonne.
Revenue from coal sales is 96% of total sales revenue, which includes 20.7 billion baht from sales in Indonesia, 8.83 billion from Australia and 8 million from Thailand, where the company's mines are almost depleted.
Revenue from electricity sales from its three plants in China as well as other revenue totalled 1.15 billion baht or 4% of total sales.
CEO Chanin Vongkusolkit said profit margin in the third quarter for the coal business was 47%, with higher sales in Indonesia and rising prices.
BANPU shares closed yesterday on the SET at 580 baht, down two baht, in trade worth 636.55 million baht.
(sourced BangkokPost)
Banpu Plc, Thailand's biggest coal miner, expects average coal prices next year to be higher than this year's price of US$97 per tonne, thanks to higher regional demand.
Chief financial officer Somruedee Somphong said the company would secure 50% of next year's coal sales contracts by next month.
The company this year expects to sell 40 million tonnes of coal, with 25 million from its five mines in Indonesia. Of the 15 million tonnes sold in Australia, 35% is exported. Mrs Somruedee said the target next year would be 16 million tonnes with 40% exported.
"This will cause average selling prices to increase, as export prices are higher than prices in the domestic market," she said yesterday.
Sales from Indonesia next year are forecast to rise to 27 million tonnes.
Banpu, which last year acquired Australia's Centennial Coal Co, expects a minimal impact from Australia's new clean energy act, which will impose carbon taxes starting in July. It estimated the law would add only 30 cents a tonne to Centennial's cost of production.
Meanwhile, Banpu expects its most recent acquisition of Perth-based Hunnu Coal to be finalised by December. Production will start in 2013 at 3-5 million tonnes per year initially.
Banpu's net profit in the third quarter of this year totalled 4.21 billion baht, a 68.4% decrease from 13.28 billion in the same period last year. However, last year it had an extraordinary gain from selling an 8.72% stake in PT Indo Tambangraya Megah Tbk worth 11.7 billion baht.
Net profit in the third quarter was down 33% from the second quarter.
Nine-month consolidated net profit was 16.53 billion baht (60.83 baht a share), compared with 19.76 billion (72.70 baht a share) in the same period last year.
Sales revenue in the third quarter totalled 30.69 billion baht, a rise of 16.99 billion baht or 124% from the same period last year due to a 117% increase in volume to 10.94 million tonnes.
The average selling price of coal from the company's Indonesian mines rose 27% year-on-year in the third quarter to $98.99 per tonne.
Revenue from coal sales is 96% of total sales revenue, which includes 20.7 billion baht from sales in Indonesia, 8.83 billion from Australia and 8 million from Thailand, where the company's mines are almost depleted.
Revenue from electricity sales from its three plants in China as well as other revenue totalled 1.15 billion baht or 4% of total sales.
CEO Chanin Vongkusolkit said profit margin in the third quarter for the coal business was 47%, with higher sales in Indonesia and rising prices.
BANPU shares closed yesterday on the SET at 580 baht, down two baht, in trade worth 636.55 million baht.
(sourced BangkokPost)
Thursday, November 3, 2011
Dry Bulk Market officially in the "Red" on lower cargo demand - Nikos Roussanoglou, Hellenic Shipping
Thursday, 03 November 11
The dry bulk market kept falling yesterday, on lower iron ore demand, which has caused the industry’s benchmark, the BDI (Baltic Dry Index) to plunge to more than one-month lows, ending the session down to 1,859 points, or by 2.77%.
All shipping segments were down yesterday, with the Capesize market sustaining the biggest losses by 3.23%. The Panamax market was down by 1.20%.
According to the latest report from Shiptrade Services, after the previous weeks’ steady increase, the market turned downwards with Capesizes suffering the most. Commenting on the Capesize market, it mentioned that “the week began positively, but lack of cargoes in the Pacific forced Owners to lower their levels, or start ballasting towards the Atlantic.
Atlantic basin was active, with good cargo volume mostly coming ex Brazil.
Rates for Transatlantic rounds concluded at USD 34.000 per day, while on the Fronthaul trade, rates for trips to F.East, levels concluded at USD 49.000 per day. On the Tubarao/Qingdao trade rates were fluctuating between USD 30.00 – 30.50 pmt but week’s closing rates softened as an effect of the ballasters from the Pacific.
Pacific basin was quiet due to the absence of the iron ore majors but Owners could see a few alternative cargoes ex S.Africa / W.Canada. Rates softened, and at weeks closing, rates for the Australia/China trade concluded at USD 11.00pmt, while on TCT basis, rates for Pacific round concluded at USD 25.000 per day basis N.China delivery” said Shiptrade.
In a separate report Fearnley’s said that “after a relatively long period with improving rates, the Cape market experiences a correction mid last week. Rates kept dropping throughout this week, with West Australia/China being done just bellow usd 10 pmt. Tubarao/Qingdao was done last week around usd 32 pmt, the lowest done this week is just below usd 25 pmt. The drop in spot rates has resulted in less period activity with chrtrs aiming around mid teens, a level perceived to be of non interest to the owners. The rest of the week is remained to be quiet with Eisbein going on in Germany” said the report.
On the Panamax front, the Nordic-based shipbroker it said “fair activity with mineral requirements in the North Atlantic from USEC and Baltic catering for healthy levels as market is tight for prompt loaders. Fixing levels in the 20´s for Baltic rounds, upper teens for TA rounds. Less activity and weakness in the USG and ECSA from an increasing number of
ballasters appears from the Med and Far East. Levels for trip out hovering in the 26 + 600 range basis APS. In the Far East activity is low, tonnage lists grow, and rates are under downward pressure. NOPAC rounds 12500, period activity scant. The general sentiment is losing confidence from a slow and descending forward market” said Fearnley’s.
Shiptrade Services mentioned that “Panamax rates dropped slightly since the cargo volume was not enough to cover the available tonnage. In the Atlantic basin, the USG market remained the driving force, especially for the Fronthaul cargoes with fixtures at USD 26.500+650.000 GBB basis APS USG. Rates for Transatlantic round remained at USD 17.500 - 18.000 per day. In the Pacific basin activity remained flat with many Charterers waiting for rates to drop further. At week’s closing, rates for S.China/S.E.Asia positions interested for
Indonesia round, concluded at USD 14.000 – 14.500 per day. Positions at N.china/Japan range interested for trips ex NOPAC could get USD 13-14.500 per day” said Shiptrade.
On the Supramax trades the Piraeus-based shipbroker mentioned that “the market followed the same trend, with less cargoes and rates dropping. In the Atlantic basin, we could notice a decrease in the number of cargoes, but some areas were more attractive. In the USG region rates for trip to continent/East Mediterranean remained steady close to USD 30.000 per day, while for trips to F.East fixtures reported at USD 38.000 per day.
On the Mediterranean/Bl.Sea market, rates for trips to F.East held around USD 24 - 25.000per day, while rates for trips to USG were between USD 9 -10.000per day. On the ECSA region, vessels concluded at rates close to USD 18-19.000per day + 400.000 ballast bonus basis APS ECSA delivery for trips to F.East, and for trips to Continent/Med rates concluded at USD 16-17.000per day. In the pacific basin, rates dropped, as there were not many cargoes from Indonesia, and many Charterers preferred not to move and see how the market will proceed.
Some fixtures concluded to direction India but levels were fluctuating between USD 8.000 – 11.000per day. On the other hand, for the N.China positions, a few cargoes ex NOPAC remained an attractive solution at rates of USD 12.000per day (M/V Prabhu Jivesh 50956 / 02’)” concluded the shipbroker.
By:Nikos Roussanoglou, Hellenic Shipping
If you believe an article violates your rights or the rights of others, please contact us.
(sourced coalspot.com)
The dry bulk market kept falling yesterday, on lower iron ore demand, which has caused the industry’s benchmark, the BDI (Baltic Dry Index) to plunge to more than one-month lows, ending the session down to 1,859 points, or by 2.77%.
All shipping segments were down yesterday, with the Capesize market sustaining the biggest losses by 3.23%. The Panamax market was down by 1.20%.
According to the latest report from Shiptrade Services, after the previous weeks’ steady increase, the market turned downwards with Capesizes suffering the most. Commenting on the Capesize market, it mentioned that “the week began positively, but lack of cargoes in the Pacific forced Owners to lower their levels, or start ballasting towards the Atlantic.
Atlantic basin was active, with good cargo volume mostly coming ex Brazil.
Rates for Transatlantic rounds concluded at USD 34.000 per day, while on the Fronthaul trade, rates for trips to F.East, levels concluded at USD 49.000 per day. On the Tubarao/Qingdao trade rates were fluctuating between USD 30.00 – 30.50 pmt but week’s closing rates softened as an effect of the ballasters from the Pacific.
Pacific basin was quiet due to the absence of the iron ore majors but Owners could see a few alternative cargoes ex S.Africa / W.Canada. Rates softened, and at weeks closing, rates for the Australia/China trade concluded at USD 11.00pmt, while on TCT basis, rates for Pacific round concluded at USD 25.000 per day basis N.China delivery” said Shiptrade.
In a separate report Fearnley’s said that “after a relatively long period with improving rates, the Cape market experiences a correction mid last week. Rates kept dropping throughout this week, with West Australia/China being done just bellow usd 10 pmt. Tubarao/Qingdao was done last week around usd 32 pmt, the lowest done this week is just below usd 25 pmt. The drop in spot rates has resulted in less period activity with chrtrs aiming around mid teens, a level perceived to be of non interest to the owners. The rest of the week is remained to be quiet with Eisbein going on in Germany” said the report.
On the Panamax front, the Nordic-based shipbroker it said “fair activity with mineral requirements in the North Atlantic from USEC and Baltic catering for healthy levels as market is tight for prompt loaders. Fixing levels in the 20´s for Baltic rounds, upper teens for TA rounds. Less activity and weakness in the USG and ECSA from an increasing number of
ballasters appears from the Med and Far East. Levels for trip out hovering in the 26 + 600 range basis APS. In the Far East activity is low, tonnage lists grow, and rates are under downward pressure. NOPAC rounds 12500, period activity scant. The general sentiment is losing confidence from a slow and descending forward market” said Fearnley’s.
Shiptrade Services mentioned that “Panamax rates dropped slightly since the cargo volume was not enough to cover the available tonnage. In the Atlantic basin, the USG market remained the driving force, especially for the Fronthaul cargoes with fixtures at USD 26.500+650.000 GBB basis APS USG. Rates for Transatlantic round remained at USD 17.500 - 18.000 per day. In the Pacific basin activity remained flat with many Charterers waiting for rates to drop further. At week’s closing, rates for S.China/S.E.Asia positions interested for
Indonesia round, concluded at USD 14.000 – 14.500 per day. Positions at N.china/Japan range interested for trips ex NOPAC could get USD 13-14.500 per day” said Shiptrade.
On the Supramax trades the Piraeus-based shipbroker mentioned that “the market followed the same trend, with less cargoes and rates dropping. In the Atlantic basin, we could notice a decrease in the number of cargoes, but some areas were more attractive. In the USG region rates for trip to continent/East Mediterranean remained steady close to USD 30.000 per day, while for trips to F.East fixtures reported at USD 38.000 per day.
On the Mediterranean/Bl.Sea market, rates for trips to F.East held around USD 24 - 25.000per day, while rates for trips to USG were between USD 9 -10.000per day. On the ECSA region, vessels concluded at rates close to USD 18-19.000per day + 400.000 ballast bonus basis APS ECSA delivery for trips to F.East, and for trips to Continent/Med rates concluded at USD 16-17.000per day. In the pacific basin, rates dropped, as there were not many cargoes from Indonesia, and many Charterers preferred not to move and see how the market will proceed.
Some fixtures concluded to direction India but levels were fluctuating between USD 8.000 – 11.000per day. On the other hand, for the N.China positions, a few cargoes ex NOPAC remained an attractive solution at rates of USD 12.000per day (M/V Prabhu Jivesh 50956 / 02’)” concluded the shipbroker.
By:Nikos Roussanoglou, Hellenic Shipping
If you believe an article violates your rights or the rights of others, please contact us.
(sourced coalspot.com)
Tuesday, November 1, 2011
Indonesia's Borneo Lumbung to buy Bumi stake for $1 bln
Tue Nov 1, 2011
* Deal to help Bakrie pay bulk of $1.35 bln debt, avoid default
* Deal values Bumi Plc at 10.91 pound each
* Talks with Glencore fail because lenders uncomfortable
* UBS says deal is net positive for Bumi
By Saeed Azhar and Fathiya Dahrul
SINGAPORE/JAKARTA, Nov 1 (Reuters) - Indonesia's Bakrie Group is selling a 23.8 percent stake in London-listed Bumi Plc , its joint venture with financier Nathaniel Rothschild, to coal miner PT Borneo Lumbung Energi in a $1 billion deal to avoid a loan default.
The deal with Borneo, which is backed by Indonesian billionaire businessman Samin Tan, would help Bakrie pay off the bulk of an $1.35 billion loan and extricate itself from a debt crunch that has weighed on the share price of the world's largest thermal coal exporter Bumi Resources .
The agreement between the Bakrie Group, run by one of Indonesia's most powerful families, and Tan marks the second time in three years that the Bakrie family has had to scramble together a transaction to ease its debt load.
The deal was sealed after Glencore , the world's largest diversified commodity trader, dropped out of talks on refinancing the Bakrie loan.
It also marks the second time Tan, a former partner at accounting firm Deloitte, has negotiated to buy a stake in Bumi, having failed to strike a bold deal in 2006.
Tan succeeded this time, with PT Borneo confirming the agreement in a statement, adding that the total consideration of $1 billion valued Bumi plc's shares at approximately 10.91 pounds each at the date of the announcement. That translates to a 6 percent premium to the last 6-month volume-weighted average price, and would be payable in cash.
"The biggest haircut in this deal has been taken by the Bakries," said a source with direct knowledge of the deal. "They have lost half their stake in Bumi Plc."
GLENCORE DEAL FELL THROUGH
Sources close to the deal told Reuters earlier that talks between the Bakrie Group and Swiss-based Glencore, the previous frontrunner, fell through because lenders were not comfortable with the structure of the proposal.
Glencore had been looking for additional marketing rights over Bumi's coal in return for lending Bakrie $800-$900 million.
"We think it is net positive for Bumi not having to incur higher marketing costs from allocating greater volumes to the trader," said Singapore-based UBS analyst Andreas Bokkenheuser in a note to clients.
However stock investors remained apprehensive as shares of PT Bumi Resources , Asia's biggest thermal coal exporter, and coking coal producer PT Borneo Lumbung Energi & Metal both fell.
PT Borneo dropped 11.7 percent and Bumi fell 4.3 percent, compared with a fall of 1.3 percent for Jakarta's benchmark index .
Tan indirectly controls 73 percent of PT Borneo and also owns Indonesian investment bank Renaissance Capital.
The Bakrie Group, a sprawling conglomerate with interests in property, energy, plantations, coal and telecoms, also fended off debt crises in 1998 and 2008.
Its controlling family is headed by Aburizal Bakrie, chairman of Indonesia's Golkar Party, who many analysts believe will run for the presidency of Southeast Asia's largest economy in 2014.
CONTROL OF MINES
Tan, an ethnic Chinese Indonesian from the small city of Bengkalis in central Sumatra, has previously played down any direct connection with the powerful Bakrie family.
In a 2006 interview with Reuters, he said he was a "simple, homegrown financial professional" and added that Renaissance was independent of Bakrie.
The deal, which would keep control of the Bakrie Group's world-class mines in Indonesian hands, is part of the family's attempts to refinance the loan obtained in March this year to consolidate debts.
Credit Suisse arranged the loan, secured against the Bakrie Group's roughly 47 percent stake in Bumi Plc, and lenders included the Swiss bank and a group of hedge funds.
Glencore, which already markets Bumi coal, has frequently used its deep pockets to help out troubled counterparties, cementing the relationships it sees as key to its business.
The world's largest diversified commodity trader had been ahead of rival Vitol and others in negotiating a deal.
Standard Chartered is advising Borneo and is also arranging the financing, while Credit Suisse is advising the Bakrie family and its various entities, the sources said.
"This transaction creates a partnership between two leading mining groups in Indonesia," said Tan, who is also president director of PT Borneo, in a statement.
"The transaction also provides BORN (Borneo) with exposure to a high quality metals portfolio, thus transforming BORN from a pure coking coal producer into a world class diversified natural resources producer."
After the transaction, Borneo together with PT Bakrie & Brothers Tbk and Long Haul Holdings -- companies controlled by the Bakrie Group -- would own an approximate 47.6 percent stake and an approximate 29.99 percent voting interest in Bumi Plc, according to the document seen by Reuters.
The deal is subject to approval of Borneo shareholders in a meeting on Dec. 15 -- a formality since the deal document states Tan's vehicle, PT Republik Energi & Metal, will put its 73 percent holding behind the agreement -- and certain other conditions, including regulatory approvals.
Bumi Resources' share price has been weighed down by investor concerns over high debt levels and transparency. Indonesia's stock exchange said last year it would fine three Bakrie firms, including the family's holding firm Bakrie & Bros, for failing to explain discrepancies in their financial reports.
The London-listing, a joint venture engineered by Rothschild, the billionaire scion of the European banking dynasty, through a complex reverse takeover, was meant to bring greater corporate governance and better access to capital.
But a sharp decline since June in the share price of Bumi Plc amid falling equity and commodity markets triggered a mandatory repayment clause on the one-year $1.35 billion loan that had been due to mature in March 2012.
(sourced Reuters)
* Deal to help Bakrie pay bulk of $1.35 bln debt, avoid default
* Deal values Bumi Plc at 10.91 pound each
* Talks with Glencore fail because lenders uncomfortable
* UBS says deal is net positive for Bumi
By Saeed Azhar and Fathiya Dahrul
SINGAPORE/JAKARTA, Nov 1 (Reuters) - Indonesia's Bakrie Group is selling a 23.8 percent stake in London-listed Bumi Plc , its joint venture with financier Nathaniel Rothschild, to coal miner PT Borneo Lumbung Energi in a $1 billion deal to avoid a loan default.
The deal with Borneo, which is backed by Indonesian billionaire businessman Samin Tan, would help Bakrie pay off the bulk of an $1.35 billion loan and extricate itself from a debt crunch that has weighed on the share price of the world's largest thermal coal exporter Bumi Resources .
The agreement between the Bakrie Group, run by one of Indonesia's most powerful families, and Tan marks the second time in three years that the Bakrie family has had to scramble together a transaction to ease its debt load.
The deal was sealed after Glencore , the world's largest diversified commodity trader, dropped out of talks on refinancing the Bakrie loan.
It also marks the second time Tan, a former partner at accounting firm Deloitte, has negotiated to buy a stake in Bumi, having failed to strike a bold deal in 2006.
Tan succeeded this time, with PT Borneo confirming the agreement in a statement, adding that the total consideration of $1 billion valued Bumi plc's shares at approximately 10.91 pounds each at the date of the announcement. That translates to a 6 percent premium to the last 6-month volume-weighted average price, and would be payable in cash.
"The biggest haircut in this deal has been taken by the Bakries," said a source with direct knowledge of the deal. "They have lost half their stake in Bumi Plc."
GLENCORE DEAL FELL THROUGH
Sources close to the deal told Reuters earlier that talks between the Bakrie Group and Swiss-based Glencore, the previous frontrunner, fell through because lenders were not comfortable with the structure of the proposal.
Glencore had been looking for additional marketing rights over Bumi's coal in return for lending Bakrie $800-$900 million.
"We think it is net positive for Bumi not having to incur higher marketing costs from allocating greater volumes to the trader," said Singapore-based UBS analyst Andreas Bokkenheuser in a note to clients.
However stock investors remained apprehensive as shares of PT Bumi Resources , Asia's biggest thermal coal exporter, and coking coal producer PT Borneo Lumbung Energi & Metal both fell.
PT Borneo dropped 11.7 percent and Bumi fell 4.3 percent, compared with a fall of 1.3 percent for Jakarta's benchmark index .
Tan indirectly controls 73 percent of PT Borneo and also owns Indonesian investment bank Renaissance Capital.
The Bakrie Group, a sprawling conglomerate with interests in property, energy, plantations, coal and telecoms, also fended off debt crises in 1998 and 2008.
Its controlling family is headed by Aburizal Bakrie, chairman of Indonesia's Golkar Party, who many analysts believe will run for the presidency of Southeast Asia's largest economy in 2014.
CONTROL OF MINES
Tan, an ethnic Chinese Indonesian from the small city of Bengkalis in central Sumatra, has previously played down any direct connection with the powerful Bakrie family.
In a 2006 interview with Reuters, he said he was a "simple, homegrown financial professional" and added that Renaissance was independent of Bakrie.
The deal, which would keep control of the Bakrie Group's world-class mines in Indonesian hands, is part of the family's attempts to refinance the loan obtained in March this year to consolidate debts.
Credit Suisse arranged the loan, secured against the Bakrie Group's roughly 47 percent stake in Bumi Plc, and lenders included the Swiss bank and a group of hedge funds.
Glencore, which already markets Bumi coal, has frequently used its deep pockets to help out troubled counterparties, cementing the relationships it sees as key to its business.
The world's largest diversified commodity trader had been ahead of rival Vitol and others in negotiating a deal.
Standard Chartered is advising Borneo and is also arranging the financing, while Credit Suisse is advising the Bakrie family and its various entities, the sources said.
"This transaction creates a partnership between two leading mining groups in Indonesia," said Tan, who is also president director of PT Borneo, in a statement.
"The transaction also provides BORN (Borneo) with exposure to a high quality metals portfolio, thus transforming BORN from a pure coking coal producer into a world class diversified natural resources producer."
After the transaction, Borneo together with PT Bakrie & Brothers Tbk and Long Haul Holdings -- companies controlled by the Bakrie Group -- would own an approximate 47.6 percent stake and an approximate 29.99 percent voting interest in Bumi Plc, according to the document seen by Reuters.
The deal is subject to approval of Borneo shareholders in a meeting on Dec. 15 -- a formality since the deal document states Tan's vehicle, PT Republik Energi & Metal, will put its 73 percent holding behind the agreement -- and certain other conditions, including regulatory approvals.
Bumi Resources' share price has been weighed down by investor concerns over high debt levels and transparency. Indonesia's stock exchange said last year it would fine three Bakrie firms, including the family's holding firm Bakrie & Bros, for failing to explain discrepancies in their financial reports.
The London-listing, a joint venture engineered by Rothschild, the billionaire scion of the European banking dynasty, through a complex reverse takeover, was meant to bring greater corporate governance and better access to capital.
But a sharp decline since June in the share price of Bumi Plc amid falling equity and commodity markets triggered a mandatory repayment clause on the one-year $1.35 billion loan that had been due to mature in March 2012.
(sourced Reuters)
Saturday, October 29, 2011
Japan's Sept coking coal imports by source
Sat,Oct29, 2011
TOKYO(Reuters) - Following is a table of coking coal imports for September released by Japan's Ministry of Finance on Friday.
Figures are converted from yen to dollars using Japan Customs' official conversion rate. Volumes are in tonnes.
TOKYO(Reuters) - Following is a table of coking coal imports for September released by Japan's Ministry of Finance on Friday.
Figures are converted from yen to dollars using Japan Customs' official conversion rate. Volumes are in tonnes.
Country Sept Sept Aug Aug M/M Yr/Yr YTD YTD YTD (Yr/Yr %)
Name Tonnes $/Tonne Tonnes $/Tonne % % Tonnes $/Tonne Tonnes
China 3,287 274.62 98,740 153.31 -96.7 952,382 256.03 101.7
Mongolia - - - -100.0
Indonesia 1,154,996 146.21 1,190,021 139.47 -2.9 -8.7 10,923,282 129.18 -21.6
India - - 1 7,663.54 -100.0
Russia 265,332 269.28 228,585 305.84 16.1 85.8 1,963,922 246.26 21.0
Canada 440,902 313.80 848,777 303.11 -48.1 -13.4 5,388,836 264.89 -21.8
USA 227,390 264.14 500,651 279.37 -54.6 -37.1 4,300,965 257.58 123.2
Mexico - - 75,764 301.31
Columbia - - 61,844 296.64
Australia 3,285,048 273.16 3,153,109 285.38 4.2 -4.2 27,226,212 241.95 -16.5
New Zealand - - -100.0 253,020 245.66 -27.2
Total 5,376,955 248.65 6,019,883 257.15 -10.7 -6.8 51,146,228 222.20 -11.6
(sourced Reuters)
Friday, October 28, 2011
MahaGenco to increase steam coal import
Friday, 28 Oct 2011
BS reported that amid rising constraints in the availability of coal from Coal India Limited and its associate companies, state run Maharashtra State Power Generation Company has decided to increase the import of coal.
To start with, MahaGenco, whose plants faced a decline in generation, has floated a tender for the import of 0.2 million tonne of coal.
The company may also consider an additional import of up to 1 million tonne of coal.
MahaGenco, with an installed capacity of 7,500 MW, has a total requirement of 45 million tonne, of which it imports 4 to 5 million tonne.
A MahaGenco official told Business Standard, “We are aware that the supply of coal is expected to become a major issue in the days to come and therefore, we are looking at the possibility of more imports. New plants can absorb more quantity of imported coal, unlike old plants, which have limitations in this regard.”
He, however, added increased coal prices and restrictions imposed by several coal rich countries, including Australia, South Africa, Mozambique and Indonesia, are issues which needed to be considered while deciding to import additional coal.
The official also said domestic coal was priced at Rs 1,600-2,000 per tonne, while imported came at a price of Rs 5,000 per tonne.
(sourced from Business Standard)
BS reported that amid rising constraints in the availability of coal from Coal India Limited and its associate companies, state run Maharashtra State Power Generation Company has decided to increase the import of coal.
To start with, MahaGenco, whose plants faced a decline in generation, has floated a tender for the import of 0.2 million tonne of coal.
The company may also consider an additional import of up to 1 million tonne of coal.
MahaGenco, with an installed capacity of 7,500 MW, has a total requirement of 45 million tonne, of which it imports 4 to 5 million tonne.
A MahaGenco official told Business Standard, “We are aware that the supply of coal is expected to become a major issue in the days to come and therefore, we are looking at the possibility of more imports. New plants can absorb more quantity of imported coal, unlike old plants, which have limitations in this regard.”
He, however, added increased coal prices and restrictions imposed by several coal rich countries, including Australia, South Africa, Mozambique and Indonesia, are issues which needed to be considered while deciding to import additional coal.
The official also said domestic coal was priced at Rs 1,600-2,000 per tonne, while imported came at a price of Rs 5,000 per tonne.
(sourced from Business Standard)
Saturday, October 22, 2011
Australia Indo Mines plans USD 1 billion Indonesia iron project
Saturday, 22 Oct 2011
Reuters reported that Australia Indo Mines is to start construction of a USD 1 billion project on Indonesia Java Island in December to begin operations in at least three years to produce 9 million tonnes to 15 million tonnes of iron ore a year.
Mr Mudrajad Kuncoro a local government official in Yogyakarta, central Java said the joint venture will involve PT Jogja Magasa Iron which will own a 30% stake in the project. He said that "We expect the ministry of energy and mineral resources to issue the permit to PT Jogja Magasa Iron in mid-November this year so the company can start its project in early December."
Indo Mines was not immediately available for comment.
Mr Kuncoro said the project will consist of a plant with production capacity of 1 million tonnes of pig iron and 2 million tonnes of iron concentrate per year, as well as a port a coal fired power plant, oxygen plant and water treatment facility.
He said that when it starts operations in three to five years time the project will produce 9 million tonnes to 15 million tonnes of iron ore annually and will consume around 1.2 million tonnes of coal annually.
The world fourth most populous country drew in a record USD 9.6 billion in foreign direct investment in first-half 2011 lured by its relatively stable politics and strong economy plus abundant resources and consumer spending power.
Despite issues over infrastructure, corruption and labour disputes, that trend is expected to continue as global firms look to take advantage of cheap labour and Indonesia huge mineral wealth.
(sourced from Reuters)
Reuters reported that Australia Indo Mines is to start construction of a USD 1 billion project on Indonesia Java Island in December to begin operations in at least three years to produce 9 million tonnes to 15 million tonnes of iron ore a year.
Mr Mudrajad Kuncoro a local government official in Yogyakarta, central Java said the joint venture will involve PT Jogja Magasa Iron which will own a 30% stake in the project. He said that "We expect the ministry of energy and mineral resources to issue the permit to PT Jogja Magasa Iron in mid-November this year so the company can start its project in early December."
Indo Mines was not immediately available for comment.
Mr Kuncoro said the project will consist of a plant with production capacity of 1 million tonnes of pig iron and 2 million tonnes of iron concentrate per year, as well as a port a coal fired power plant, oxygen plant and water treatment facility.
He said that when it starts operations in three to five years time the project will produce 9 million tonnes to 15 million tonnes of iron ore annually and will consume around 1.2 million tonnes of coal annually.
The world fourth most populous country drew in a record USD 9.6 billion in foreign direct investment in first-half 2011 lured by its relatively stable politics and strong economy plus abundant resources and consumer spending power.
Despite issues over infrastructure, corruption and labour disputes, that trend is expected to continue as global firms look to take advantage of cheap labour and Indonesia huge mineral wealth.
(sourced from Reuters)
Capesize - Tubarao / Qingdao being fixed at strong US$ 29.75 PMT
Friday,Oct21, 2011
Handy
The Atlantic market is quite steady, and market seems to be around the same levels as last week. Fewer fixtures reported though. Fronthauls still around 25k, with a USD 3-4k premium for vessels willing to go through Aden. USG/Skaw fixing around USD 30k, and Skaw/USG concluded in the USD 8k range. The Pacific market remains firm with considerable cargoes seen from Indonesia. For Indo-India, large eco Supra can fetch close to USD 16k for S. China position and NOPAC RV close to USD 14k. Indian iron ore market bit quiet as not many cargoes seen in the market however rates from WCI fixing around USD 12k for WCI-China and 11k for ECI-China. RBCT India round rates around USD 13k. Red Sea fertilizers to India are fixed around mid 20s. Short period rates are around 15k for large Supras but seeing less takers.
Panamax
After two strong weeks and a quiet opening due to activity in CoalTrans in Madrid, the Continent and North Atlantic is still tight for tonnage for prompt loaders. There are less fresh requirements so market seems more in balance including some toppish signs in the USG and in ECSA.TA rounds generally at 18k, trip out 27k. In the Pacific the market is also more quiet after stronger levels above mid teens both for NOPAC grains and Indonesian coal. Some period fixtures are still in the 14 range for short period, but less activity on the longer deals. Decline in Chinese iron ore imports and steel production is adding fuel to the bearish signs and the FFA market is loosing faith in next year as well gradually.
Capesize
A large share of the decision makers were gathered in Madrid at the beginning of the week, resulting in less activity. However towards the end of the week, activity picked up and rates improved. It is mainly the front haul market being the main driver, with Tubarao /Qingdao being fixed at strong USD 29.75 pmt for first half November dates. West Australia round remain around steady USD 12 pmt despite lack of requirements from the big three. Period and short period markets have been inactive, whit takers following closely but generally rating touch below owners ideas.
source FearnBulk
Handy
The Atlantic market is quite steady, and market seems to be around the same levels as last week. Fewer fixtures reported though. Fronthauls still around 25k, with a USD 3-4k premium for vessels willing to go through Aden. USG/Skaw fixing around USD 30k, and Skaw/USG concluded in the USD 8k range. The Pacific market remains firm with considerable cargoes seen from Indonesia. For Indo-India, large eco Supra can fetch close to USD 16k for S. China position and NOPAC RV close to USD 14k. Indian iron ore market bit quiet as not many cargoes seen in the market however rates from WCI fixing around USD 12k for WCI-China and 11k for ECI-China. RBCT India round rates around USD 13k. Red Sea fertilizers to India are fixed around mid 20s. Short period rates are around 15k for large Supras but seeing less takers.
Panamax
After two strong weeks and a quiet opening due to activity in CoalTrans in Madrid, the Continent and North Atlantic is still tight for tonnage for prompt loaders. There are less fresh requirements so market seems more in balance including some toppish signs in the USG and in ECSA.TA rounds generally at 18k, trip out 27k. In the Pacific the market is also more quiet after stronger levels above mid teens both for NOPAC grains and Indonesian coal. Some period fixtures are still in the 14 range for short period, but less activity on the longer deals. Decline in Chinese iron ore imports and steel production is adding fuel to the bearish signs and the FFA market is loosing faith in next year as well gradually.
Capesize
A large share of the decision makers were gathered in Madrid at the beginning of the week, resulting in less activity. However towards the end of the week, activity picked up and rates improved. It is mainly the front haul market being the main driver, with Tubarao /Qingdao being fixed at strong USD 29.75 pmt for first half November dates. West Australia round remain around steady USD 12 pmt despite lack of requirements from the big three. Period and short period markets have been inactive, whit takers following closely but generally rating touch below owners ideas.
source FearnBulk
Thursday, October 13, 2011
Rio is making piles from ore
By Barry FitzGerald
October 14, 2011
RIO Tinto is set to beat last year's record profit of $US14.32 billion comfortably after latest production figures showed it is well on the way to meeting its 2011 production target for iron ore - its profit mainstay.
The group's third (September) quarter production report, released yesterday, shows that Rio set new quarterly records for iron ore sales, as well as setting records for coking coal production.
Pilbara and Canadian iron ore production for companies owned or part-owned and managed by Rio was 64 million tonnes (Rio's share was 50 million tonnes) in the September quarter, up by 5 per cent on the previous corresponding period.
That took production for the first three quarters of the group's reporting year to 179 million tonnes (Rio's share was 141 million), leaving it requiring output of 61 million tonnes in the final quarter to hit its 240 million tonne target for the year.
The market pushed the stock $1.88, or 2.7 per cent, higher to $69.34. That was more than the 56¢, or 1.5 per cent, gain for BHP Billiton, which has yet to report for the September quarter.
Just as important for Rio in hitting production targets has been the ability of iron ore prices to be largely immune so far from the worst of the commodity price shakedown that has accompanied the equities rout on Europe's debt concerns.
Spot prices for the key steel-making raw material have weakened in the past month by about 9 per cent to $US162 a tonne. But that price is still well above last year's average of $US135 a tonne, ensuring that the bumper earnings from iron ore will continue for some time yet.
Most analysts have Rio earning more than $US17 billion for 2011, indicating a big second half given its profit for the June half was $US7.58 billion. That represented a 30 per cent improvement on the 2010 June-half result of $US5.8 billion.
Rio chief executive Tom Albanese highlighted iron ore's relative price strength in his commentary on the production report lodged with the stock exchange.
''Whilst we are mindful of current market volatility, the fundamentals are holding up well, particularly for bulk-traded [iron ore, coking and steaming coal] commodities,'' Mr Albanese said.
Coking coal prices have retreated recently but the spot price of $US256 a tonne remains well ahead of last year's average of $US217 a tonne. Steaming or energy coal has bucked the trend in recent weeks to edge higher to $US125 a tonne. Last year's average for the commodity was $US98 a tonne.
There were some areas of weakness in Rio's September production report, most notably in the copper division. A combination of industrial action in Chile and Indonesia and lower grades cut copper production by 32 per cent in the quarter from the previous corresponding period.
Sourced smh.com.au
October 14, 2011
RIO Tinto is set to beat last year's record profit of $US14.32 billion comfortably after latest production figures showed it is well on the way to meeting its 2011 production target for iron ore - its profit mainstay.
The group's third (September) quarter production report, released yesterday, shows that Rio set new quarterly records for iron ore sales, as well as setting records for coking coal production.
Pilbara and Canadian iron ore production for companies owned or part-owned and managed by Rio was 64 million tonnes (Rio's share was 50 million tonnes) in the September quarter, up by 5 per cent on the previous corresponding period.
That took production for the first three quarters of the group's reporting year to 179 million tonnes (Rio's share was 141 million), leaving it requiring output of 61 million tonnes in the final quarter to hit its 240 million tonne target for the year.
The market pushed the stock $1.88, or 2.7 per cent, higher to $69.34. That was more than the 56¢, or 1.5 per cent, gain for BHP Billiton, which has yet to report for the September quarter.
Just as important for Rio in hitting production targets has been the ability of iron ore prices to be largely immune so far from the worst of the commodity price shakedown that has accompanied the equities rout on Europe's debt concerns.
Spot prices for the key steel-making raw material have weakened in the past month by about 9 per cent to $US162 a tonne. But that price is still well above last year's average of $US135 a tonne, ensuring that the bumper earnings from iron ore will continue for some time yet.
Most analysts have Rio earning more than $US17 billion for 2011, indicating a big second half given its profit for the June half was $US7.58 billion. That represented a 30 per cent improvement on the 2010 June-half result of $US5.8 billion.
Rio chief executive Tom Albanese highlighted iron ore's relative price strength in his commentary on the production report lodged with the stock exchange.
''Whilst we are mindful of current market volatility, the fundamentals are holding up well, particularly for bulk-traded [iron ore, coking and steaming coal] commodities,'' Mr Albanese said.
Coking coal prices have retreated recently but the spot price of $US256 a tonne remains well ahead of last year's average of $US217 a tonne. Steaming or energy coal has bucked the trend in recent weeks to edge higher to $US125 a tonne. Last year's average for the commodity was $US98 a tonne.
There were some areas of weakness in Rio's September production report, most notably in the copper division. A combination of industrial action in Chile and Indonesia and lower grades cut copper production by 32 per cent in the quarter from the previous corresponding period.
Sourced smh.com.au
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