market news vol. 52 - ben line agencies line coal market news vol_ 5… · market news vol. 52...
TRANSCRIPT
Market News Vol. 52
Content :
1. MMTC to Award Contract to CEPL and Knowledge to Supply 0.835 Million Tons of Imported
Coal
2. Coal FE Start Production at Indonesia Mine
3. Indonesian Coal for Power Plant
4. Indika 1H Revenue Soars 116.95%
5. Indika Picks Macquarie and Citi
6. Low Calorific Value Coal May be Sold Below Coal Reference Price in Indonesia
7. Coal Traders Power Foreign Asset Buys
8. Four Indonesian Coal Firms Keen to Tie Up with Nalco
9. Thirteen Firms Ready for Listing on Indonesian Stock Exchange
10. Indonesia’s Harum Energy Up On Debut, Eyes Mine Buy
11. Credit Suisse RZB, Take BUMI Shares
12. Banpu Now Owns Nearly 96% of Centennial Coal
13. Coal India to Issue 6 Million Tonnes Import Tender
14. Bumi Resources Sells $700 M 7 Year Bond at Par; 10.75% Yield
15. Coal Traders Power Foreign Asset Buys
16. Harum Energy & US $ 120 Million Standby Loan
17. Harum Energy Up To 4.81% on Trading Debut
18. Mirach Energy Gains Rights to East Kalimantan Coal Mine
19. October Indonesian Coal Price Reference Has Up By 2.92 Percent
20. Borneo Energy Eyes US $ 400 Million IPO
21. Coal Imports to Start in 2015
22. Indonesian Power Plants and Other Industries to Burn 78.97 Million Tons of Coal in 2011
23. Glencore, RZB, CS, Own 11.25 BUMI
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MMTC to Award Contract to CEPL and
Knowledge to Supply 0.835 Million Tons of
Imported Coal
MMTC, India’s state owned trading company
has opened three coal purchase tenders today.
According to our market sources, Coastal
Energy Private Limited, member of Coal & Oil
group, one of the leading international coal
trader become L1 in two tenders and another
Indian based coal trader and importer,
Knowledge Infra become L1 in an another
tender.
Coastal Energy Private Limited (CEPL) will supply
660,000 MT of Imported coal and Knowledge
Infra will supply 175,000 Mt of Imported coal if
MMTC award the order, our sources further
said.
Coal & Oil Company has been awarded
recently ‘International Coal Trader of the Year -
2010’ by McCloskey Coal Conferences of United
Kingdom, a world leader in International Coal
events.
(www.coalspot.com, September 2010)
Coal FE Start Production at Indonesia Mine
ASX-listed Coal FE Resources has started
production at its Adabi coal project, in
Indonesia, with a trial shipment of 50 000 t
scheduled to be delivered by the third week in
October.
The miner said on Wednesday that once the
trial shipment has been completed, a long-term
supply agreement would be negotiated.
All the infrastructure development at the
project has now been completed, and the
mining contracted has mobilised the necessary
machinery to start production from the first
mine pit.
The Adabi coal project is estimated to host
around 34,5-million tons of coal, of which 27,5-
million tons are in the measured category, and
6,1-million tons are in the indicated category.
The project area covers 1 017 ha of land in the
Kutai Kartanegara province, in East Kalinamtan.
(www.mitraismining.com, September 2010)
Indonesian Coal for Power Plant
Lanka Gazette reported that, A cargo vessel
with coal on board to generate electricity for
the Norochcholai Coal Power Plant will arrive in
Sri Lanka by October end. The cost of the first
shipment of 65,500 MT of coal from Indonesia
will be US$ 7 million.
Space has been allocated to store coal at
Norochcholai. It has been estimated that one
million tons of coal are needed to generate 300
Mw electricity during the year, Power and
Energy Minister Patali Champika Ranawaka
said.
Nearly 95 percent of the first phase (300Mw)
Power Plant has been completed. The other five
percent will be completed within the next three
months. Pre-testing for generating electricity
are being carried out by experts.
By December this year, the Ministry hopes to
add coal power electricity to the national grid.
The project which was delayed over a decade
was started by President Mahinda Rajapaksa in
2006. Construction of the 900 MW power plant
is carried out by China National Machinery
Import and Export Corporation and built in
three phases costing Rs 45 billion.
(www.coalspot.com, September 2010)
Indika 1H Revenue Soars 116.95%
Publicly listed EPC and coal mining company PT
Indika Energy Tbk today announces a 116.95%
jump in revenue in the first half of 2010 as a
result of contribution surge from contracts and
services.
In 1H 2010 financial statement submitted to
Indonesia Stock Exchange (IDX) today, Indika
posted Rp1.77 trillion revenue in 1H 2010 from
Rp815.17 billion a year earlier.
Contracts and services contributed Rp1.67
trillion in 1H 2010, a steep jump from Rp615.29
billion in 1H 2009, while coal sales contribution
fell from Rp199.88 billion in 1H 2009 to Rp95.05
billion in 1H 2010.
In line with soaring revenue, Indika's operating
profit also experienced a steep jump by
111.27% from operating loss of Rp36.18 billion
as of June last year to Rp4.08 billion operating
profit.
Net others income grew 12.05% from Rp470.23
billion in 1H 2009 to Rp526.91 billion in 1H
2010. Net income contribution from associated
companies, such as coal mining PT Kideco Jaya
Agung, slightly lowered from Rp799.73 billion in
1H 2009 to Rp721.23 billion in 1H 2010. Indika
booked Rp467.16 billion net profit in 1H 2010, a
28.13% rise from Rp364.61 billion a year earlier.
(Insider Stories, September 2011)
Indika Picks Macquarie and Citi
PT Indika Energy Tbk (INDY), the parent
company of coal mining company PT Petrosea
Tbk (PTRO), has appointed Macquarie Securities
and Citi as joint bookrunner to sell at least 18%
of Petrosea shares during second offering.
Petrosea re-floating shares into the market
after the stock split is intended to unlock the
hidden value of Petrosea, especially on PT
Santan Batubara.
An executive familiar with this information
revealed that the re-float of Petrosea shares will
take place after it completes a stock split in a
near time. “The offering of Petrosea shares will
take place in the fourth quarter this year of next
year to meet the requirement from Bapepam-
LK. Stock split is potentially completed with
ratio 1:5,” he said.
In a disclosure to Indonesia Stock Exchange on
September 14, 2010, Petrosea said it has
planned to hold an extraordinary general
meeting of shareholders, which is scheduled to
take place on October 21, with 2 agendas: stock
split and basic budget change.
At the end of June 2010, Indika Energy
controled 99.38 million shares of Peetrosea or
98.55%, while 1.45% belonged to public
investor.
However, President Director Indika M. Arsjad
Rasjid P.M. declined to comment on it. “It takes
longer preparation [for Petrosea secondary
offering],” he said yesterday.
He also added that the sale is to meet the
requirement from Capital Market and Financial
Institution Supervisory Agency (Bapepam-LK)
after the company accomplished a tender offer
for Petrose.
Indika requires to refloat Petrosea shares to the
market in 2 years after completing tender offer,
aiming at adding more public ownership.
“Well, Indika should release at least 18% of
Petrosea shares (to fill the requirement of 20%
shares in public),” he said.
Arsyad added that Indika could further sell
Petrosea shares after the stock split. Regarding
the stock split, he disclosed that the ratio had
not been stated.
(Insider Stories, September 2011)
Low Calorific Value Coal May be Sold Below
Coal Reference Price in Indonesia
Indonesia, the world’s largest coal exporter has
issued another ministerial decree to regulate
the selling price of coal of Indonesian origin on
23 September 2010, which is the
implementation regulation for government
regulation 23/2010. “This is an important policy
in order to restructure the optimal benefits in
the management of coal in Indonesia”
according to web site of directorate general of
minerals and coal.
The regulation on coal reference price,
guidelines states that coal must be sold at or
above the government's declared monthly coal
reference price. However, the same regulation
also providing room for coal that contains a
very low calorific value to sell below reference
price. However , it was not clear what calorific
Value or Total Moisture coal being categorized
as low GCV coal.
As stated by Reuters, "The low CV coal can be
sold without following the government price
reference but miners must give a strong reason
and it will be subject to approval by the
ministry," said Witoro Soelarno, secretary at
the directorate general of minerals and coal at
the energy and mines ministry.
Production Operation Permit holder's of coal
Mining (IUP holders) must sell their coal as per
monthly reference price issued government
either for export or domestic market , including
to its affiliated business entities, says regulation
no 17/2010, the decree, issued by the energy
ministry on September 23 and copy of the same
obtained by COALspot.com.
The decree 17/2010 has been in force since the
day of its issue on 23 September 2010.
The main points of the decree ( related to coal)
Director General on behalf of the Minister to
set a benchmark price for steam (thermal) coal
and coking (Metallurgical) coal every month.
Coal miners must refer Indonesian Coal
benchmark price to conclude the deal with
domestic or international buyers and must give
priority for Indonesian flag carriers, if they used
vessel/ barges to transport coal.
Mine owners can use the surveyor named or
appointed by the Director General on behalf of
the Minister. Mine owners are required to
submit a monthly coal sales reports to
authority. The report must include selling price,
sales volume, quality, point of sale, cost
adjustments, and name of port of destination or
country. Monthly report should be supported
by supporting documents.
Coal sellers are required to follow Indonesian
coal price reference when conclude the coal
sales and purchase agreement with their
respective buyers. Spot deals should refer to
the reference price of the month that shipment
taken place where’s term deals should refer to
the reference price of an average of 3 (three)
previous months from the date of agreement
signed. However, before it was committed in
the sales contract must be submitted to the
Minister through the Director General.
Concluded spot contracts must be executed
within one month from the date of contract
signed and term contracts must be commenced
execution within 2 months from the date of
sales and purchase contract and must be
completed within a maximum period of 12
months.
Miners are required to submit an annual
delivery schedule to the Director-General in the
beginning of the year, and if there are any
changes in the delivery schedule, then must be
reported revised delivery schedule periodically.
Violations can lead to revocation of mining
permits.
Coal for specific purposes and certain types of
coal (fine coal, reject coal and coal with certain
impurities) used in the domestic market can be
sold at a price below the coal price reference,
after obtain approval from the Director General
on behalf of the Minister.
(www.coalspot.com, October 2010)
Coal Traders Power Foreign Asset Buys
Economic Times reported that, the rush to own
coal assets is leading to innovative alliances. are
teaming up with utilities like , Reliance Power
and CESC to jointly scout for overseas coal to
bring down the cost of acquisition and also
speed up the process of buying mines.
“We are talking to mega power companies,
including the Tatas, to look for joint acquisition
of coal assets,” said Ahmed Buhari, founder
president of Coal & Oil (C&O) Group, a Rs 2,000-
crore (US$ 447,116,313) company that imports
more than 6 million tonnes of coal for its Indian
users.
C&O Group is one of the leading suppliers of
steam coal for companies such as the Tatas,
Reliance Power, CESC, Gujarat Ambuja, Madras
Cements and others. It also has long-term
contracts with power producers that ensure
continuous supplies for 7-10 years. When
contacted by ET, utility companies declined to
comment on the issue.
Some of these trading companies are also
negotiating with utilities for an equity stake in
return for supply of coal. The Singapore-based
Middle East Coal, another trading company that
has ownership of mines in Indonesia, has been
negotiating with major Indian firms for securing
a stake.
In an earlier interaction with ET, Middle East
Coal vice-chairman Madhu Koneru said the
supply of coal would be finalised for a 10-12
year period to ensure that power producers
complete their projects. “It would also keep the
prices down as contracted prices would
typically be at cost level,” said Mr Koneru.
Demand for imported coal in India, which is
widely used by power generators and
steelmakers, has soared by about 16% over the
past five years and is expected to rise more as
companies use more of imported coal instead
of Indian coal, due to the high ash content in
the local resource.
The tight demand for coal has inflated the
valuations of mines as global players are ready
to offer higher prices for a stake in resource
assets.
China is an active player here as the country's
power plants buy and stockpile coal ahead of
the winter and the summer to meet increasing
demand. In August, in one of the largest
acquisitions of a coal mine by an Indian
company, the Ahmedabad-based Adani
Enterprises bought Australia's Linc Energy's coal
assets for Rs 12,600 crore in a cash-cum-royalty
deal.
State-owned utility NTPC, which expects to
import up to 15 million tonnes of coal next year,
has also been active in buying coal mines
overseas. Last month, NTPC said it plans to buy
stakes in two Indonesian coal mines and will
also invite global bids for more such assets.
Indian users import coal from countries like
Australia, South Africa, and Indonesia, where
most of the coal trading is also done. Indian
players, rattled by tight supplies, are keen to
leverage existing contracts that the traders
have with their miners. “We have been in the
coal trading business for 17 years and have
long-term supply agreements with mine
owners. We, therefore, want to be associated
with top-notch companies to extend this
agreement,” said Mr Buhari.
The arrangement will also benefit trading
companies as these are building power plants
themselves. C&O is building a 1,200 megawatt
power plant at Tuticorin in Tamil Nadu and is
also investing in Chennai-based Meenakshi
group that has interests in power and
infrastructure.
The power sector is one of the largest
consumers of coal in India, accounting for 71%
of the country's coal demand, which is met
through linkages with Coal India and Singareni
Collieries.
(Economic Times, October 2010)
Four Indonesian Coal Firms Keen to Tie Up
with Nalco
Sify reported that, Four Indonesian coal
companies have shown interest to tie up with
public sector National Aluminium Company
(Nalco) for its 4 billion USD (Rs 18,000 crore)
aluminium-cum-power plant complex in that
country.
The four firms, which have responded to the
Expression of Interest (EoI) bid floated by Nalco
last month, are MEC Middle East, Bumi
Resources, Energy Indonesia and Pram Dwi
Jaya.
"We will go for technical evaluation of the bids
before short-listing firms for invitation of
commercial bid", BL Bagra, director (finance),
Nalco told Business Standard. The process will
take about a month, he added.
Nalco proposed to set up a 0.5 million MT
aluminium smelter and 1250 MW coal based
thermal captive power plant in East Kalimantan
province in Indonesia. While the company
intends to import approx. one million tonne of
alumina annually from its facilities in India to
feed the aluminium smelter, the coal for the
captive power plant will be procured locally.
Nalco needed 8 - 10 million tonnes per annum
of thermal grade coal, 4-5 MTPA of which was
for its East Kalimantan project and the rest for
its energy requirement elsewhere.
Hence, the company invited EoI bid from
competent miners or concession holders for
coal reserves in East Kalimantan province in
Indonesia having coal mines in close proximity
to seaport, fresh water source and other
infrastructure facilities,
Nalco would be an equity partner in the coal
mining operation, Bagra said, adding, after the
scrutiny of technical and financial bids, talks will
be held with the selected party in this regard.
But the extent of shareholding will depend on
the total volume of production from the mine,
volume required by Nalco and the valuation of
the asset.
The finalization of the JV partner will be
followed up with preparation of detailed
project report (DPR) for the venture. The JV
agreement is a pre-curser to DPR as this will
provide a clear picture on the cost to be borne
towards procurement of coal and
transportation.
With the debt equity ratio of the Rs 18,000
crore-project being pegged at 70: 30 and Nalco
intent on having at least 50 per cent stake in it,
the equity exposure of the company is
estimated at around Rs 2,700 crore.
After the JV agreement and finalization of DPR,
the company will seek the approval of its board
and the government for equity investment and
approach foreign financial institutions for
financing the project. The debt component at Rs
12,400 crore being a sizeable amount, the
company will seek international consortium
financing, Bagra said.
(www.coalspot.com, October 2010)
Thirteen Firms Ready for Listing on Indonesian
Stock Exchange
Some 13 companies have expressed their
readiness to list the stocks on The Indonesian
Stock Exchange.
The positive trend of JKSE index has boosted
the would-be listed firms, according to the
Indonesian Stock Exchange`s Company
Appraisal Director, Eddy Sugito.
During 2010, The Indonesian Stock Exchange
has listed 13 companies, and will likely to meet
its target of listing 25 firms this year.
"Such a phenomena will encourage our bourse
in the future, moreover the bourse is currently
moving forward with positive trend," he said.
The Indonesian bourse has given a pre-effective
permit for subsidiary of PT Bumi Resources Tbk
(BUMI), namely PT Bumi Resources Mineral
(BRM), which will conduct initial public offering.
The 13-listed companies on the Indonesian
Stock Exchange in 2010 are PT Elang Mahkota
Teknologi Tbk (EMTK), PT Pembangunan
Perumahan Tbk (PTPP), PT Benakat Petroleum
Energy Tbk (BIPI), PT Sarana Menara Nusantara
Tbk (TOWR), PT Nippon Indosari Corpindo Tbk
(ROTI), PT Golden Prima Retailindo Tbk (GOLD),
PT Skybee Tbk (SKYB), PT BPD Jabar Banten Tbk
(BJBR), dan PT Indopoly Swakarsa Industry Tbk
(IPOL), PT Evergreen Invesco Tbk (GREN), PT
Bukit Uluwatu Villa Tbk (BUVA), PT Berau Coal
Energy (BRAU), and PT Harum Energy Tbk
(HRUM).
The 13 other firms to be listed are PT Indofood
CBP Sukses Makmur, PT Tower Bersama
Infrastruktur, PT Krakatau Steel, PT Agung
Podomoro, PT Midi Utama, PT Aditech
Adiwiyasa, PT Wintermar Offshore Marine, PT
Bumi Resources Mineral, PT Borneo Energy, PT
Megapolitan Development, PT Multifilling Mitra
Indonesia, PT Martina Berto, and Bank Sinar
Mas.
(Antara News, October 2010)
Indonesia’s Harum Energy Up On Debut, Eyes
Mine Buy
Shares in PT Harum Energy <HRUM.JK>, an
Indonesian thermal coal miner, jumped as much
as 20 percent on the firm's trading debut on
Wednesday as investors snapped up a stock
seen as cheap versus its mining peers.
Harum's buoyant start comes as investors drove
Indonesian stocks <.JKSE> to a fresh record high
on Wednesday, attracted by strong economic
growth fuelled by domestic demand and
expanding commodities output in the world's
largest thermal coal exporter.
Harum raised more than 2.86 trillion rupiah
($320.2 million), including a greenshoe option,
the biggest IPO by an Indonesian coal miner in
two years after PT Bayan Resources <BYAN.JK>
raised $529 million in 2008.
Rey Gunara, Harum's president director, told
reporters the company aims to spend $130
million from the IPO for coal mine acquisitions.
He said the company expects to produce as
much as 7.4 million tonnes of coal this year.
The stock rose in early trade to a high of 6,250
rupiah, versus its IPO price of 5,200, before
trimming gains to trade at 5,500 rupiah by 0350
GMT."Valuation-wise Harum is the cheapest
among Indonesian coal miners," said a trader at
PT Panin Sekuritas in Jakarta. "However, it
remains to be seen whether they could actually
get their target."
Harum now trades at a 2011 price-to-earnings
ratio of 7 to 9, while Indonesia's biggest coal
miner by market value PT Adaro Energy
<ADRO.JK> trades at a P/E of 11.
PT Indotambangraya Megah <ITMG.JK>, the No.
3 coal miner, and PT Tambang Batubara Bukit
Asam <PTBA.JK>, the No. 6 coal miner, trade at
11 and 13 times, respectively.
(Reuters, October 2010)
Credit Suisse RZB, Take BUMI Shares
Indonesia’s largest thermal coal producer PT
Bumi Resources Tbk (BU enabled to shrink its
total debt from US$ 4.17 billion as of
September 29 US$ 3.81 billion as a result of non
preemptive rights.
The company’s debt structure is now consisting
of US$ 591.8 million convertible bond. US$ 3.06
billion bank loan facilities and other debts of
US$ 158 million Bumi’s bank loan lowered from
US$ 3.42 billion level after two creditors Credit
Suisse and Raiffeisen Zentralbank Osterreich
AG(RZB) (Via Moorfields Investments Limit
participated non preemptive rights of 7.06% or
1.37 billion new share worth US$ (?) million or
IDR 2.366 per share.
Moorfields determined to participate 760,78
million new shares issued Bumi. Another
creditor credit Suisse, based on London,
conveyed a participation 608,62 billion new
shares.
At the end of June 2001, Bumi’s total debts
stood at US$ 4.12 billion, consisting US$ 777.5
million, convertible bonds, US$ 3.18 billion
bank loans and other debts US$ 158 million.
(Insider Stories, October 2010)
Banpu Now Owns Nearly 96% of Centennial
Coal
Asian coal company Banpu has taken control of
95,56% of the issued share capital of takeover
target Centennial Coal, it reported on
Wednesday. The majority acquisition enabled
Banpu to initiate a compulsory acquisition of
the remaining shares in Centennial.
ASX-listed Centennial Coal has recommended
shareholders to accept a A$2,5-billion all-share
takeover offer from Banpu. The Asian coal firm
was offering Centennial shareholders A$6,20 for
each share held. The Australian Foreign
Investment Review Board has approved the
takeover.Centennial Coal supplies thermal coal
to domestic and export markets, and has ten
mines in New South Wales, which produced a
combined 15-million tons of coal in 2009.
Banpu is listed on the Thailand Stock Exchange
and has a diverse portfolio of coal-mining and
power assets in China, Thailand and Indonesia.
The company produced 21-million tons of coal
in 2009.
(www.miningweekly.com, October 2010)
Coal India to Issue 6 Million Tonnes Import
Tender
State-run Coal India Ltd is likely to issue a
tender in the next three months to import 6
million tonnes of coal, Chairman Partha
Bhattacharyya said on Tuesday, to bridge a
shortfall in domestic availability.
India, which produces only a small quantity of
premium grade coal, mainly buys from
Indonesia and South Africa. The country is
expected to import nearly 84 million tonnes of
coal in the current fiscal year.
Coal contributes to generation of more than
half of India's annual energy consumption. Local
output lags booming demand in the nation of
more than one billion people.
Coal India, the world's biggest coal miner,
produced 81 percent of India's 531 million
tonnes of coal output in 2009/10. It also
imported 73.25 million tonnes to bolster
domestic supplies in the past year.
Bhattacharyya told reporters about 53 million
tonnes of coal had piled up at Coal India's mines
due to lack of proper transportation facilities
and the company may look at building power
plants. "We might get into power generation
though it is not an area of core competence,"
he said
(Reuters, October 2010)
Bumi Resources Sells $700 M 7 Year Bond at
Par; 10.75% Yield
Indonesian thermal coal producer PT Bumi
Resources (BUMI.JK) raised $700 million
through a seven-year bond deal Thursday that
priced at par to yield 10.75%, according to a
person familiar with the transaction.
Deutsche Bank, J.P. Morgan and Credit Suisse
are managing the sale. A term sheet seen by
Dow Jones Newswires earlier had indicated the
company was looking to raise between $500
million and $700 million at a yield between
10.75% and 11.00% to refinance debt. The
bonds will be listed on the Singapore Stock
Exchange.
In July, Bumi officials said the company planned
to sell bonds to improve its debt profile, moving
from shorter-term debt toward more long-term
borrowing.
In line with bonds issuance, Bumi Resources
announced that it has concluded the non
preemptive issuance of 1.37 billion ordinary
shares at an issue price of Rp2,366/share,
amounting to US$360 million.
In a press statement published at the
company's website, Bumi President Director Ari
S. Hudaya said the company will disclose the
names of the counterparties on 4 October 2010
and list the new shares on the Indonesian Stock
Exchange as per regulation and announced
timetable. The total number of outstanding
shares of the company will consequentially
increase to 20.77 billion on 5 October 2010.
(Bisnis Indonesia, October 2010)
Coal Traders Power Foreign Asset Buys
The rush to own coal assets is leading to
innovative alliances. are teaming up with
utilities like , Reliance Power and CESC to jointly
scout for overseas coal to bring down the cost
of acquisition and also speed up the process of
buying mines. “We are talking to mega power
companies, including the Tatas, to look for joint
acquisition of coal assets,” said Ahmed Buhari,
founder president of Coal & Oil (C&O) Group, a
Rs 2,000-crore company that imports more than
6 million tonnes of coal for its Indian users.
C&O Group is one of the leading suppliers of
steam coal for companies such as the Tatas,
Reliance Power, CESC, Gujarat Ambuja, Madras
Cements and others. It also has long-term
contracts with power producers that ensure
continuous supplies for 7-10 years. When
contacted by ET, utility companies declined to
comment on the issue.
Some of these trading companies are also
negotiating with utilities for an equity stake in
return for supply of coal. The Singapore-based
Middle East Coal, another trading company that
has ownership of mines in Indonesia, has been
negotiating with major Indian firms for securing
a stake.
In an earlier interaction with ET, Middle East
Coal vice-chairman Madhu Koneru said the
supply of coal would be finalised for a 10-12
year period to ensure that power producers
complete their projects. “It would also keep the
prices down as contracted prices would
typically be at cost level,” said Mr Koneru.
Demand for imported coal in India, which is
widely used by power generators and
steelmakers, has soared by about 16% over the
past five years and is expected to rise more as
companies use more of imported coal instead
of Indian coal, due to the high ash content in
the local resource.
The tight demand for coal has inflated the
valuations of mines as global players are ready
to offer higher prices for a stake in resource
assets.
China is an active player here as the country's
power plants buy and stockpile coal ahead of
the winter and the summer to meet increasing
demand. In August, in one of the largest
acquisitions of a coal mine by an Indian
company, the Ahmedabad-based Adani
Enterprises bought Australia's Linc Energy's coal
assets for Rs 12,600 crore in a cash-cum-royalty
deal.
State-owned utility NTPC, which expects to
import up to 15 million tonnes of coal next year,
has also been active in buying coal mines
overseas. Last month, NTPC said it plans to buy
stakes in two Indonesian coal mines and will
also invite global bids for more such assets.
Indian users import coal from countries like
Australia, South Africa, and Indonesia, where
most of the coal trading is also done. Indian
players, rattled by tight supplies, are keen to
leverage existing contracts that the traders
have with their miners. “We have been in the
coal trading business for 17 years and have
long-term supply agreements with mine
owners. We, therefore, want to be associated
with top-notch companies to extend this
agreement,” said Mr Buhari.
The arrangement will also benefit trading
companies as these are building power plants
themselves. C&O is building a 1,200 megawatt
power plant at Tuticorin in Tamil Nadu and is
also investing in Chennai-based Meenakshi
group that has interests in power and
infrastructure.
The power sector is one of the largest
consumers of coal in India, accounting for 71%
of the country's coal demand, which is met
through linkages with Coal India and Singareni
Collieries.
(www.mitraismining.com, October 2010)
Harum Energy & US $ 120 Million Standby
Loan
Publicly listed coal company PT Harum Energy
Tbk (HRUM) enables to use standby loan facility
US$120 million and US$10 million cash
obtained from IPO to bankroll its spending,
including for acquisition.
Harum Energy President Director Ray Gunara
said the company's outstanding revolving
facility from DBS Bank reaches US$120 million.
"We have drawn US$80 million of the revolving
in June," he said today at Indonesia Stock
Exchange.
The company today disposes 500 million shares
into the stock market in a bid to snap Rp2.60
trillion cash or Rp5,200 per share.
Of the total proceed raised from the IPO,
Harum's founder PT Karunia Bara Perkasa sold
300 million shares, grabbing Rp1.56 trillion
cash, while Harum issued 200 million shares
worth Rp1.04 trillion.
As of the first quarter of this year, Harum
booked Rp894.7 billion revenue from last year's
level of Rp4.60 trillion.Post IPO, Karunia Bara
Perkasa controls 81.39% stake in Harum, PT
Bara Sejahtera Abadi owns 0.09%, and the
public shareholders hold 18.52%.
(Insider Stories, October 2010)
Harum Energy Up To 4.81% on Trading Debut Publicly listed coal mining company PT Harum
Energy Tbk (HRUM) rose 4.81% to Rp5,450 per
share on the trading debut today.The company
sold 500 million shares into the market at
Rp5,200 per share, enabling to snap Rp2.6
trillion cash.
As of June 2010, the realization for coal
production of Harum Energy achieved 50% of
this year’s target.
Harum Energy President Director Ray Gunara
said that the achievement is contributed by E
Block’s production in the second quarter at the
mine site owned by PT Mahakam Sumber Jaya
(MSJ), a subsidiary of Harum Energy. “Out of
this year’s target by 7.4 million tons coal, we
have reached out near 50% of the target [3.7
million tons]. The figure can not be disclosed
yet. Later,” he said.
The target of 7.4 million ton is an accumulation
of 5.2 million tons from MSJ’s output and 2.2
million tons from PT Santan Batubara (SB)’s
output.
SB is a subsidiary of Harum Energy by
controlling 50% shares, while the rest is taken
over by a coal-mining contractor, PT Petrosea
Tbk (PTRO) that is owned 98% shares by PT
Indika Energy Tbk (INDY).
Harum Energy targets to produce 10 million
tons coal by 2011 and 13 million tons by 2012.
MSJ is also set up to produce 7.5 million tons
coal as well as SB by 2.5 million in 2010. In
2011, both MSJ and SB are targeted to
contribute 9million tons coal 4 million tons coal
each.
(Insider Stories, October 2010)
Mirach Energy Gains Rights to East Kalimantan
Coal Mine
The Edge Singapore reported that, Mirach
Energy says it has gained the rights to produce
and sell coal in an open-pit coal mine in
Samarinda, the capital of the Indonesian
province of East Kalimantan.
The contract area covers 100 hectares and is
located near to operational haulage road,
stockyard and conveyor loading jetty. The mine
produces sub-bituminous coal of caloric value
5100- 5300 Kcal/kg. This type of coal, also
known as steam coal, is generally used for
power generation.
A drilling exploration program conducted during
due diligence process estimated proven
reserves of 1.1 million tonnes of coal, with
potentially much higher reserves to be
explored. Based on the terms of an agreement
signed with the mine owner, PT GTM, and a
subsidiary of the company, the company has
the rights to extract and sell a minimum of 5
million tonnes of coal within a period of four
years.
Production has commenced and initial
production volume is estimated at 30,000
tonnes of coal per month, with a production
target of 70,000 tonnes by the end of the year.
Stripping ratio averages 3.62 for the initial
production phase. The first barge shipment of
coal is expected in October 2010 and end
buyers will come from China, Philippines or
India.
Mirach Energy selected and embarked on a
small mine area for its first venture into the coal
production business to ensure that the business
model and the risks profile of the project sits
well with the company’s current structure and
scale. This first coal venture will form a platform
for Mirach Energy to develop its coal segment
to strengthen and build up a healthy cash flow
for the Company, while developing its other oil
and gas assets. It is currently negotiating for
other larger coal mines with the intention to
acquire the rights to increase its coal mining
operations.
(The Edge Singapore, October 2010)
October Indonesian Coal Price Reference Has
Up By 2.92 Percent The Directorate General of Mineral, Coal and
Geothermal of Indonesia has been publishing a
monthly coal price reference (HBA) since
February 2010 to be used by coal producers for
all future spot and term coal sales contracts.
Coal price reference (HBA) was calculated from
the monthly average of four international coal
indices such as Indonesian coal Index / ICI
1, Platts-1,New Castle Export Index and
Newcastle globalCoal Index. According to
djmbp, the October Indonesian coal price
reference was calculated based on 25% of ICI-1
+ 25% of Platts-1 + 25% of NEX and 25% of GC.
Assessment basis of coal price reference was
calculated considering coal with GCV
(GAR) 6,322 kcal/kg, Total Moisture (arb)
8.00%, Total Sulphur 0.8%, Ash Content 15.00%
and delivery free on Board (FOB) Vessel. The
declared coal price reference for October 2010
is US$ 92.68 per Ton FOB vessel up by US$ 2.63
or 2.92 percent from September 2010 Coal
price reference. September 2010 coal price
reference was at US$ 90.05.The coal price
reference, which has been established to fulfill
the requirement of mining law 04/2009 and
latest ministerial decree 17/2010 and aims to
increase government revenue from royalties
from coal producers. However, the actual
physical market condition of Indonesian coal is
stable or stable to firm instead of falls of
International coal index as well as HBA.
According to coal producers, due to tight
availability of coal for various reasons and
recent new inquires from Korea, Taiwan and
India, the actual physical coal prices of
Indonesia are showing positive move and
heading to north.
(www.coalspot.com, October 2010)
Borneo Energy Eyes US $ 400 Million IPO
PT Borneo Lumbung Energi & Metal, parent of
Indonesia’s hard coking coal producer, PT Asmin
Koalindo Tuhup, seeks US$400 million fresh
fund from the 20% or 3.32 billion shares from
initial public offering (IPO) planned to be
realized by the upcoming November.
An executive familiar with such corporate
action said that based on the given target, the
100% shares valuation or nearly 16.59 billion
stocks of Borneo Energi may reach US$2
billion.“From the US$400 million fresh fund
derived from such IPO, Borneo Energi shall
exploit the fund to enhance its production
capacity, refinance its debt and to strengthen
its working capital,” he said today.
To realize such IPO, Borneo Energi has
appointed three underwrites namely CIMB
Securities, Credit Suisse Indonesia and Morgan
Stanley.
The executive further elaborated that Borneo
Energi, 99% stake owned by PT Republik Energi
& Metal. Borneo controls 99% stake in Asmin
Koalindo Tuhup and 99% shares in PT Borneo
Mining Services.
Indonesia’s stellar entrepreneurs Samin Tan and
Surjadinata Sumantri, founders of Renaissance
Capital, controlled PT Republik Energi & Metal.
Asmin Koalindo controls coal mining concession
in Murung Raya, Central Borneo. This coal-
mining site is divided into two main areas
namely Kohong and Telakon.
When being asked for confirmation, President
Director of Borneo Energi, Geroad Jusuf said
that he could not disclose any comments yet
concerning this IPO since this period of time is
still classified as blackout period.
The source said that Borneo Energi’s coking coal
production capacity reached 2.4 million ton in
the end of December last year.“The company
targets to increase its production capacity into
3.6 million ton by 2010 and 5 million ton by
2011.
Borneo Energi produced 752,000 ton hard
coking coal as the mixture component in steel
fusion in the end of June 2010. In the
meantime, the sales volume reached 583,100
ton during the first half of 2010 with average
sale price US$180 per ton. Borneo Energi
booked US$120 million-US$130 million revenue
in the end of June 2010.
(Insider Stories, October 2010)
Coal Imports to Start in 2015 Vietnam Business reported that, Viet Nam is
now likely to import coal only from 2015, not
2013 as earlier forecast since many thermal
power plants have fallen behind schedule.
The steering committee managing coal imports
said, however, that firms should start looking
for foreign coal suppliers immediately to ensure
there is no delay. “Besides Australia and
Indonesia, Viet Nam can also source coal from
Russia by buying stakes in mines there or
purchasing the right to mine or buy coal,”
Nguyen Manh Quan, a member of the
committee and the head of the Heavy Industry
Department, said. But he was unsure if power-
plant investors would begin looking for coal
sources any time soon.
Tran Chien Thang, deputy general director of
the Viet Nam National Coal and Mineral
Industries Group (Vinacomin), said the
Government had tasked his firm with importing
coal for power plants but no investor had
discussed the issue yet. “Enterprises, especially
State-owned ones, prefer local sources because
costs are partly subsidised by the Government,”
Quan said.
A private firm recently signed an agreement
with a foreign supplier to buy coal for 20 years
and was willing to import more to supply other
companies, Ta Van Huong, director of the
Energy Department, said.
An Vien Group and VinCom Group informed the
Ministry of Industry Trade that they could help
local firms source coal from Russia, Minister of
Industry and Trade Le Duong Quang said.
However, more companies can enter the coal
import business as long as they follow
Government rules, according to the ministry .
The steering committee will draft a legal
framework to regulate coal imports.
It is not clear yet but Viet Nam may have to
import between 3 million and 15 million tonnes
of coal a year by 2015 – and 21 million to 40
million by 2020 – as more and more coal-fired
power plants are built, Vinacomin has said.
(Vietnam Business, October 2010)
Indonesian Power Plants and Other Industries
to Burn 78.97 Million Tons of Coal in 2011
The Minister of Energy and Mineral Resources
of Indonesia has issued a ministerial degree
2360 K/30/MEM/ 2010 related to Domestic
market obligation (DMO) for 2011.
According to the decree, the total requirement
of coal for the domestic market in 2011 is
around 78.97 million tons up 21.56 percent
compared to 2010 year requirement of 64.96
million tons. The total coal production
is estimated at 326.65 million ton in 2011,
which is higher by 64.17 million ton compared
to this year production estimation of 262.48
million tons. Around 247.68 million tons of
coal will be expected to be shipped out in 2011.
42 CCoW holders, 10 IUP holders and one state
owned mining company is required to supply
78.91 million tons of coal to the domestic
market in 2011. State owned power producer
PT.PLN is expected to consume around 55.82
million tons or 70.69 percent of total allocated
coal for the domestic market in 2011.
State owned power producer will be expected
to consume low GCV coal such as 4,000 - 5200
(GAR) kcal/kg coal and other industries are
expected to consume coal with calorific value (
GAR) of 4100 – 6500 kcal/kg. Around 66.28
million tons of coal or 83.93 percent of total
coal allocated for the domestic market will be
supplied to power producers and remaining for
other industries such as cement, fertilizer and
Textile.
According to market players, the price of coal
for domestic market to be negotiated and
finalized by parties involved or through tender
process. Hence price of coal will be decided
based on government declared monthly coal
price reference, market condition, terms of
payment, supply period and other general
contractual terms and conditions.
(www.coalspot.com, October 2010)
Glencore, RZB, CS, Own 11.25 BUMI
Stellar commodities trading company Glencore
International AG, Raiffeisen Zentralbank
Oesterreich AG Singapore Branch (RZB) S/A
Moorefields Investments Ltd, and Credit Suisse
International (CS) have officially held 4.66%,
3.66%, and 2.93% stakes respectively in PT Bumi
Resources Tbk (BUMI) as of October 5 2010.
In a formal announcement regarding on
material transaction published by BUMI today,
RZB and Credit Suisse International own Bumi
stakes after they confirmed to participate non
preemptive rights of 7.06% stake or 1.37 billion
new shares.
In line with non preemptive rights, BUMI also
issued US$700 million guaranteed senior
secured notes with 10.75% annual coupon
maturing in 2017.
Based on proforma financial report, assuming
the notes were issued on June 30 2010, BUMI's
first half 2010 net profit would decrease
US$14.07 million from US$134.58 million to
US$120.50 million or 10.46%.
This is because a rise on interest and financial
charges of US$14.07 million from US$257.44
million to US$271.52 million
(Insider Stories, October 2010)
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