Category Archives: Coal News

Asia Coal-Prices ease to near $63 on demand concerns

Kalimantan Coal
JAKARTA, May 7 (Reuters) – Australian thermal coal prices, a benchmark for Asia, edged lower to around $63 a tonne on concerns over demand, after hitting a two-week high of $64 earlier in the week.
Thermal coal prices on the globalCOAL Newcastle weekly index were at $63.17 a tonne late on Wednesday, up from $62.27 a tonne a week ago.
“It’s a temporary fluctuation,” a regional trader said.
“But the trend is still sluggish as coal stocks are quite healthy and Indian demand is going to subside in May,” the trader said.
Indian buyers tend to stock up on coal before the start of the monsoon in India in June.
There were no physical trades registered on globalCOAL.
* INDONESIA COAL
Indonesian bituminous coal of 6,300 kcal/kg air-dried basis was offered at around $60 a tonne, FOB mother vessel from Sumatra, while some traders offered coal of the same quality at between $65-$66 a tonne, FOB mother vessel from Kalimantan.
Indian demand for Indonesian coal eased as buyers switched to South African coal, while Chinese buyers who had been active in the past weeks slowed purchasing, an Indonesian producer said “We still see a lot of inquiries from Chinese buyers. But they stop short on asking prices,” the producer said.
Buyers were seeking Indonesian coal of 6,300 kcal/kg at $51-$55, FOB mother vessel, the producer said.
Indonesian sub-bituminous coal of 5,300 kcal/kg was offered at around $35-$37 a tonne, FOB mother vessel from Kalimantan.
Demand from industrial sectors such as textiles has eased but steady demand from power plants helped to support prices.
PT Pembangkitan Jawa-Bali, a unit of state-electricity firm Perusahaan Listrik Negara, is in the process of short-listing bidders in a tender seeking 60,000 tonnes of 4,900 kcal/kg as-received coal a month for its Paiton power plant.
The firm is expected to award the contract in coming weeks.
GLOBALCOAL SWAPS TRADES SINCE MAY 4 ——————————————
PERIOD WEDNESDAY TUESDAY MONDAY
Q3’09 N/A $65.25 N/A ($1=10350 Rupiah) (Reporting by Fitri Wulandari, editing by Sara Webb)

Indonesia S.Kalimantan gets coal trucks off public roads

JAKARTA, April 27 (Reuters) – A local government in one of Indonesia’s top coal-producing areas has banned coal and palm oil firms from using public roads because of the damage done by the trucks, a move which could increase costs for smaller producers. The governor of South Kalimantan province, which accounts for around 36 percent of Indonesia’s total coal production, said the new regulation was intended to reduce the damage to key infrastructure and would come into effect in July.
The ban is unlikely to affect shipments from big coal producers in the area — including PT Adaro Energy Tbk (ADRO.JK) and PT Arutmin, a unit of Indonesia’s largest coal producer PT Bumi Resources Tbk (BUMI.JK) — as they have their own hauling roads, according to Supriatna Suhala, executive director of Indonesia Coal Association.
“It will affect small miners. They may either have to declare force majeur, incur extra costs by building roads, or use small trucks which are suitable for public roads,” Suhala said.
“Ideally, all miners should have their own roads because they use heavy machinery which could damage public roads,” he said.
Many of the public roads in South Kalimantan have been badly damaged, as they were not intended for heavy use by trucks carrying coal and oil palm fruit and weighing tens of tonnes.
Coal miners and palm oil planters must build their own roads linking the mines and plantations to the nearest river ports by the end of July, Governor Rudy Ariffin said.
“If their roads come across public roads, they will have to build an underpass,” Ariffin told Reuters in Jakarta after a meeting with legislators.
“Companies are now working to build their own roads. Hopefully, the roads can be used to transport mining products and agriculture produce by July,” he said.
Indonesia is expected to produce 230 million tonnes of coal this year. (Writing by Fitri Wulandari; Editing by Sara Webb)

Indonesia’s Cirebon Elec in talks on coal supplies

Kalimantan Coal
JAKARTA, March 11 (Reuters) – Indonesia’s PT Cirebon Electric Power, an independent power producer, is in talks with a number of coal suppliers to seek a maximum 3 million tonnes of coal a year, a company official said on Wednesday.
The firm held two coal tenders last year failed to secure coal supply deals because it did not get approval from the state electricity firm Perusahaan Listrik Negara (PLN) due to soaring coal prices, June Yoo, manager at PT Cirebon Electric Power said.
Independent power producers must receive approval on coal tenders from PLN.
“We are almost finalising the suppliers. But we need final approval from lenders and PLN,” Yoo said, adding it was seeking coal supplies for a long-term contract of more than 15 years.
“We need a maximum of almost 3 million tonnes a year but maybe less,” she said, declining name potential coal suppliers.
Indonesian coal miner Indika Energy (INDY.JK: Quote, Profile, Research) has a 20 percent interest in Cirebon Electric, while Marubeni Corp (8002.T: Quote, Profile, Research) has a 32.5 percent stake, Korea Midland Power Co. Ltd 27.5 percent and Samtan 20 percent.
The firm is building a 660-megawatt coal-fired power plant in Cirebon, West Java,
The power plant, which is expected to start operations in 2011, may cost about $800 million and will sell electricity to PLN under a 30-year contract, Indika Energy said last year.
Southeast Asia’s biggest economy has struggled with power shortages and blackouts in recent years, but is attempting to ramp up electricity supplies through a crash programme led by the state power firm PLN to build coal-fired power plants and also through independent power producers.
(Reporting by Fitri Wulandari; Editing by Ed Davies)
Indonesia coal output seen 260 mln T in 2009-trade
NEW DELHI, March 4 (Reuters) – Indonesia’s coal output is expected to be 250 million to 260 million tonnes this year with domestic demand seen at 68 million tonnes, the head of a mining body said on Wednesday.
Jeffrey Mulyono, chairman of Indonesian Coal Mining Association, also said global coal prices were “normal” now and demand was unlikely to drop significantly.
“Of course psychologically it may seem that energy demand will decrease. But in reality it is not so much,” he said. (Reporting by C.J. Kuncheria; Editing by Ranjit Gangadharan)

L/C Obligation Only For Export Above US$ 1 Million

Kalimantan Coal

L/C Obligation Only For Export Above US$ 1 Million

Jakarta – TAMBANG. After discussing with stakeholders, the Ministry of Trade finally revised the L/C obligation policy of exported goods. The obligation to use Letter of Credit (L/C) would apply only for mining products, tin, and CPO export product worth over US$ 1 million. The implementation would also be delayed until April 2009.The decision was announced by the Minister of Trade, Mari Elka Pangestu, during a press conference on 5 March 2009. The meeting was also attended by the Director of Foreign Trade – Ministry of Trade, Diah Maulida, and chairmen of numerous associations representing the business sector.The minister said that since the Ministerial Regulation No.1/M-DAG/PER/1/2009 on L/C obligation effective on 5 January 2009, the ministry has been receiving inputs on the difficulties faced by business actors in implementing the rule. Furthermore, the policy was applied in the midst of global crisis, resulting in the drastic decline on export performances.Therefore, the Ministry of Trade has done a revision on the policy, by setting the obligation only for mining products, tin, and CPO. “Those three products are considered to have better bargaining position for buyers abroad,” the minister affirmed.Other revision related to the value, was that the L/C obligation would only apply for those three product worth over US$ 1 million. “We will also postpone the implementation until April 2009,” she explained.Previously, the Ministry of Trade has decided that the implementation would be commenced in two month following the issuance of Ministerial Regulation No.1/M-DAG/PER/1/2009. However, due to the loads of complaints from middle scales exporters and the worsening external economic condition, the policy needed a revision.

ICW: Unusual Accumulated Depreciation On BP Migas’ Assets
March 05, 2009 16:27 GMT(+7) At the end of 2008, BP Migas has reported an accumulated depreciation of US$ 21 billion on its asset, in a 30 years period. The value had depreciated from US$ 24 billion to only US$ 3 billion, leaving only approximately 10% of its original value. Indonesian Corruption Watch (ICW) noticed that the accumulated depreciation value was unusual, and had the strong indication of corruption case.
read more …

Roy Olsen Cautiously Optimistic On The New Mining Law
March 05, 2009 12:59 GMT(+7) The new Mining Law (Law No.4/2009) has gained some positive responses from mining stakeholders. Nevertheless, the anxiety would still remain in anticipation of the implementing regulations to provide clarity and certainty. Roy Olsen, President Director of PT Thiess Contractors Indonesia, is among those who cautiously wait in optimism.
read more …

Simon Sembiring, New Independent Commissioner Of Petrosea
March 04, 2009 17:56 GMT(+7) PT Petrosea Tbk has appointed Simon F. Sembiring as their new Independent Commissioner, replacing John S. Karamoy who has resigned earlier. The appointment was made public in a special stockholders’ meeting held at Garden Hotel Kemang, Jakarta, on 4 March 2009. Among the meeting’s agenda were on the change in the board of commissioners, and on the reduction of issued / paid up capital due to the buy back process.
read more …

TAKE-A-LOOK-Global coal market news

Kalimantan Coal

Global coal market news
The global spot market for thermal coal has grown swiftly
as volatile prices, which has tumbled about 60 percent since a
record high of $200 a tonne in July, drive producers to seek
more contract flexibility. Rising prices last year have also
driven utilities, especially those in Europe, to work harder to
manage their costs amid liberalising power and gas markets. Please double click on the codes in brackets below to see
recent Reuters stories on coal.
ASIAN COAL MARKET
REPORT…………..[COAL/ASIA] EUROPEAN COAL MARKET
REPORT………..[COAL/EURO] TOP STORIES > Asia Coal-Prices
fall near 21-mth low, oil to give [nJAK67564] > China
Coal-Prices little changed despite plunge ab[nSHA100485] >
China adds $10 bln to commodity stockpiling budget [nPEK17046]
> China seen seeking policies to raise coal costs
[ID:nPEK18898] > China’s Datang: breakeven coal price 400 yuan
[ID:nPEK38354] > China Datang making losses, seeks imports
[ID:nSHA349855] > Thermal coal trade to shrink 2.6 pct in
’09-ABA[ID:nSYD502465] > Australia coal miners wrestle Japan
firms on price[nSYD411286] > Indonesia may miss 2009 coal
output target-officia[nJAK415573] > Indonesia delays new trade
rule opposed by exporte[nJAK165589] > SAfrica faces power
distribution crisis-minister[ID:nL3168536] > S.Africa says keen
to go green on energy supply [ID:nL4605615] > Eskom looks at
solar for next baseload plant [ID:nWEA0653] > India’s MSTC
to raise coal imports next fiscal [ID:nDEL002692] > Anglo cuts
650 Australia coal jobs to fight cos[ID:nSYD372972] > US coal
supplies rise 1.5 pct for week [ID:nN03381158] > Baltic
dry freight index rises to highest this year[nL5338324] MARKETS
> Asia Coal-Prices fall near 21-mth low, oil to give
[nJAK67564] > Euro Coal-Prices little changed from Wednesday
[nL5936767] > April S.Africa coal cargo trades at $57.00/T FOB
[nL5921370] > May delivery coal trades at $59.00/T DES ARA
[ID:nL2275962] > S.Korea’s KOMIPO awards 16 cargoes in coal
tend [ID:nSP471339] > S.Korea’s KEWESPO awards 800,000 tonnes
in coal ten[nSP478968] STOCKS, IMPORT/EXPORT DATA > Australia
Newcastle coal exports, queues fall [ID:nSYD439282] EXCLUSIVE
ON REUTERS > Coal mines attract cash-flush bargain hunters
[ID:nL5582977] > Costs to keep US carbon storage from coal
elusi[ID:nN05454520] > Low prices, downturn could alter Aussie
CO2 scheme [nSP406539] > Turkey’s Soyak to invest $1 bln in
power output [ID:nL5925061] CORPORATE > China Shenhua plans
$725 mln Inner Mongolia railwa[nSHA170445] > China Shenhua
2008:prelim net profit up 30 pct [ID:nHKG348578] > Xstrata
shareholders approve $5.9 bln rights iss[ID:nL2205742] > Lanna
says Indonesian coal mine restarted March[ID:nBKK398330] > UAE
fund plans Indonesia coal rail link [nJAK271569]
RECURRING MARKET REPORTS European physical market…………[COAL/EURO] European swaps market……………[DERIV/COAL] Australian spot prices…………..[COAL/ASIA] North America coal market………..[COAL/US] STOCKS AND
IMPORT/EXPORT DATA Australia Newcastle stocks……….[NEWC/COAL] S. Africa’s Richards Bay stocks…..[BAY/COAL] TRADES AND
TENDERS Spot trades…[COAL/TRADE\] Coal tenders…[COAL/TEND]
COAL PRICES McCloskeys weekly physical spot/freight
prices.. API4 coal paper prices,
McCloskeys………… API2 coal paper prices,
McCloskeys………… (Compiled by Fayen Wong)

China Coal-Prices little changed despite plunge abroad

SHANGHAI, March 5 – China‘s spot coal prices were little changed from a week earlier, despite the sharp fall in the international market, and demand for coal remains sluggish.
Prices of thermal coal in Newcastle, Australia, a benchmark for Asia, dropped to the lowest level in nearly 20 months, to below $65 per tonne, according to globalCOAL.
But the falling prices are unlikely to boost China‘s coal imports, as the domestic demand, as well as spot prices, remain weak, industry sources said.
“Power plants simply would not buy, no matter how cheap the coal is. Demand for electricity is still low,” said a coal trader based in the southern province of Guangdong.
The freight rates and tax put prices of imported Australian coal are on par with those of domestic coal, he added.
At Qinhuangdao, China‘s top coal shipping port, thermal coal with a heating value of 6,000 kcal/kg was quoted in the range of 580-600 yuan ($84.8-$87.7) per tonne, unchanged from a week earlier, according to the Qinhuangdao Seaborne Coal Market (www.cqcoal.com).
Coal with a heating value of 5,500 kcal/kg edged down less than 1 percent on the week to 550-560 yuan ($80.4-$81.8) per tonne, down 8 percent from a year earlier, the market said on its website.
“Thermal coal is currently a demand story. The price movement in the future will depend on the overall economy,” said Henry Liu, an analyst at Macquarie.
A key gauge of Chinese manufacturing improved in February for the third month in a row as factories restocked in anticipation of an early revival in the economy despite deepening global gloom. [ID:nPEK16693]
The industrial output figures, including power output, for the first two months of the year are scheduled to be released next week.

Felix Studying Coal Acquisitions in India, Indonesia
By Jesse Riseborough
March 6 (Bloomberg) — Felix Resources Ltd., an Australian supplier of coal to Korea and Japan, is studying acquisitions of energy coal assets in India and Indonesia after last month shelving talks to sell itself to another company.
“Indonesia and India are the two areas we are having a look at,” Brian Flannery, 57, managing director of Brisbane-based Felix, said in an interview. The company is talking to “large groups” in India that are looking to build new power stations, he said. Indonesia is the biggest exporter of energy coal.
India is planning to build nine 4,000 megawatt capacity power stations to double coal-fired electricity production by 2017, according to Australia’s commodity forecaster. Prices for the fuel rose to a record last year on rising demand from Asia, boosting Felix’s profit threefold to A$166 million ($106 million) and taking cash on hand to A$340 million as of last month.
“If you take the bet that there is going to be a rapid increase in energy demand in India, which would be the case, then India is your first choice to develop supply, with Indonesia probably a close second,” said Mark Pervan, senior commodity strategist at Australia and New Zealand Banking Group Ltd. “This is really a locality strategy.”
Felix rose 0.6 percent to A$7.05 at the 4:10 p.m. Sydney time close on the Australian stock exchange, after gaining as much as 8.1 percent earlier. The stock has dropped 20 percent this year and has a market value of A$1.4 billion.
Demand for imported coal in India will rise over the next five years as new power stations are built in coastal areas, Flannery said.
The company will also study merger and acquisition opportunities in Australia in the next six months given recent share price declines, he said.
Talks Shelved
Felix has “decided to move on” after shelving talks on a possible takeover last month, Flannery said. Talks are on ongoing, “however given the world financial environment it is unlikely that these discussions will be concluded in the near term,” the company said in a Feb. 27 statement.
Indian energy coal imports will more than triple to as much as 100 million metric tons by 2012 as new power plants are built, Coal and Oil Group, the country’s largest importer of the fuel, said last month.
The nine planned power stations will each consume as much as 15 million metric tons of coal annually, the Canberra-based Australian Bureau of Agricultural and Resource Economics said in a report this week. There will be “strong growth” in Indian coal demand over the medium term, it said.
The country imported 34 million tons of coal last year, the bureau said. Thermal coal contract prices, at a record $125 a ton for the year ending March 31, may drop to $75 a ton in the year starting April 1, RBC said.

To contact the reporter on this story: Jesse Riseborough in Melbourne at jriseborough@bloomberg.net
Last Updated: March 6, 2009 00:35 EST

Summary Coal News

Kalimantan Coal

Coal: Global demand weakens

Katherine Hermawan, Analyst
While coal prices were stickier on the way down compared to other commodities like oil, the Newcastle price now suggests coal prices have begun to play catch-up, following trends in oil prices down by 14 percent week-on-week and 21 percent since the start of the year to US$65.32 per ton.
These time-lagged price movements should only be temporary and are caused mostly by the carried over impact of completed contracts.
The recent plunge in coal prices have been caused by the build-up of Australian metallurgical coal supplies, entering the global thermal coal market, hence intensifying competition further.
This will place Australia as Japan’s top supplier of choice not only due to delivery reliability but also due to Japan’s preference for high calorific value (CV) coal.
It is worth highlighting that Japan, accounting for around 23 percent of Indonesia’s total coal exports, is our largest coal importer.
According to ABARE (the Australian Bureau of Agricultural and Resource Economics), Japan as the world’s largest coal importer is forecast to have thermal coal imports fall by at least 3 percent to 130 million tons in 2009 as the capacity utilization of several nuclear power plants recovers following breakdowns or maintenance in 2008.
The nuclear power plant utilization rates of Japan’s 10 nuclear power companies rose to a five-month high of 67.2 percent in January 2009 to help meet peak winter demand, according to Japan’s Ministry of Economy, Trade & Industry (METI).
Higher usage of energy produced by nuclear power plants will cause less energy usage from other sources, including the coal-fired power plants.
This plays a crucial role in reducing global coal demand significantly this year.
The coal price index should be pressured downward further within the near future, especially after the outcome of current on-going negotiations between Japan and Australia on coal- contract renewals.
From another point of view, the Chinese government has experienced rising coal stockpiles and has decided to issue a bigger than expected second batch of coal export quotas in 2008 ranging up to 15.9 million tons compared to the 0-10 million tons bracket adopted before.
Going forward, with China having closed down some 100,000 factories last year due to the economic slowdown, we expect China’s coal exports to rise in 2009.
It is worth highlighting that China is the world’s biggest coal producer with total 2008 production at 2.5 billion tons (45 percent of total global production).
This is expected to rise to 2.7 billion tons in 2009.
Thus, the impact of China’s slowing domestic consumption this year will undoubtedly add pressure upon an already crowded global coal supply position, particularly as major exporters are still targeting production growth of 3-7 percent per year.
Meanwhile, Indonesia, the world’s largest thermal coal exporter, is still targeting optimistic 2009 coal sales of 280m tons, a significant expectation of 12 percent year-on-year growth compared to 2008.
On the flip side, South Korean power companies such as Korean Midland Power Co (KOMIPO) and Korean East West Power Co (KEWESPO) are at present being offered higher coal volumes than what they seek in tenders with many offering sales prices at $3-$4 per ton lower than current market prices.
KOMIPO stated that it saw bidders from as far afield as South African and Canada, implying that producers will have to work harder to sell coal as demand weakens while supply steadily increases.
In 2009 coal producers should mitigate higher risk exposure to the volatile overseas coal market by securing more of their sales volumes in long-term contracts rather than spot sales.
Unlike in 2008, when spot sales provided producers with higher sales prices, 2009 demand is relatively weaker resulting in much lower prices.
Since its recent peak, coal prices have come down 66 percent to about $65 per ton at present.
We expect prices to decline further to as low as $53 per ton in 2009. Thus, domestic-sales oriented coal producers can anticipate less market pressure and lower risk exposure in 2009, based on adequate global supply and weakening demand.
The writer is an analyst at Bahana Securities

Indonesian coal output to edge up, exports seen flat

NEW DELHI, March 4 (Reuters) – Indonesia’s coal output in 2009 is expected to edge up from last year, the head of a miners’ body said on Wednesday, and global demand for the fuel was unlikely to dive as China and India helped shore up consumption.
Jeffrey Mulyono, chairman of the Indonesian Coal Mining Association, said coal prices, sharply down from their peak in July, were “normal” now and he saw little downside.
“Of course, psychologically it may seem that energy demand will decrease. But in reality it is not so much,” Mulyono said on the sidelines of a coal conference in the Indian capital.
“We’re thinking of India and China still. They’re developing their energy supply to the public and to the industry.”
Mulyono estimated Indonesian production at 250-260 million tonnes this year, up from 238 million tonnes a year ago.
Domestic demand would rise to 68 million tonnes from 50 million tonnes in 2008, he said, leaving overseas sales from the world’s top exporter flat on the year.
Demand for thermal coal is expected to shrink in 2009, with electricity demand taking a hit from the global economic slump.
Japan, the top buyer, is expected to buy 10 million tonnes less, while sales to world No. 2 importer South Korea are seen 6 percent lower by an Australian government agency
But China, the world’s largest consumer, is likely to see only a marginal decline in imports but India would buck the trend as it raises coal-fired generation capacity, the agency said.
This has reflected in thermal coal prices in Australia, a benchmark for Asia, dropped to a near 20-month low of just above $65 a tonne at end-February, below the $201 a tonne quoted in July, as surpluses build up during a period of weak demand.
But Mulyono said the prices benefited both producers and buyers.
“Today’s is normal pricing. The producer can make a profit and the buyer can still survive,” Mulyono said. “Today’s is a very convenient pricing level.” He estimated the production cost of Indonesian coal at an average of $35-$40 a tonne.
When asked about competition from South African coal for the Asian market, Mulyono said: “Freight is now so cheap the African supplier can easily supply up to India. But if they are talking of supplying to China or to Japan, there is still expensive transport costs.” (Reporting by C.J. Kuncheria, Editing by Mark Williams)

Chinese coal price likely to drop by 20%

China International Capital Corporation Ltd released a report that China’s coal prices will probably drop 20% towards its equilibrium on the grounds of a recovery in coal production utilization rate and weakened demand. CICC holds that there is a great profit margin for coal enterprises at the current price, and so will very likely resume production.China’s steel plants will probably further cut production due to increasing steel inventories and falling steel prices since February 2009, which will further affect coke demand. However, coal enterprises in China’s major coal producing areas including Shanxi, Shaanxi and Inner Mongolia Autonomous region hold that coal prices wouldn’t slide so far as in the fourth quarter of 2008.Coal output from major coal producing areas accounts for half of the nation’s total, while trading volume takes 71%.CICC predicted that the pre-tax power coal prices at Qinhuangdao Harbor would drop 28% in 2009, while pre-tax contractual coal prices will remain unchanged. Average coking coal prices of large coking enterprises will decrease by 24% while that of small and medium enterprises will fall 20% in 2009.(Source: China Mining)

China’s Datang says breakeven coal price 400 yuan

BEIJING, March 4 (Reuters) – China Datang Corp, the parent of Datang International Power (0991.HK) (601991.SS), can break even when coal prices are about 400 yuan ($58.46) per tonne, general manager Zhai Ruoyu said on Wednesday.
“We can solve the problem of losses if coal prices fall to around 400 yuan per tonne,” he told reporters in Beijing.
Datang, along with other major Chinese power firms, has been locked in negotiations with coal miners for months about a term price for 2009. But Zhai said he was not worried about the failure to sign a deal because some coal firms were still supplying even though no new contracts had been agreed.
He said Datang would increase generating capacity by 13 gigawatts to more than 90 gigawatts this year. ($1=6.842 YUAN)
(Reporting by Jim Bai; Writing by Tom Miles, Editing by Nick Macfie)

Time to face up to reality
Article from: The Australian
THERE is no point pretending Australia is not now in recession. This is not talking down the economy — it’s facing up to the real world.
Like the deficit word, getting over “recession” should allow Australia to wake up to the more pressing issue of how to contain the fallout from the global financial crisis and promote recovery next year.
Exploiting the nation’s strengths could allow us to keep doing better than the rest of the world. Not dealing with our vulnerabilities could cost much more than commonly understood.
The economy’s 0.5 per cent contraction in the wake of the global crisis has exposed the limits of government spending to stimulate household consumption.
The limit to this easy option switches the focus to the Rudd Government’s policy weaknesses: reimposing pro-union workplace rules on business, bidding up more taxpayer-funded entitlement spending and slapping on new carbon imposts amid a manufacturing downturn.
It was always unrealistic to think Australia could be so insulated from the biggest global financial crisis since the 1930s.
The mid-September Wall Street eruption occurred in Australian real time. Frightened households wisely ignored pleas from Kevin Rudd and Wayne Swan to splurge the $8 billion-plus of pre-Christmas handouts, instead paying off their debts and lifting savings to their highest rate in nearly two decades. With profits being hit, business cut back on working hours, inventories and production. GDP would have fallen even further without the budget stimulus. But this consolation was bought with borrowed money that will have to be repaid. The disappointing return should put a brake on any further budget splurge, especially on top of the second $42 billion fiscal stimulus, which kicks in this month. Amid a global credit crunch, this is risky business for a country with a large foreign debt. There are other reasons why the Australian economy has held up so far compared with the US (down 1.6 per cent in the quarter), Britain (down 1.5 per cent) and Japan (down 3.3 per cent). Our banks are solid. Monetary policy retains traction. The budget entered the crisis in surplus. And the lower Australian dollar has provided a competitive boost. The December quarter was also buoyed by the lingering resources boom momentum, with business investment in new capacity rising 1.1 per cent in the three months to be 12 per cent up on the year. And China and Japan were still paying high contract prices for our coal and iron ore exports. This is recession territory, although the Government will cling to the hope of dodging the definition of two consecutive quarters of economic contraction. GDP rose a piddling 0.1 per cent in the September quarter, fell 0.5 per cent in the December quarter and is likely to drop again in the current quarter. Outside the farm recovery, non-farm GDP went backwards 0.8 per cent in the December quarter, after falling for the previous three months. In per capita terms, GDP has decreased three quarters in a row to be down 1.4per cent on a year ago. The good news is the economy has entered recession without a buildup of unsold inventory. This means business will need to restock when demand picks up. But we’ve yet to see the bad news on collapsing business investment, weaker export volumes and sharply lower contract prices for coal and iron ore exports

INDONESIA COAL NOT EXPECTING TO FEEL CHILL

Kalimantan Coal

By Paul Betts and John Aglionby
Published: March 2 2009 23:16 Last updated: March 2 2009 23:16
What global financial crisis? That would be a reasonable conclusion after the latest predictions from the Association of Indonesian Coal Companies.
It estimates that overseas sales from the world’s largest exporter of thermal coal, which is used mostly for power generation, are going to rise this year to 215m tonnes from 200m in 2008. Domestic sales are estimated to jump from 50m to 60m tonnes.
Are these figures credible? Many market indicators suggest not.
The spot price of benchmark Australian power-station coal, for example, fell last week to a 17-and-a half-month low of $67, down 16.8 per cent in a fortnight.
But spot prices can be deceptive and analysts do not expect a collapse in demand for Indonesian coal either.
Indonesia, for example, is in the process of converting many of its power stations to coal from oil. It is also in the process of building 10,000MW of coal-fired generating capacity, although this has hit a funding snag.
And demand in overseas markets, particularly India, appears to be holding up better than other economic data would suggest.
On the supply side, Indonesian costs, at $33-$36 per tonne are below the regional average, and are lower than in Australia, the US and Russia.
So even if demand, and spot prices, continue to head south, Indonesian coal producers are likely to continue to see busy mines this year, even if they are not so profitable as last year.
Still on the right track
Michel Rollier always uses his wife’s maiden name when booking a restaurant. Hardly surprising given he is the senior managing partner of the family-controlled Michelin tyre company that also publishes the famous gastronomic bible that has been handing out and taking away good food stars for more than a century.
“If a restaurant knows I’m coming they will either be falling over themselves to pander to my every whim in the most annoying way or they will organise a lynching party,” he says.
The first edition of the Michelin guide was launched in 1900 to help motorists in France to find a decent hotel and a good restaurant as well as a garage to repair their cars or change a tyre while touring the country.
It proved a brilliant initiative that gave Michelin a head start in the guide book and road map publishing business.
The guide gradually established itself as the leading culinary reference book not only in France but elsewhere in Europe and more recently in North America and Asia.
And, as it gained a reputation for making or breaking restaurants by its awarding stars, it has steadily become a subject of controversy that has helped to increase both its notoriety and its annual sales.
Yesterday, Michelin unveiled the latest edition of its French culinary bible – the 100th since publication of the guide was interrupted during the first and second world wars – attracting all the usual controversy.
This year, Michelin has been accused of being too soft by not taking stars away from established restaurants in the face of the global recession.
But all this sound and fury whether a restaurant deserves a three stars rating or not is not really the point.
For Michelin, the guide books business is not so much a profit centre or a vehicle for diversification but essentially a marketing tool.
Every year, Michelin sells some 1.2m guide books around the world. That is pretty impressive, but it still accounts for only about 0.5 per cent of the company’s annual sales.
And the guides’ purpose is not, primarily, to help increase earnings. The aim is essentially to promote the Michelin brand and the sale of its core product – tyres.
Japan is a good example of this strategy.
The Japanese are mad about food and the Michelin Tokyo restaurant and hotel guide has greatly enhanced the company’s visibility in the Japanese market.
Indeed, Mr Rollier acknowledges that Michelin is probably better known for its guides and restaurant stars in Japan than for its tyre business – and this in the home country of Bridgestone, Michelin’s main competitor in the international tyre market.
Michelin is also continuing to expand its guide book business in countries where it has significant tyre operations.
Hence its decision to launch a Hong Kong and Macau guide last year that is expected to be followed up with a mainland Chinese one.
It is also considering a guide for Brazil where it has important operations.
The guide books are also being updated and adapted to new formats such as mobile telephones, GPS systems in cars and so on.
Yet the fundamental point of this publishing business has not changed since it was first started in 1900 – to promote the products of what has become the world’s leading tyre maker.
As for all the debate about who gets a star and who doesn’t, the company is quite sanguine. The culinary stars belong to Michelin and Michelin does what it wants with them.
world.view@ft.com

INDONESIA’S UNITED TRACTORS TO RELY MORE ON MINING CONTRACTING

Kalimantan Coal

JAKARTA, Mar 02, 2009 (AsiaPulse via COMTEX) — PTAIF Quote Chart News PowerRating — Indonesian heavy equipment company PT United Tractor (JSX:UNTR) said it hopes to earn more revenues this year from mining contracting than from the sales of heavy equipment.
Last year sales of heavy equipment and mining contracting contributed 50 per cent each to the total revenues of the subsidiary of the country’s largest automotive company PT Astra International (JSX:ASII), Corporate secretary Sara K. Loebis said.
Last year the company recorded Rp27.9 trillion (US$2.3 billion) in income up 53.6 per cent from the previous year with net profit surging 78.52 per cent to 2.66 trillion, Loebis said.
Loebis predicted business will suffer a slowdown this year as a result of the global economic woes, the newspaper Bisnis Indonesia reported.
(ANTARA)

Indonesia’s Indika buys 81.95 pct stake in Petrosea

Kalimantan Coal

JAKARTA, Feb 27 (Reuters) – Indonesian coal miner, PT Indika Energy Tbk (INDY.JK) said it has agreed to buy an 81.95 percent stake in engineering firm PT Petrosea Tbk (PTRO.JK) from Clough International Singapore Pte Ltd for $83.8 million.
“Petrosea’s mining capability provides us with immediate scale and depth to our becoming a leader in the energy sector,” Indika’s president director Arsjad Rasjid said in a statement to the stock exchange late on Thursday night.
“The acquisition of Petrosea is a logical next step in our growth,” he added.
Indika controls 46 percent of Indonesia’s third-largest coal miner, PT Kideco Jaya Agung.
Indika’s shares closed up 3.4 percent at 1,510 rupiah per share on Thursday, while Petrosea’s share price jumped 19.7 percent to 9,100 rupiah.
The firm did not give any details about when it would hold a tender offer for the remaining shares.
(Reporting by Andreas Ismar; Writing by Dicky Kristanto; Editing by Sara Webb)

India sees coal imports at 51 mln tonnes this year


Kalimantan Coal

SINGAPORE (Reuters) – India’s demand for coal is growing by around 8-9 percent a year, outpacing production that is growing by 6 percent as the power sector has not been hit by the credit crunch, a senior government official said on Thursday.

“There is no delay on account of the credit crunch,” Shri S.C. Bhatia, deputy secretary of the ministry of coal, said on the sidelines of a coal market conference.

He expected import demand at 51 million tonnes in the financial year to the end of March, up from 49.8 million tonnes in the previous year and 42 million in the 2006/07 financial year.

“The demand is there, many areas are not yet covered by power, so there will be growth,” said Bhatia.

India will use 731.1 million tonnes of coal in 2011/12, up from 474.18 million tonnes in 2006/07, he added.

Previous government estimates have shown that domestic production will cover just 680 million tonnes of this demand.