Daily News Update Page 1

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Export benchmark prices for mining products for the period of February 2021: Most of the commodity prices have increased Harga Patokan Ekspor Produk Pertambangan Periode Februari 2021: Sebagian Besar Harga Komoditas Alami Kenaikan Coal Becomes Taxable Goods, 10% VAT Paid by PLN Batubara jadi barang kena pajak, PPN 10% dibayar oleh PLN Freeport Promises to Fill State Pockets Rp560 T Until 2041 Freeport Janji Isi Kantong Negara Rp560 T Hingga 2041 Exposed to Profit Taking Action, Coal Prices Weakened Terkena Aksi Profit Taking, Harga Batu Bara Melemah To boost sales of heavy equipment, United Tractors will maximize its sales network Pacu penjualan alat berat, United Tractors bakal maksimalkan jaringan penjualan Tekmira BLU Technology Breakthrough Extends Production Life of PT Timah Terobosan Teknologi BLU Tekmira Perpanjang Umur Produksi PT Timah For the blessing of Chinese New Year, see the recommendation of coal issuers Ketiban berkah Imlek, simak rekomendasi saham emiten batubara Copper price in slump, hits one-month low China maintains ample, stable coal production in 2020 OZ Minerals to begin Carrapateena block cave expansion Coal India output likely to slip 4% in January after months of growth Kyrgyzstan bans foreign companies from future mining projects

Kemendag Kontan CNN Indonesia CNBC Indonesia Kontan Liputan6 Kontan Mining.com Global Times Australian Mining Business Standard Mining Weekly

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Daily News Update Page 2

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Russian mining giant Nornickel meets 2020 production guidance Environmental concerns spur Asia to reduce reliance on coal

Kitco News Asia Times

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Daily News Update Page 3

Export benchmark prices for mining products for the period of February 2021: Most of the

commodity prices have increased

UNTIL the end of January 2021, the prices

of several mining product commodities showed a positive trend that continued amid the Covid-19 pandemic. This is indicated by the significant increase in the prices of several mining product commodities due to increased demand and supply in the world market. This condition affects the determination of the Export Benchmark Price (HPE) of mining products subject to Export Duty (BK) for the period February 2021. This provision is stipulated in the Regulation of the Minister of Trade Number 06 of 2021, dated January 26, 2021.

“HPE for mining products for the period of February 2021 has fluctuated. Among the commodities of copper concentrate, iron concentrate, laterite iron concentrate, manganese concentrate, iron sand concentrate, ilmenite concentrate and rutile concentrate, which experienced an increase compared to the last month period. Prices of several mining product commodities that experienced an increase due to increased world demand, mean-while for leached lead concentrates, zinc concentrates and bauxite experienced a decline in prices. Meanwhile, iron sand concentrate pellets have not changed,” explained the Director General of Foreign Trade, Didi Sumedi.

Harga Patokan Ekspor Produk Pertambangan Periode Februari

2021: Sebagian Besar Harga Komoditas Alami Kenaikan

HINGGA periode akhir Januari 2021,

harga beberapa komoditas produk pertam-bangan menunjukkan trenpositif yang terus berlanjut di tengah pandemi Covid-19. Hal ini diindikasikan dengan kenaikan harga beberapa komoditas produk pertam-bangan yang cukup signifikan disebabkan meningkatnya permintaan dan penawaran pasar dunia. Kondisi ini mempengaruhi penetapan Harga Patokan Ekspor (HPE) produk pertambangan yang dikenakan Bea Keluar (BK) untuk periode Februari 2021. Ketentuan ini ditetapkan dalam Peraturan Menteri Perdagangan Nomor 06 Tahun 2021, tanggal 26 Januari 2021.

“HPE produk pertambangan periode Februari 2021 mengalami fluktuasi. Diantaranya komoditas konsentrat tembaga, konsentrat besi, konsentrat besi laterit, konsentrat mangan, konsentrat pasir besi , konsentrat ilmenite, dan konsentrat rutil mengalami kenaikan di-bandingkan periode bulan lalu. Harga beberapa komoditas produk pertam-bangan yang mengalami kenaikan di-karenakan adanya permintaan dunia yang meningkat, sementara untuk komoditas konsentrat timbal, konsetrat seng dan bauksit yang telah dilakukan pencucian mengalami penurunan harga. Sedangkan untuk pellet konsentrat pasir besi tidak mengalami perubahan,” jelas Direktur Jenderal Perdagangan Luar Negeri Didi Sumedi.

Daily News Update Page 4

A number of mining products subject to BK are copper concentrate, iron concentrate,

laterite iron concentrate, iron sand concentrate, iron sand concentrate pellet,

manganese concentrate, lead concentrate, zinc concentrate, ilmenite concentrate,

rutile concentrate, and washed bauxite.

HPE base price calculations for iron concentrate, laterite iron concentrate, iron sand concentrate, manganese concentrate, ilmenite concentrate and rutile concentrate are sourced from Asian Metal and Iron Ore Fine Australian. Meanwhile, copper concentrate, iron sand concentrate pellets, lead concentrate, zinc concentrate, and bauxite are sourced from the London Metal Exchange (LME).

Compared to the previous period, mining products that experienced an average price increase in the February 2021 period were copper concentrate (Cu ≥ 15%) with an average price of USD 3,111.97/WE or an increase of 3.45%; iron concentrates (hematite, magnetite) (Fe ≥ 62% and ≤ 1% TiO2) with an average price of USD 148.03/WE or an increase of 19.34%; laterite iron concentrates (gutite, hematite, magnetite) with levels (Fe ≥ 50% and (Al2O3 + SiO2) ≥ 10%) with an average price of USD 75.64/WE or an increase of 19.34%.

Furthermore, manganese concentrate (Mn ≥ 49%) with an average price of USD 208.00/WE or an increase of 2.52%; iron sand concentrate (lamella magnetite-ilmenite) (Fe ≥ 56%) with an average price of USD 88.39/WE or an increase of 19.34%; ilmenite concentrate (TiO2≥ 45%) with an average price of USD 339.00/WE or an increase of 4.26%; and rutile concentrate (TiO2 ≥ 90%) with an average price of USD 926.52/WE or an increase of 6.16%.

Sejumlah produk pertambangan yang dikenakan BK adalah konsentrat tembaga, konsentrat besi, konsentrat besi laterit, konsentrat pasir besi, pellet konsentrat pasir besi, konsentrat mangan, konsentrat timbal, konsentrat seng, konsentrat ilmenit, konsentrat rutil, dan bauksit yang telah dilakukan pencucian.

Perhitungan harga dasar HPE untuk komo-ditas konsentrat besi, konsentrat besi laterit, konsentrat pasir besi, konsentrat mangan, konsentrat ilmenit, dan konsentrat rutil bersumber dari Asian Metal dan Iron Ore Fine Australian. Sedangkan konsentrat tembaga, pellet konsentrat pasir besi, konsentrat timbal, konsentrat seng, dan bauksit bersumber dari London Metal Exchange (LME).

Dibandingkan periode sebelumnya, produk pertambangan yang mengalami kenaikan harga rata-rata pada periode Februari 2021 adalah konsentrat tembaga (Cu ≥ 15%) dengan harga rata-rata sebesar USD 3.111,97/WE atau naik sebesar 3,45%; konsentrat besi (hematit, magnetit) (Fe ≥ 62% dan ≤ 1% TiO2) dengan harga rata-rata sebesar USD 148,03/WE atau naik sebesar 19,34%; konsentrat besi laterit (gutit, hematit, magnetit) dengan kadar (Fe ≥ 50% dan (Al2O3+ SiO2) ≥ 10%) dengan harga rata-rata sebesar USD 75,64/WE atau naik sebesar 19,34%.

Selanjutnya, konsentrat mangan (Mn ≥ 49%) dengan harga rata-rata sebesar USD 208,00/WE atau naik sebesar 2,52%; konsentrat pasir besi (lamela magnetit-ilmenit) (Fe ≥ 56%) dengan harga rata-rata sebesar USD 88,39/WE atau naik sebesar 19,34%; konsentrat ilmenit (TiO2≥ 45%) dengan harga rata-rata sebesar USD 339,00/WE atau naik sebesar 4,26%; dan konsentrat rutil (TiO2 ≥ 90%) dengan harga rata-rata sebesar USD 926,52/WE atau naik sebesar 6,16%.

Daily News Update Page 5

Meanwhile, the products that had decreased compared to the HPE in the

previous period were lead concentrate (Pb ≥ 56%) with an average price of USD

818.19/WE or a decrease of 2.72%; zinc concentrate (Zn ≥ 51%) with an average

price of USD 750.92/WE or a decrease of 0.60%; and washed bauxite (Al2O3 ≥ 42%)

with an average price of USD 27.09/WE or a decrease of 0.18%.

Meanwhile, iron sand concentrate pellets

(lamella magnetite-ilmenite) (Fe ≥ 54) with an average price of USD 117.98/WE

did not change.

According to Didi, the HPE for the February 2021 period was determined after paying

attention to various written inputs and coordination from various related

agencies.

Regulation of the Minister of Trade

Number 06 of 2021 concerning Stipulation of Export Benchmark Prices for Mining

Products Subject to Export Duty can be downloaded via http://jdih.kemendag.go.id/

peraturan/detail/2083/2.

Sedangkan, produk yang mengalami penurunan dibandingkan HPE periode sebelumnya adalah konsentrat timbal (Pb ≥ 56%) dengan harga rata-rata sebesar USD 818,19/WE atau turun sebesar 2,72%; konsentrat seng (Zn ≥ 51%) dengan harga rata-rata sebesar USD 750,92/WE atau turun sebesar 0,60%; dan bauksit yang telah dilakukan pencucian (washed bauxite) (Al2O3≥ 42%) dengan harga rata-rata sebesar USD 27,09/WE atau turun sebesar 0,18%.

Sementara itu, pellet konsentrat pasir besi (lamela magnetit-ilmenit) (Fe ≥ 54) dengan

harga rata-rata USD 117,98/WE tidak mengalami perubahan.

Menurut Didi, HPE periode Februari 2021 ini ditetapkan setelah memperhatikan ber-

bagai masukan tertulis dan koordinasi dari berbagai instansi terkait.

Peraturan Menteri Perdagangan Nomor 06 Tahun 2021 tentang Penetapan Harga

Patokan Ekspor Atas Produk Pertam-bangan Yang Dikenakan Bea Keluar dapat

diunduh melalui http://jdih.kemendag.go.id/ peraturan/detail/2083/2.

Coal Becomes Taxable Goods,

10% VAT Paid by PLN Reporter: Ridwan Nanda Mulyana | Editor:

Yudho Winarto

PT PLN (Persero) will bear a 10% Value

Added Tax (PPN) along with the change in

the status of coal to Taxable Goods in Law

Number 11 of 2020 concerning Job

Creation.

Batubara jadi barang kena

pajak, PPN 10% dibayar oleh PLN

Reporter: Ridwan Nanda Mulyana | Editor: Yudho Winarto

PT PLN (Persero) bakal menanggung

Pajak Pertambahan Nilai (PPN) 10% seiring dengan perubahan status batubara menjadi Barang Kena Pajak pada Undang-Undang Nomor 11 Tahun 2020 tentang Cipta Kerja.

Daily News Update Page 6

ESDM Ministry Director General of Mineral and Coal Ridwan Djamaluddin said that

based on the agreement, the VAT was imposed on PLN. "Regarding VAT, it has

been agreed that PLN will pay it," he said in a virtual press conference, Wednesday

(27/1).

On the other hand, Ridwan explained that there are three components that affect the

coal supply chain business process for PLN electricity. Apart from weather factors,

there is also a component of a business to business contract between PLN and coal

suppliers, as well as government policies. Including those that make coal a taxable

item.

"This means that this purchase must have VAT. Who has to pay the VAT, how to pay

it, this is something new, so the govern-ment also contributes," said Ridwan.

Previously, Ridwan said that the policy would increase PLN's costs. This has also

been discussed with the Ministry of Finance.

"Coal as a taxable item will indeed increase

PLN's costs. We have also conveyed it and discussed it with the Fiscal Policy Agency,"

Ridwan said in the RDP with Commission VII of the Indonesian Parliament which

was held last Thursday (10/12).

As is well known, coal is now a taxable item whose VAT payable is payable in

accordance with Article 112 of the Job Creation Law which amends the provisions

of Article 4A of Law Number 42 of 2009.

Deputy Chairman of Commission VII DPR

RI Ramson Siagian criticized the impact of this policy. This is because this condition

will further burden PLN, which is currently in a bad financial condition.

Direktur Jenderal Mineral dan Batubara Kementerian ESDM Ridwan Djamaluddin mengatakan bahwa berdasarkan kese-pakatan, PPN tersebut dikenakan kepada PLN. "Mengenai PPN, sudah disepakati akan dibayar oleh PLN," ungkapnya dalam konferensi pers virtual, Rabu (27/1).

Di sisi lain, Ridwan menjelaskan bahwa ada tiga komponen yang mempengaruhi proses bisnis rantai pasok batubara untuk kelistrikan PLN. Selain faktor cuaca, ada juga komponen kontrak business to business antara PLN dan pemasok batubara, serta kebijakan pemerintah. Termasuk yang menjadikan batubara sebagai barang kena pajak.

"Artinya pembelian ini harus ada PPN-nya. Siapa yang harus bayar PPN-nya, bagai-mana bayarnya, ini sesuatu yang baru, jadi pemerintah juga berkontribusi," ungkap Ridwan.

Sebelumnya, Ridwan mengatakan bahwa kebijakan tersebut akan meningkatkan biaya PLN. Hal itu pun sudah didiskusikan dengan pihak Kementerian Keuangan.

"Batubara sebagai barang kena pajak memang akan meningkatkan biaya PLN. Itu juga sudah kami sampaikan dan diskusikan dengan Badan Kebijakan Fiskal," kata Ridwan dalam RDP bersama Komisi VII DPR RI yang digelar Kamis (10/12) lalu.

Seperti diketahui, batubara kini merupa-kan Barang Kena Pajak yang atas penye-rahannya terutang PPN sesuai dengan Pasal 112 Undang-Undang Cipta Kerja yang mengubah Ketentuan Pasal 4A UU Nomor 42 Tahun 2009.

Wakil Ketua Komisi VII DPR RI Ramson Siagian mengkritisi dampak dari kebijakan ini. Sebab, kondisi ini akan semakin mem-bebani PLN yang saat ini pun kondisi keuangannya sudah terpuruk.

Daily News Update Page 7

This is because the majority of primary energy for PLN power plants still uses coal,

up to 62%. "Later in Indonesia, PLN could go bankrupt. Currently, 62% of primary

coal energy is used for all power plants. How about the price later?" he said.

Sebab, mayoritas energi primer untuk pem-bangkit listrik PLN masih menggunakan batubara, hingga mencapai 62%. "Nanti di Indonesia PLN bisa bangkrut. Sekarang ini 62% energi primer batubara untuk semua pembangkit listrik. Coba nanti bagaimana harganya?" ungkap dia.

Freeport Promises to Fill State Pockets Rp560 T Until 2041

PT FREEPORT Indonesia promises to fill

the pockets of state revenue reaching

Rp560 trillion by 2041. The amount has doubled from the company's revenue

contribution for the last 28 years, Rp280 trillion.

"Until 2041, Freeport will contribute up to

US$ 40 billion or the equivalent of Rp560 trillion," said Freeport Indonesia President

Director Tony Wenas at the 2021 Media Group News Summit Indonesia event

virtually, Thursday (28/1).

On average, Freeport's cash flow to the state is Rp 14 trillion per year in the next

20 years. The amount increased from the company's contribution to the state of Rp

10 trillion per year in 1992-2020.

Not only filling the pockets of the state, the

mining company in Grasberg, Timika,

Papua also claims to contribute to

community development with an average

investment value of up to Rp 1 trillion per

year. This investment is used in the fields

of education, health, economy, and infra-

structure.

Freeport Janji Isi Kantong Negara Rp560 T Hingga 2041

PT FREEPORT Indonesia menjanjikan

bakal mengisi kantong penerimaan negara

mencapai Rp560 triliun sampai 2041. Jumlahnya naik dua kali lipat dari sum-

bangan penerimaan perusahaan selama 28 tahun terakhir, Rp280 triliun.

"Sampai 2041, Freeport akan berkontri-

busi sampai US$40 miliar atau setara Rp560 triliun," kata Presiden Direktur

Freeport Indonesia Tony Wenas di acara Media Group News Summit Indonesia

2021 secara virtual, Kamis (28/1).

Bila dirata-rata, aliran uang Freeport ke negara Rp14 triliun per tahun dalam 20

tahun ke depan. Jumlahnya naik dari kontribusi perusahaan ke negara sebesar

Rp10 triliun per tahun pada 1992-2020.

Tak hanya mengisi kantong negara, per-usahaan tambang di Grasberg, Timika,

Papua itu juga mengklaim memberi kontribusi ke pengembangan masyarakat

dengan nilai investasi rata-rata mencapai Rp1 triliun per tahun. Investasi ini di-

gunakan di bidang pendidikan, kesehatan, ekonomi, hingga infrastruktur.

Daily News Update Page 8

Meanwhile, the realization of community

development investment from Freeport

reached US$ 1.73 billion in 1992-2020.

Freeport, he said, also contributed 94

percent to Mimika's regional income, 48

percent of Papua's regional income, and

0.6 percent of national income in 2015.

In addition to contributing economically,

Tony claims Freeport has absorbed 27,459

workers so far, starting from the

contractor level to direct employees. In

fact, the dual impact of labor absorption

has reached 210 thousand job

opportunities in Papua and outside Papua.

"40 percent of PTFI's direct employees are

Papuans who hold various positions down

to senior management, including director

positions," he said.

According to his records, Freeport has also

distributed 11,566 scholarships since

1996. Meanwhile, in the environmental

sector, the mining SOE holding subsidiary

is also said to have carried out a number of

programs, such as the reclamation of the

pesisi in Muara Ajkwa by planting

mangroves covering an area of 401.31

hectares (ha).

Then, the reclamation of 873 ha of inactive

tail ings land and conservation and

repatriation of endemic animals. The total

cost of post-mining reclamation and

rehabilitation reaches US$ 350 million.

(uli/sfr)

Sementara realisasi investasi pengem-

bangan masyarakat dari Freeport men-

capai US$1,73 miliar pada 1992-2020.

Freeport, katanya, juga berkontribusi ke

pendapatan daerah Mimika sekitar 94

persen, pendapatan daerah Papua 48

persen, dan pendapatan nasional 0,6

persen pada 2015.

Selain berkontribusi secara nilai ekonomi,

Tony mengklaim Freeport sudah menyerap

27.459 tenaga kerja selama ini, mulai dari

level kontraktor hingga karyawan

langsung. Bahkan, dampak ganda dari

penyerapan tenaga kerja mencapai 210

ribu kesempatan kerja di Papua dan luar

Papua.

"40 persen karyawan langsung PTFI adalah

masyarakat Papua yang menduduki ber-

bagai posisi hingga manajemen senior,

termasuk posisi direktur," tuturnya.

Menurut catatannya, Freeport juga sudah

mengalirkan 11.566 beasiswa sejak 1996.

Sementara di bidang lingkungan, anak

perusahaan holding BUMN tambang itu

juga disebut telah melakukan sejumlah

program, seperti reklamasi pesisi di Muara

Ajkwa dengan menanam mangrove seluas

401,31 hektare (ha).

Kemudian, reklamasi lahan tailing tidak

aktif seluas 873 ha dan konservasi serta

repatriasi satwa endemik. Total biaya

reklamasi dan rehabilitasi pasca tambang

mencapai US$350 juta. (uli/sfr)

Daily News Update Page 9

Exposed to Profit Taking Action, Coal Prices Weakened

Tirta Citradi, CNBC Indonesia

ICE Newcastle coal prices for contracts

that are actively traded fell 1.15% to US$

89.95/ton in trading last weekend, Friday (28/1/2021). Even though it was corrected

at the end of the week, the coal contract price still appreciated 3.27% in a week.

Before it was corrected at the weekend, the coal futures contract price had recorded a

record high price for almost 2 years at US$ 91/ton. The high increase in coal prices

tempted traders to take profit.

The price of China's Qinhuangdao 5,500

Kcal/kg thermal coal has started to decline sharply in the last 10 days by almost

reaching 20%. However, the difference between the Newcastle thermal coal price

and Qinhiangdo is still within US$ 37/ton.

This price dif ference has certainly

prompted Chinese coal users to switch to looking for supplies from other countries.

The prospect of coal prices for 2021 is still brighter than last year.

The tight domestic supply of China and the easing of its import policy has pushed up

the price of coal in other regions, including for Indonesia.

"Energy demand in China in 2020 rose 3.1% YoY due to the jump in the second

semester. A winter that was longer than before, increasing the use of heating made

electricity consumption increase, which in turn boosted coal demand. This was able to

offset...

Terkena Aksi Profit Taking, Harga Batu Bara Melemah

Tirta Citradi, CNBC Indonesia

HARGA batu bara ICE Newcastle untuk kontrak yang aktif diperjualbelikan melemah 1,15% ke US$ 89,95/ton pada perdagangan akhir pekan lalu, Jumat (28/1/2021). Walau-pun terkoreksi di akhir pekan, harga kontrak batu bara masih mengalami apresiasi 3,27% dalam sepekan.

Sebelum terkoreksi di akhir pekan, harga kontrak futures (berjangka) batubara sempat mencatatkan rekor harga tertinggi hampir 2 tahun di US$ 91/ton. Kenaikan harga batu bara yang tinggi membuat para trader tergiur untuk melakukan aksi ambil untung.

Harga batu bara termal China Qinhuangdao 5.500 Kcal/kg sudah mulai merosot tajam dalam 10 hari terakhir dengan hampir men-capai 20%. Namun selisih antara harga batu bara termal Newcastle dengan Qinhiangdo masih terpaut US$ 37/ton.

Selisih harga tersebut tentunya membuat pengguna batu bara China beralih mencari pasokan dari negara lain. Prospek harga batu bara untuk tahun 2021 masih lebih cerah dibanding tahun lalu.

Ketatnya pasokan domestik China hingga pelonggaran kebijakan impornya membuat harga batu bara di wilayah lain terdongkrak, tak terkecuali bagi RI.

"Permintaan energi di China pada 2020 naik 3,1% YoY karena lonjakan pada semester II. Musim dingin yang lebih panjang dari sebelumnya meningkatkan penggunaan penghangat ruangan membuat konsumsi listrik naik, yang kemudian mendongkrak permintaan batu bara. Ini mampu menutup...

Daily News Update Page 10

This was able to offset the decline in demand as China underwent a run. period of regional quarantine (lockdown) in the early months of 2020," said Toby Hassall, Refinitiv Analyst.

Coal is one of Indonesia's main export commodities. Throughout 2020, exports of mineral fuels (which are dominated by coal) were US$ 17.27 billion. This amount covers 11.14% of the total non-oil and gas exports.

Looking ahead, it looks like the prospect for coal is still bright. The rating agency Fitch Ratings estimates that Indonesia's coal price and production in 2021 will increase.

Fitch projects that Indonesia's average coal price of 4,200 kcal in 2021 is US$ 32.5/ton, an increase compared to 2020 which was US$ 27/ton. Meanwhile, production is estimated to increase by 6%.

The reference coal price (HBA) is now at the li level of US$ 75.84 per ton. The HBA rose sharply by 27.14% compared to the HBA in December 2020 which was still at the position of US$ 59.65 per ton. CNBC

INDONESIA RESEARCH TEAM (twg/twg)

Ini mampu menutup penurunan per-mintaan saat China menjalani periode karantina wilayah (lockdown) pada bulan-bulan awal 2020," papar Toby Hassall, Analis Refinitiv.

Batu bara adalah salah satu komoditas andalan ekspor Indonesia. Sepanjang 2020, ekspor bahan bakar mineral (yang di-dominasi batu bara) adalah US$ 17,27 miliar. Jumlah ini mencakup 11.14% dari total ekspor non-migas.

Ke depan, sepertinya prospek batu bara masih cerah. Lembaga pemeringkat Fitch Ratings memperkirakan harga dan pro-duksi batu bara Indonesia pada 2021 akan naik.

Fitch memproyeksi rata-rata harga batu bara 4.200 kcal Indonesia pada 2021 adalah US$ 32,5/ton, naik dibandingkan 2020 yang sebesar US$ 27/ton. Sementara produksi diperkirakan naik 6%.

Harga batu bara acuan (HBA) kini berada li level US$ 75,84 per ton. HBA itu naik tajam 27,14% dibandingkan dengan HBA Desem-ber 2020 yang masih berada di posisi US$ 59,65 per ton. TIM RISET CNBC INDONESIA

(twg/twg)

To boost sales of heavy equipment, United Tractors will

maximize its sales network Reporter: Muhammad Julian | Editor:

Handoyo

PT UNITED Tractors Tbk (UNTR) is optimistic that the heavy equipment market this year will improve slightly compared to last year. In this case,...

Pacu penjualan alat berat, United Tractors bakal maksimalkan

jaringan penjualan Reporter: Muhammad Julian | Editor:

Handoyo

PT UNITED Tractors Tbk ( UNTR) optimistis pasar alat berat tahun ini bisa sedikit membaik dibanding tahun lalu. Dalam hal ini,...

Daily News Update Page 11

In this case, industrial activity for heavy equipment users is slowly recovering along with the adaptation and implementation of health protocols amidst Covid-19, which is believed to be able to drive demand for heavy equipment.

United Tractors Corporate Secretary Sara K. Loebis suspects that heavy equipment demand will be recovered mainly in the construction sector. "Other sectors have not shown any indication of expansion. There are still projects in construction,” said Sara to Kontan.co.id, Friday (29/1).

As is known, the heavy equipment industry is one of the industries affected by the Covid-19 pandemic. Referring to Kontan.co.id's previous statement, the Indonesian Heavy Equipment Industry Association (Hinabi) said that the national heavy equipment production fell to 3,427 units due to sluggish market demand.

Previously, the realization of national heavy equipment production reached 6,060 units in 2019.

In the midst of such market conditions, the realization of UNTR sales also shrank. The latest UNTR data shows that the realization of sales of Komatsu heavy equipment by UNTR only reached 1,481 units during January-November 2020. This figure is lower than the realization of sales for the same period in 2019 which reached 2,843 units.

The majority of sales from January to November 2020 were absorbed by the mining sector with a share of 41% of total sales. The remainder came from sales to the construction sector (31%), forestry (16%) and plantations (12%).

Until the close of 2020, the realization of Komatsu heavy equipment sales by UNTR is estimated to reach around 1,500 units, down from the realization in 2019 which reached 2,926 units.

Dalam hal ini, aktivitas industri pengguna alat berat yang mulai pulih perlahan seiring adaptasi dan penerapan protokol kesehatan di tengah Covid-19 dipercaya bisa mendorong permintaan alat berat.

Sekretaris Perusahaan United Tractors Sara K. Loebis menduga, pemulihan permintaan alat berat terutama akan dijumpai pada sektor konstruksi. “Sektor lain belum menunjukkan indikasi ekspansi. Konstruksi masih ada proyek2 yg akan berjalan,” kata Sara kepada Kontan.co.id, Jumat (29/1).

Seperti diketahui, industri alat berat merupakan salah satu industri yang ter-kena dampak pandemi Covid-19. Merujuk kepada pemebertiaan Kontan.co.id sebelumnya Himpunan Industri Alat Berat Indonesia (Hinabi) menyebutkan bahwa produksi alat berat nasional turun ke angka 3.427 unit seiring permintaan pasar yang lesu. Sebelumnya, realisasi produksi alat berat nasional mencapai 6.060 unit di tahun 2019.

Di tengah kondisi pasar yang demikian, realisasi penjualan UNTR juga ikut me-nyusut. Data terkini UNTR menunjukkan bahwa realisasi penjualan alat berat Komatsu oleh UNTR untuk hanya men-capai 1.481 unit di sepanjang Januari-November 2020. Angka tersebut lebih rendah dibanding realisasi penjualan periode sama tahun 2019 yang mencapai 2.843 unit.

Mayoritas penjualan Januari-November 2020 tersebut diserap oleh sektor pertam-bangan dengan porsi 41% dari total penjualan. Sisanya berasal dari penjualan ke sektor konstruksi (31%), kehutanan (16%), dan perkebunan (12%).

Sampai tutup tahun 2020, realisasi pen-jualan alat berat Komatsu oleh UNTR diperkirakan mencapai sekitar 1.500 unit, turun dibandingkan realisasi tahun 2019 yang mencapai 2.926 unit.

Daily News Update Page 12

This figure is an estimate, UNTR has not released a full year operational perfor-mance report for the 2020 financial year.

With hopes of a recovery in the heavy equipment market, UNTR projects that the company's sales of Komatsu heavy equipment can reach around 1,700 units this year. Demand for heavy equipment is estimated to lead to small-medium heavy equipment for the non-mining sector.

Even so, Sara emphasized that UNTR will maximize sales of heavy equipment in all sectors. This will be done by maximizing the company's heavy equipment sales network. "We have increased our sales coverage so that needs can be identified as quickly as possible, so that equipment supplies can be arranged and scheduled properly," said Sara.

Angka tersebut merupakan angka estimasi, UNTR belum merilis laporan kinerja operasi-onal satu tahun penuh untuk tahun buku 2020.

Dengan adanya harapan pemulihan pasar alat berat, UNTR memproyeksi bahwa pen-jualan alat berat Komatsu oleh perusahaan bisa mencapai sekitar 1.700 unit pada tahun ini. Permintaan alat berat diperkirakan banyak mengarah pada alat berat tipe ukuran small-medium untuk sektor non pertambangan.

Meski begitu, Sara menegaskan bahwa UNTR akan memaksimalkan penjualan alat berat di semua sektor. Hal ini akan ditempuh dengan cara memaksimalkan jaringan penjualan alat berat perusahaan. “Coverage penjualan kami tingkatkan agar kebutuhan dapat diidenti-fikasi secepat mungkin, sehingga penyediaan alat dapat disusun dan dijadwalkan dengan baik,” kata Sara.

Tekmira BLU Technology

Breakthrough Extends Production Life of PT Timah

Nofie Tessar

THE RESEARCH and Development Center for Mineral and Coal Technology (Tekmira) of the Ministry of Energy and Mineral Resources has succeeded in developing technological breakthroughs by extending the production life of PT Timah Tbk by 12 years.

"As Tekmira service users, we at PT Timah feel very good cooperation because Tekmira can answer major problems at PT Timah regarding mineral processing, especially primary tin ore processing," said Aidil Yuzar, Head of the Business Development Division of PT Timah Tbk. online partner meeting between Tekmira and PT Timah Tbk. on Wednesday (27/1).

Terobosan Teknologi BLU

Tekmira Perpanjang Umur Produksi PT Timah

Nofie Tessar

PUSAT Penelitian dan Pengembangan Teknologi Mineral dan Batubara (Tekmira) Kementerian ESDM berhasil mengembangkan terobosan teknologi dengan memperpanjang umur produksi PT Timah Tbk selama 12 tahun.

"Sebagai pengguna jasa Tekmira, kami di PT Timah merasakan kerja sama yang sangat baik karena Tekmira bisa menjawab persoalan besar di PT Timah tekait pengolahan mineral khususnya pengolahan bijih timah primer," ungkap Aidil Yuzar, Kepala Divisi Pengem-bangan Bisnis PT Timah Tbk yang disampai-kan dalam rangka temu mitra secara daring antara Tekmira dengan PT Timah Tbk. pada Rabu (27/1).

Daily News Update Page 13

In order to optimize the results of tin mining where the reserves of alluvial tin reserves, both land and sea, have begun to deplete, the Tekmira Public Service Agency (BLU) has succeeded in responding to this challenge by conducting laboratory-scale experiments, which were then scaled-up by PT Timah's R&D team to factory scale with a capacity of 400 tonnes of primary tin ore and giving encouraging results.

"With the formula and process conditions compiled by Tekmira, we have succeeded in proving that using only 10% lead content can produce up to 60% primary lead content. The board of directors of PT Timah Tbk gave their appreciation of the collaborative R&D performance of PT Timah Tbk with Tekmira, because proven capable of providing solutions for companies in the future," continued Aidil.

He stated that the potential for primary tin owned by PT Timah Tbk is currently more than 500,000 tons. If in one year it is able to process 40,000 tons of primary tin, PT Timah Tbk's age will increase by 12 years.

The Tekmira-Timah collaboration in the primary tin ore extraction process and technology has been in place since 2018, which began with a study of the process and technology for extracting tin from primary ore using the wet chlorination process. Then, continue until 2020 for a techno-economic study of primary tin ore processing and preparation of a feasibility study on optimizing the utilization of PT Freeport Indonesia's remaining processing products (2019-2020).

Tekmira Nuryadi Saleh, the Coordinator of the Mineral Technology Processing and Utilization Group, was relieved by the success of Timah's industrial -scale experiments based on the process conditions carried out in the Tekmira laboratory.

Guna mengoptimalkan hasil penambangan timah dimana mulai menipisnya sumber cadangan sumber daya cadangan timah alluvial baik darat maupun laut, Badan Layanan Umum (BLU) Tekmira berhasil menjawab tantangan tersebut dengan melakukan percobaan skala laboratorium, yang selanjutnya discale-up oleh tim litbang PT Timah menjadi skala pabrik dengan kapasitas 400 ton bijih timah primer dan memberikan hasil yang menggembirakan.

"Dengan formula dan kondisi proses yang disusun oleh Tekmira, kami berhasil mem-buktikan bahwa hanya dengan mengguna-kan kadar timah 10% dapat menghasilkan kadar timah primer sampai 60%. Jajaran direksi PT Timah Tbk memberikan apresiasi terhadap kinerja litbang kolabo-rasi PT Timah Tbk dengan Tekmira ini, karena terbukti mampu memberikan solusi untuk perusahaan di masa depan," lanjut Aidil.

Ia menyatakan potensi timah primer yang dimiliki oleh PT Timah Tbk saat ini lebih dari 500.000 ton, apabila dalam satu tahun mampu mengolah timah primer sebanyak 40.000 ton, maka umur PT Timah Tbk akan bertambah 12 tahun.

Kerja sama Tekmira-Timah dalam proses dan teknologi ekstraksi bijih timah primer terjalin sejak 2018, yang dimulai dengan kajian proses dan teknologi ekstraksi timah dari bijih primer dengan proses klorinasi basah. Lalu, berlanjut hingga 2020 untuk kajian tekno-ekonomi pengolahan bijih timah primer serta penyusunan studi kelayakan optimalisasi pemanfaatan sisa hasil pengolahan PT Freeport Indonesia (2019-2020).

Koordinator Kelompok Pengolahan dan Pemanfaatan Teknologi Mineral Tekmira Nuryadi Saleh merasa lega atas keber-hasilan percobaan skala industri yang di-lakukan Timah berdasarkan kondisi proses yang dilakukan di laboratorium Tekmira.

Daily News Update Page 14

"We are very happy, Alhamdulillah, the results of the production scale do not deviate from the laboratory scale. In the future, it is necessary to study the beneficiation to increase the iron content in the slag which produces levels according to the grade determined by the govern-ment so that it can be exported," he explained.

"Kami sangat gembira, Alhamdulillah, hasil

skala produksi tidak menyimpang dari

skala laboratorium. Untuk ke depannya,

perlu dikaji benefisiasi untuk mening-

katkan kadar besi di slag yang meng-

hasilkan kadar sesuai grade yang

ditetapkan pemerintah supaya bisa

diekspor," jelasnya.

For the blessing of Chinese New Year, see the recommendation

of coal issuers Reporter: Akhmad Suryahadi | Editor:

Wahyu T. Rahmawati

THE FITCH Ratings rating agency believes

that the prospect of Indonesian coal

issuers will be bright along with the arrival

of the Chinese New Year in China. In his

report, Thursday (28/1), Fitch said that

Indonesian coal miners have the potential

to benefit because Indonesia is the largest

thermal coal exporter to China. This

opportunity also occurs amidst China's

political tensions with the second largest

supplier of thermal coal, namely Australia.

NH Korindo Sekuritas Indonesia analyst

Maryoki Pajri Alhusnah said the increase in

coal demand ahead of the Chinese New

Year celebration could have a positive

impact on coal stock prices. It's just that,

Maryoki assessed the increase in demand

for coal during the Chinese New Year

celebration at this time is not too

significant, because China is also in a

period of economic recovery.

Ketiban berkah Imlek, simak rekomendasi saham emiten

batubara Reporter: Akhmad Suryahadi | Editor:

Wahyu T. Rahmawati

LEMBAGA pemeringkat Fitch Ratings

meyakini prospek emiten batubara tanah air akan cemerlang seiring dengan datang-

nya Tahun Baru Imlek di China. Dalam laporannya, Kamis (28/1), Fitch mengata-

kan, penambang batubara Indonesia berpotensi diuntungkan karena Indonesia

merupakan pengekspor batubara termal terbesar ke China. Peluang ini juga terjadi

di tengah ketegangan politik China dengan pemasok batubara thermal terbesar kedua,

yakni Australia.

Analis NH Korindo Sekuritas Indonesia Maryoki Pajri Alhusnah mengatakan,

kenaikan permintaan batubara menjelang perayaan Imlek bisa berdampak positif

bagi harga saham batubara. Hanya saja, Maryoki menilai kenaikan permintaan

batubara di masa perayaan Tahun Baru Imlek saat ini tidak terlalu signifikan,

karena China yang juga sedang masa pemulihan ekonomi.

Daily News Update Page 15

For coal mining sector companies, NH Korindo Sekuritas recommends buying shares of PT Adaro Energy Tbk (ADRO) with a target price of Rp 1,580 and buying shares of PT Bukit Asam Tbk (PTBA) with a target price of Rp 3,030.

Phillip Sekuritas Indonesia analyst Michael Filbery said the Lunar New Year momentum would benefit issuers with a share of Chinese exports, including ADRO, PT Indo Tambangraya Megah Tbk (ITMG), and PT Harum Energy Tbk (HRUM).

Michael recommends holding for coal stocks, namely PTBA hold with a target price of IDR 3,000 per share, hold on ADRO with a target price of Rp 1,600 per share, and hold for ITMG with a target price of Rp 13,200 per share.

Michael projects that the benchmark coal price this year will be at the level of US$ 65 per ton. "Economic recovery in China will increase demand for coal. This year, it is estimated that there will be a coal stock deficit in China so that it will increase the prospect of coal imports by China to cover the deficit in coal stocks," explained Michael.

Fitch said, China's coal imports jumped to 39.08 million tons in the December 2020 period, from 2.77 million tons in the same period the previous year. This increase was due to Beijing loosening import restric-tions to ease domestic supply constraints amid the arrival of winter.

This increase was also driven by recovering economic activity, inspections in the Inner Mongolia region (China's largest coal producing province), and restrictions on coal imports from Australia. Fitch expects most Indonesian coal producers to increase production in the first quarter of 2021.

Untuk emiten sektor tambang batubara, NH Korindo Sekuritas merekomendasikan beli saham PT Adaro Energy Tbk (ADRO) dengan target harga Rp 1.580 dan beli saham PT Bukit Asam Tbk (PTBA) dengan target harga Rp 3.030.

Analis Phillip Sekuritas Indonesia Michael Filbery mengatakan, momentum Imlek ini akan menguntungkan emiten dengan pangsa ekspor China, antara lain ADRO, PT Indo Tambangraya Megah Tbk (ITMG), dan PT Harum Energy Tbk (HRUM).

Michael merekomendasikan hold untuk saham-saham batubara, yakni hold PTBA dengan target harga Rp 3.000 per saham, hold ADRO dengan target harga Rp1.600 per saham, dan hold ITMG dengan target harga Rp 13.200 per saham.

Michael memproyeksi, benchmark harga batubara di tahun ini bakal berada di level US$ 65 per ton. “Pemulihan perekonomian di China akan meningkatkan permintaan terhadap batubara. Tahun ini diperkirakan akan terjadi defisit stok batubara di China sehingga akan meningkatkan prospek impor batubara oleh China untuk menutupi defisit stok batubara,” terang Michael.

Fitch menyebut, impor batubara China melonjak menjadi 39,08 juta ton pada periode Desember 2020, dari 2,77 juta ton pada periode yang sama tahun sebelumnya. Kenaikan ini karena Beijing melonggarkan pembatasan impor untuk mengurangi kendala pasokan dalam negeri di tengah datangnya musim dingin.

Kenaikan ini juga didorong oleh pulihnya aktivitas ekonomi, adanya inspeksi di wilayah Inner Mongolia (provinsi peng-hasil batubara terbesar di China), dan pembatasan impor batubara dari Australia. Fitch berekspektasi sebagian besar pro-dusen batubara tanah air untuk mening-katkan produksi di kuartal pertama 2021.

Daily News Update Page 16

This increase in production was in response to improving demand and prices, following production restrictions in the second half of last year. However, heavy rains and flooding in several parts of Kalimantan Island, which is the main producing area for Indonesian coal, are considered to be able to deter some coal miners.

Peningkatan produksi ini sebagai respons dari membaiknya permintaan dan harga, setelah adanya pembatasan produksi pada semester kedua tahun lalu. Namun, hujan lebat dan banjir di beberapa bagian Pulau Kalimantan, yang merupakan daerah penghasil utama batubara Indonesia, dinilai bisa menghambat beberapa penambang batubara.

Copper price in slump, hits one-month low MINING.COM Staff Writer

COPPER prices continued to slump on Friday, hitting their lowest point of the month amid a

global sell-off in equities and a firmer US dollar, which made greenback-priced metals less appealing to holders of other currencies.

Copper futures on the Comex were down 0.2% to $3.57 a pound (or about $7,780.54 a tonne)

by noon EST.

Elsewhere, the most actively traded March copper contract on the Shanghai Futures Exchange fell 1.4% to 58,000 yuan ($9,023.45) per tonne, after falling as much as 2% earlier.

Weaker equities also hurt risk sentiment across asset classes and raised concerns about liquidity in financial markets.

“Fundamental is supportive but macro is not,” analyst He Tianyu of consultancy firm CRU

Group said in a note to Reuters, adding that demand for copper in top consumer China ahead of the Lunar New Year holiday has been better than the same period in previous years.

“The Chinese government encourages workers to celebrate the holiday locally. That means

working days will be longer than before,” he said.

According to an S&P Global report released last week, industry analysts are predicting the

rise in copper prices to continue in 2021 on low inventories and a bullish demand narrative, though at a slower pace.

Mining analysts at Canaccord Genuity expect Chinese stimulus to support copper demand in

combination with an expected global economic recovery in 2021.

“We now expect copper prices to average $3.50/lb ($7,716/mt) in 2021, an approximate 17% increase on our previous forecast of $3.00/lb ($6,614/mt),” Canaccord said. (With files from

Reuters)

Daily News Update Page 17

China maintains ample, stable coal production in 2020 By Global Times

CHINA’s energy production was kept stable and at a high level in 2020, with ample coal

output and supply on the market, according to China’s energy authorities.

The 2020 output of coal from large-scale enterprises stood at 3.84 billion tons, an increase of 0.9 percent over the previous year, and the output in December was 350 million tons, an increase of 3.2 percent year-on-year.

Daily coal production is at a relatively high level of around 11 million tons, according to the latest data released by the National Energy Administration on Saturday.

In terms of thermal coal inventory, as of January 25, the national power plant coal inventory can last for use of up to 15 days, and the inventory is at a reasonable level.

Regarding coal prices, the prices for medium and long-term coal contracts are stable. In 2020, the fulfilment rate of medium and long-term contracts of coal enterprises was high, hitting more than 90 percent. The medium- to long term coal supply contracts played an important role as market stabilizers.

The spot price of coal has continued to grow since the beginning of November, but has recently shown apparent signs of decline.

OZ Minerals to begin Carrapateena block cave expansion Vanessa Zhou

OZ Minerals has received board approval to progress the block cave expansion at the

Carrapateena copper-gold mine in South Australia after deferring the decision due to the COVID-19 pandemic.

OZ Minerals managing director Andrew Cole said decline early works were set to begin in the

last quarter of this year, with the expansion now integrated into the operations plan.

The decision follows a pre-feasibility study on block cave expansion last year, proving that

converting the lower portion of the sub level cave to a series of block caves will significantly increase Carrapateena’s reserve and mine life.

The expansion is also envisaged to increase production to 12 million tonnes a year, delivering

around 110,000-120,000 tonnes of copper and 110,000-120,000 ounces of gold a year.

Daily News Update Page 18

“The integration and acceleration of the block cave expansion allows progressive de-risking of the Carrapateena province in its sub level cave ramp-up to 4.7-5 million tonnes a year from 2023 and transition from sub level cave to block cave, while preserving optionality at future major capital milestone decisions over the coming years,” Cole said.

“The accelerated program could bring forward commencement of block cave production by circa six months.”

The news of the board approval came as Oz Minerals declared its achievement of its copper guidance for the sixth consecutive year.

The company produced 27,632 tonnes of copper at Carrapateena and 61,375 tonnes at Prominent Hill, also in South Australia, during the 2020 fiscal year.

Oz Minerals completed its ramp up phase at Carrapateena six months ahead of schedule, with the mine set to be cashflow positive this year.

It is also committed to invest in future decline development at Prominent Hill to increasing mining rates further from 2022 to 4-5 million tonnes a year.

Oz Minerals expects to make its final investment decision for Prominent Hill mid this year.

Coal India output likely to slip 4% in January after months of growth

COAL India's dry fuel production is likely to snap a five-month growth streak to register a

decline in January, owing to high pithead stock, sources said on Sunday.

Coal production for the month is likely to be around 60.2 million tonnes compared with the corresponding period a year ago, when the output was at 63.11 million tonnes, they said.

Till January 29, the output was 56.24 million tonnes, and aggregate production for the 11-month period of the current fiscal (April-January) will be about 454 million tonnes, the sources said.

Coal India is targeting an output of 630-640 million tonnes till March.

The world's largest miner has been registering robust growth since August 2020, as the nationwide lockdown began to ease, when it recorded a 7.1 per cent on-year rise, followed by September (31 per cent rise), October (18 per cent) and November (3.4 per cent).

Total coal offtake for the Kolkata-headquartered company in the first month of 2021 is expected to be 53.3 million tonnes, resulting in a decline of about 5.5 per cent as against the figure during the same period in 2020.

Coal demand from the power sector is on the rise, but with 63 million-tonne of pithead stock, non-power sector requirement will also be crucial for the mining behemoth.

Demand for the dry fuel is set to revive in 2021 with a 3.8-per cent increase, according to a Moody's Investors Service report.

Daily News Update Page 19

Kyrgyzstan bans foreign companies from future mining projects By: Reuters

KYRGYZSTAN on Friday banned foreign companies from future large mining projects,

although existing licences are unaffected, in the first major order by its new president.

The economy of the Central Asian nation relies heavily on gold mining, particularly after two other sources of wealth - trade with neighbouring China and remittances from migrant

labourers working in Russia - were hit by the Covid-19 pandemic.

Kyrgyz President Sadyr Japarov, who was inaugurated on Thursday, signed the order which only allows the development of "subsoil areas of national importance" by a state-owned

company.

Firms currently holding rights to develop deposits in the country are excluded from the order. Canada's Centerra Gold Inc is the largest foreign investor in Kyrgyzstan. It mines gold at

Kumtor, Kyrgyz largest gold deposit.

Kyrgyzstan has been considering options for development of its Zhetim iron-ore deposit in recent months. The country's gross domestic product dropped 8.6% in 2020, the biggest

decline in 26 years.

Russian mining giant Nornickel meets 2020 production guidance By Vladimir Basov

NORILSK Nickel, the world’s largest producer of palladium and high-grade nickel and a

major producer of platinum and copper, announced today that the company has fully met its

2020 production guidance “…despite some unprecedented environmental and epidemiolo-

gical challenges.”

In 2020, the company’s consolidated nickel production increased by 3% year-on-year (y-o-y)

to 236 kt primarily owing to increase in production of nickel concentrate for sale at Kola MMC

and higher processing volumes of the company’s Russian feed at Norilsk Nickel Harjavalta.

Consolidated copper production decreased by 2% y-o-y to 487 kt. The decline was attributed

to changes in saleable product mix, reallocation of copper intermediates within the

company’s divisions and lower processed volumes of concentrate, which was purchased from

Rostec.

Daily News Update Page 20

Palladium and platinum output declined by 3% y-o-y to 2,826 koz and 1% y-o-y to 695 koz, respectively, owing to the commissioning of the new precious metals concentrate production line at the metallurgical shop of Kola MMC, as well as high base effect of 2019, when Krasnoyarsk Precious Metals Plant processed earlier accumulated work-in-progress inventory.

The company said that total nickel output came in line, while platinum group metals production exceeded the guidance owing mainly to productivity improvements and successful ramp-up of the refining shop at Kola MMC after its upgrade to a new chlorine leaching technology. Copper output was also within the guidance driven by the scheduled ramp-up of Bystrinsky (Chita) project that reached its design capacity for all metals in 4Q 2020.

Norilsk Nickel is a diversified mining and metallurgical company, the world’s largest producer of palladium and high-grade nickel and a major producer of platinum and copper. The company also produces cobalt, rhodium, silver, gold, iridium, ruthenium, selenium, tellurium, sulphur and other products. The production units of Norilsk are located at the Norilsk Industrial District, on the Kola Peninsula and Zabaykalsky Krai in Russia as well as in Finland and South Africa.

Environmental concerns spur Asia to reduce reliance on coal Asia's switch from coal to natural gas is driven by stricter emission standards, low natural

gas prices, and more efficient new natural gas turbine technology

By Alexander Woody and Michael Richter

THE OVERWHELMING consensus seems to be that thermal coal is on its way out, to be

replaced with a suite of increasingly cost-competitive, cleaner energies. Environmental, Social and Governance (ESG) analysis informing investment decisions is playing an important role in this transition.

Companies are promising to go “net zero carbon”, major pension funds have begun to evaluate future investments in light of the “Paris goals”, and lenders are restricting lending for coal-related transactions, including mining, extraction, transport and burning of coal for power generation. This of course makes it more challenging for companies in the thermal coal industry to fund their operations.

In East and South-East Asia, the world’s largest consumer of thermal coal, and where it is the largest source (36%) of power generation, some of the same trends can be seen. At the UN General Assembly on 22 September 2020, China, the world’s largest consumer of coal, stated that it aimed to have its CO2 emissions peak before 2030 and to achieve carbon neutrality before 2060.

While details are still emerging, it is likely that China will need to meaningfully reduce its reliance on coal to hit these targets.

Daily News Update Page 21

Following Japan’s recent pledge to achieve net zero carbon by 2050, a number of large Japanese companies have announced major shifts in their business strategies away from thermal coal. Toshiba Corporation, a significant player in the power plant industry, publicly announced it will stop taking orders for coal-fired power plants.

JERA Co., Inc., Japan’s largest electricity producer, publicly announced it will shut down all of its inefficient (supercritical or less) coal power plants by 2030 and aim to achieve zero carbon by 2050.

Clear benefits of gas

Particularly in East and South-East Asia, natural gas has been touted as a useful “bridge fuel” in the transition away from coal towards the promised new normal of net zero carbon. The concept is that countries can replace coal with natural gas in the short-term to help lower their carbon emissions while they transition over the long-term from fossil fuels to a heavier reliance on renewables.

Natural gas fueled power has also been promoted as well suited to complement solar and wind power since it can ramp up or down flexibly in response to fluctuations in intermittent power from renewables. By contrast, coal is generally viewed as being better suited as a baseload power source and less complementary to the introduction of variable renewable power supply.

Notwithstanding one’s view as to whether natural gas should be viewed as merely a bridge fuel or as a fundamental component of a country’s energy mix, the environmental benefits of natural gas versus coal are clear. For example, it is estimated that switching from coal to natural gas reduces CO2 emissions by around 40% for each unit of energy output.

A 2019 report by the International Energy Agency estimated that since 2010, coal-to-gas switching has had an effect equivalent to putting an extra 200 million electric vehicles on the road over the same period. Switching can also result in rapid improvements in air quality as a result of much lower air pollutant emissions of natural gas.

However, in East and South-East Asia, multiple factors will affect the course and pace of the transition away from thermal coal and the role of natural gas in that transition. While some countries have announced plans to begin reducing thermal coal use, for others the future path is less clear.

As a result, it is expected that, in the short-term at least, coal use may actually continue to increase in the region.

Transition bottlenecks

For a long time, one of the biggest bottlenecks to the transition from coal to natural gas has been the LNG market itself, which has been characterized by long-term contracts (typically 10-20 years or longer) between large buyers and sellers, with relatively inflexible destination restrictions. LNG has also traditionally been supplied by a small number of countries, which resulted in a degree of geographic and geopolitical risk.

In recent years, however, numerous new producers have entered the LNG market which has also seen the emergence of shorter contract lengths, smaller buyers, and more flexibility to divert cargoes to alternative destinations. These changes have reduced but not eliminated some of the risk for countries in the region to expand their reliance on LNG.

Daily News Update Page 22

Economic growth and development objectives will also be key. Energy demand is expected to continue to grow in many parts of the region due to growing populations, increased industrialization and increasing incomes.

In these circumstances, in the short term at least, policies aimed at reducing emissions from coal by switching to renewables or more environmentally friendly energy sources, such as natural gas, may take a back seat to meeting energy demand required to support economic growth and development.

Another relevant factor is the lack of LNG and natural gas infrastructure in the region, including LNG import terminals, power plants, storage facilities, and pipelines. Cheaper, creative solutions are available. For example, floating storage regasification units (FSRUs) can cost approximately half as much as an onshore import terminal and can be up and running much faster than the time it would take to construct an import terminal. However, the cost of an FSRU is still significant and it is only one of the necessary infrastructure components.

The pandemic effect

The coronavirus pandemic has most likely served to magnify the above issues. Governments in developing countries may have a harder time justifying the costs of moving to clean energy in an environment of economic slowdown. The pandemic has also increased uncertainty and made countries think even harder about long-term energy security.

For the next few years at least, regional governments are likely to prioritize economic recovery above all else and remain cautious about pursuing new significant policies or economic commitments that could ‘rock the boat’ so to speak. On the other hand, for developed countries, to the extent that stimulus is directed to clean energy infrastructure, the move to natural gas could be accelerated.

The impact of the recent spike of Asian spot LNG prices to record levels and the prospect that this may be an omen of a more general tightening in LNG supplies remains to be seen.

But will this lead to a pause in plans to develop gas to power projects as the participants consider the impact on project economics if there is a general increase in LNG prices? Or will it spur participants to action to lock in long-term LNG purchase agreements at current long-term LNG price levels?

Over the long-term, it seems likely that natural gas will play a larger role in the energy mix in the region than coal due to environmental concerns and negative global views of coal relative to natural gas. However, precisely what this transition will look like will depend on a host of complex factors and will take time to play out.

(By Alexander Woody, Partner, and Michael Richter, Associate, at White & Case (both based in Tokyo. Any views expressed in this publication are strictly those of the authors and should not be attributed in any way to White & Case LLP.)