Steel Update
Roberto M. Cola, the chairman of the Southeast Asia Iron and Steel Institute (SEAISI), recently said that the global excess steel capacity was seriously affecting the viability of the biggest steel companies of the world. The World Steel Association is forecasting a decrease in world steel demand by 0.8 % for 2016 following a contraction of 3% in 2015. In the past 3 years global steel products were under pressure. Global industry capacity reached 2 billion tons while its production reached 1.5 billion tons.
Saratoga-Provident’s Gold-Copper Assets
With the exception of Grasberg mine in Papua and Gosowong gold mine in Halmahera, other gold-silver-copper assets in Indonesia are now in the hands of local business groups. Martabe gold has been taken over by a consortium consisting Djarum Group owners and Martua Sitorus (Wilmar shareholder). Batu Hijau gold-copper mine, meanwhile, is being taken over by a consortium of Medco Group and AP Investment.
Geo Energy-Engelhart Coal Deal
Shares of Geo Energy Resources Ltd, controlled by the family of Charles Anthony Melati, surged 5.2% on SGX Tuesday (July 5) as investors responded positively the Company’s US$1.2 billion coal deal with Engelhart Commodities Trading Partners (Singapore) Pte Ltd.
Recovery of Commodities
In contrast to prediction from most analysts following UK’s decision to leave European Union, commodities continued their rallies in the past few days. Crude oil and metals have recovered significantly. Reference price of Indonesian thermal coal for July 2016 is also 2.3% higher than June 2016.
Tangguh LNG Train 3 Finally
After four years of delay, final investment decision (FID) for Tangguh LNG train 3 project in Bintuni Bay, West Papua with US$8 billion of investment has finally been made Friday (July 1st). This is an important milestone to allowing construction start in the fourth quarter, which would create jobs for 10,000 people.
Medco-Newmont Deal: Conspiracy Theories
Shares of Medco Energy (MEDC) surged 21.3% in the opening minutes of trading at Indonesia Stock Exchange (IDX) Friday morning shortly after market participants got confirmation about Medco Group’s acquisition of PT Newmont Nusa Tenggara (NNT) despite limited understanding about details of the deal. The deal was announced in less than three days after the House of Representatives (DPR) passed tax amnesty bill into law.
Key Takeaways from Medco-Newmont Deal
Shares of Medco Energi (MEDC) gained 5.63% Thursday (June 30) as some investors responded confirmation of acquisition of shares in PT Newmont Nusa Tenggara (NNT). Shares of Bumi Resources Minerals (BRMS), which sells indirect interest 18% in PTNNT in the structured deal, meanwhile, advanced 4% with 343 million shares exchanged hands.
Medco-Newmont Deal
Newmont Mining Corporation has entered into a binding share sale agreement with PT Amman Mineral International (AMI) to sell its 48.5% interest in PT Newmont Nusa Tenggara (NNT) for a total consideration of US$1.3 billion. A consortium of Medco Group and AP Investment then acquiring 82.2% shares of NNT from PT AMI for US$2.6 billion.
Malaysians Acquire More Indonesian Plantation Areas
Malaysian companies continue to expand their plantation operations in Indonesia, taking benefit from persistent weakness of palm oil prices and difficulties to get new licenses ahead of moratorium planned by Indonesian government.
The Race to Control SES Block
South East Sumatra (SES) Block, which is located in the shallow water of the Java Sea off the southeastern coast of Sumatra Island, is one of oil and gas producing blocks whose production sharing contract (PSC) expires in 2018. CNOOC SES Ltd, subsidiary of China National Oil Company, is operator of the block.