Palm Oil: Waiting La-Nina?
The benchmark February 2018 contracts of crude palm oil (CPO) collapsed RM80 to RM2634 per ton Monday, while March 2018 contracts ended lower by RM75 to RM2653 per ton. Both suggested financial pressures from palm oil producers in the first half of 2018 because average price in the first half of 2017 was RM2974 per ton.
Short-Term Support for Coal
Thermal coal was traded below US$97 per ton this week. Weak output in China and United States might continue to support the commodity. Indonesian economy is poised to benefit from its resilience, shown by 49% jump in export revenues to US$17.13 billion in the first ten months of the year.
Mining Saves The Day
The State is slated to collect more of non tax revenues from coal and minerals this year, helping the government in compensating difficulties in tax collections. As of early November, the State has collected Rp34.4 trillion of non tax revenues from coal and mineral, higher than full year target of Rp32.4 trillion.
Rio Tinto-Freeport Agreement Complicates Settlement for Grasberg
Setttlement of disputes between the government of Indonesia and Freeport McMoRan on the future of PT Freeport Indonesia and Grasberg mine in Papua province has never been easy, even when both sides claim of moving closer to it. Other than domestic politics, competition between ‘power brokers’, and security threats in Papua, an agreement between Freeport and Rio Tinto signed more than two decades ago complicates the issue.
Holding Co for State Miners Finally
After years of talk, President Joko ‘Jokowi’ Widodo has reportedly signed government regulation for the assignment of state-owned aluminium producer INALUM as holding company for three other state miners plus the government’s 9.36% shareholding in PT Freeport Indonesia, which operates Grasberg, one of the largest copper and gold mines in the world.
Growing Nickel & Bauxite Output
Nickel has retreated from its recent peak, and yet to fully recover. Some nickel miners in Sulawesi Island, however, have resumed production to feed the growing domestic processing of the commodity and resumption of low-grade nickel ore export.
Mining & The Economy in Fourth Quarter
Pretty much as predicted mining sector improved year-on-year in the third quarter with 1.76% growth, but for the first nine months of 2017 the sector grew only 1.15%. The sector’s contribution to Gross Domestic Product (GDP) growth was 0.14% only from 5.06% growth in the quarter. What to expect in the fourth quarter?
Electric Vehicles & Nickel
Shares of Tesla Inc collapsed 7% Thursday as investors responded negatively the Company’s performance in third quarter ended Sept 30. In the quarter, Tesla booked net loss of US$671 million, expanded from US$401 million in the second quarter. The stock, however, rebounded 2% Friday to make a market value of US$51 billion.
Pertamina’s Financials & Major Pending Projects
State oil and gas company Pertamina booked net profit of nearly US$2 billion in the first nine months of 2017, thanks to higher average price of oil and gas, which lifted its sales revenue to US$31.38 billion from US$26.62 billion in the corresponding period of 2016. The Company was forced to sacrifice nearly US$1 billion of net profit to cover losses from fuel price gap under the public service obligation (PSO) scheme.
Mining Save The Day
Shares of mining companies advanced further this morning to respond third quarter results and relatively strong price of coal and metal in the fourth quarter. For the State, strong performance of mining companies means higher revenues in the form of royalty and corporate income tax. Revenues in the form of royalty and tax from Timah (TINS), for example, jumped 61.6% year-on-year to Rp551 billion in Jan-Sep 2017.