Sakari Resources (formerly "Straits Asia Resources")

[Thriftville]

Is there any consortium for coal that controls the production and price?
Just like OPEC for oil.

[d.o.g.]

Is there any consortium for coal that controls the production and price?
Just like OPEC for oil.

No. Coal production is sufficiently fragmented that there is no cartel at the moment.

[Thriftville]

Thanks dog. With no cartel to control the price, any oversupply of coal could hurt the profit of Sakari.
Does Sakari has any competitive advantage over other coal suppliers?

[d.o.g.]

Does Sakari has any competitive advantage over other coal suppliers?

Coal is fundamentally a commodity, albeit with variations as mentioned earlier. Essentially, as long as the coal meets minimum specifications it can be sold. Most coal is not used as-is, it is blended with coal of higher/lower grades to meet a given plant's needs.

Apart from coal quality, another main thing that draws/repels customers would be reliability of supply. Mines, being holes in the ground, are susceptible to flooding. Sakari had a period some years earlier when rain forced a stoppage at Sebuku. And last year Queensland had floods which also curbed supply. It helps if your mine is less prone to floods, whether because of better weather or better infrastructure.

For a mine itself, determinants of profitability, apart from selling price, include:

depth of deposit (open pit is cheap, underground is expensive)
distance from river/port (the nearer the cheaper)
fuel cost (mining equipment runs on diesel)

And so on.

Perhaps one thing that may be in Sakari's favour is that the controlling shareholder is the Thai government via PTT so there may be less stealing going on via interested party transactions.

In Indonesia it is not uncommon that the controlling shareholders also own the marketing company, the extraction company, the transport company, the labor contractor, the facility construction company etc. These companies allow the extraction of profits from the mine without having to declare dividends. This is one of the reasons why many Indonesian coal miners declare small dividends despite being very profitable.

[Thriftville]

Great info! thanks dog.

I'm wondering how PTT manage to get a stake in Indonesia? Usually the gov will issue license to foreigner, only if they could provide technology or large capital.

[greengiraffe]

Golden cross on the charts - exponential moving average (ema) crossover today.

EMA 5 crossing EMA 20 today.

The last time a similar crossover took place saw Sakari rose from $1.90 to $2.72 in late January.

Anyway, downside is limited given that coal prices is near to production costs.

[mrEngineer]

Just some sharing from my coal traders contacts. South Africa coal price bounced back from FOB $80/t to $92/t recently and their hypothesis was because the India buyers bought out all available supply at $80/t. Producer have no supply until end August. However, China is still not buying.

Not vested.

[sgd]

http://www.indianexpress.com/news/power-...ge/940404/

india only has less than 7 days of coal supply.


but china fares better, 12-15 days of coal. Coal counts for 70% of china's energy needs it's only a matter of time before they need to go shopping again.

http://articles.economictimes.indiatimes...unts-hebei


( Not vested in Sakari, vested in other coal related companies )

[mrEngineer]

Hi SGD, did not manage to see 7 day figure in your article but only 4 day. However data was dated 19-apr. Unsure of which year too.

Many people forget that china are actually self sufficient and they import only because of supply chain bottlenecks and government wants to spend all their US$ reserves. Nonetheless for short term trading it is no doubt that china will buy from market anyway. I know one Chinese company recently bought 3 panamaxes of coal at real low price.

[Boon]

Hi SGD, did not manage to see 7 day figure in your article but only 4 day. However data was dated 19-apr. Unsure of which year too.

Many people forget that china are actually self sufficient and they import only because of supply chain bottlenecks and government wants to spend all their US$ reserves. Nonetheless for short term trading it is no doubt that china will buy from market anyway. I know one Chinese company recently bought 3 panamaxes of coal at real low price.

The China economy is slowing down and stocks are rising

http://www.chinadaily.com.cn/cndy/2012-0...549979.htm

http://usa.chinadaily.com.cn/business/20...543269.htm