Yarra, maybe Von knows the taxi driver better than you. Wink Wink, Nod, Nod.
Have you listened to Peter's interview? It is exactly like what has been conveyed in this forum. I have contact with 5 to 7 companies working within 200 km of Cokal and companies that are working with Cokal and companies that have submitted tenders for construction and operations. The story is consistent.
The Indonesian coal industry is 98% low quality thermal coal. This 98% are on their knees. The contractors are on their knees. The tender prices to CKA are guaranteed to be rock bottom. The contractors are being asked by other producers to work for a loss to sustain the operation until things turn around. In Australia, thermal coal is in bad shape but we have pushed the Cost Curve down to an extent that we can eek out a profit at current ridiculous prices.
The Indonesian producers cannot. Their coal sells for a fraction of our Newcastle price because the calories are not there. Google Newcastle Price and then have a look at Adaro site for calories in the coal. Price is proportional to the calories but Adaro 70 million tonnes per year id further discounted due to having to drive off 25% water before heat is produced.
Indonesian coking coal is a different story. The only place where coking coal is present is in Central Kalimantan and a bit in East Kalimantan near Central border. It all has to go 650 km to the coast. However, the price is marginally higher than Australia coal. It has low ash, low sulphur, low phosphorous and coking properties that make it a perfect addition to the blend for coke making.
The major players are MGM (shipping since 2004), AKT (also called PT Top and producing since 2009) and big brother BHP. There are a couple of small players. They are reportedly in profit as the coking prices are still quite good despite the moaning of Australian high cost producers.
So in summary, I believe that CKA will be a lower cost producer than BFS says and It will get a higher price. It will build in the doom and produce in the next boom.
Just my opinion.
CKA Price at posting:
8.3¢ Sentiment: Buy Disclosure: Held
