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Marketing Research of Texas Instruments -
April 8th, 2011
NYSE: TXN), widely known as TI, is an American company based in Dallas, Texas, United States, renowned for developing and commercializing semiconductor and computer technology. TI is the No. 3 manufacturer of semiconductors worldwide after Intel and Samsung, the No. 2 supplier of chips for cellular handsets after Qualcomm, and the No. 1 producer of digital signal processors (DSPs) and analog semiconductors, among a wide range of other semiconductor products. In 2010, the company was listed at number 223 on the Fortune 500.
Meanwhile, China's state-owned mining company China Mining Corporation has been in on-again, off-again talks with Indonesia's state-owned PT Bukit Asam to explore the large Ombilin coal mine in South Sumatra.
Another issue that continues to hurt the coal mining industry is the government's tax policy on coal. A government regulation in 2000 changed coal from a taxable to a non-taxable commodity. The regulation prohibits coal producers from charging value-added tax (VAT) to end-users even though producers must pay VAT for imported capital goods and services. This effectively adds 8-10 percent to these companies' production costs.
Indonesia's Supreme Court has the authority to annul the regulation. However, in April 2004, the Court merely issued an opinion that the regulation be annulled, an act which had no legal force.
The net effect of these policies, as well as continued delays in producing a new and transparent mining law, has resulted in a steady drop in investment. Coal investment (foreign and domestic) plunged from US$ 778 million in 1997 to US$ 135 million in 2001. According to the Energy Ministry, coal investment did rise between 2002 and 2003, from US$ 61 million to US$ 90 million, primarily to capitalize on higher coal prices.
In 2004, coal production reached 132 million metric tons, an increase of nearly 16 percent over the previous year. It later increased again to 145 million metric ton in 2005. Rising coal demand and high coal prices, averaging more than US$ 50/MT in 2004, drove the production increase. Most major coal producers enjoyed higher output, except for state-owned PT Bukit Asam (PTBA), the production of which dropped over thirteen percent due to railway transportation disruptions from its South Sumatra mine.
The major players in the coal industry faired relatively the same with the 2003 condition.
Coal exports also increased by 129 million metric tons in 2005 and accounted for around 90 percent of production. The country's largest coal exporter, PT. Bumi Resources (shareholder of KPC and Arutmin) experienced a surge in exports to 36.2 MT, an increase of 39 percent from 2004. Regional exports within Asia reached 69.9 MT, almost 75 percent of total exports. Japan and Taiwan remain the largest consumers of Indonesian coal and bought over 38 percent of exports, followed by South Korea, Hong Kong and Malaysia. Exports to Japan and South Korea increased over 2.5 million MT last year, as both countries reportedly aim to reduce their reliance on coal imports from China. Coal exports to China doubled between 2003 and 2004 in response to China's growing energy demand. (The U.S. receives about 2.3 percent of Indonesian coal exports).
During 2005, coal prices soared due a surge in Chinese consumption. Concerning the domestic market, an increase in global fuel prices as well as domestic demand resulted has led to an increase in coal prices. As coal prices increase, coal exports increase as producers attempt to take financial advantage of the situation. Coal production reached 139 million metric ton in 2005, an increase of 5.3 percent from the previous year.
In turn, during 2006 exports of coal were estimated to increase although producers had to focus on domestic demand as well. Production of coal reached around 200 million metric tons. Exports of coal were estimated to amount 183.9 million metric tons during 2006. PT. Bumi Resourced through PT Kaltim Prima Coal and PT Arutmin produced around 53.5 million metric tons in 2006 or an increased from 45 million metric tons from the previous year. From this amount, around 95 percent is exported. During 2006, coal prices increased to US$ 40.8 per ton or an increased from US$ 40.12 per tons in 2005.
Major countries of destination were Japan (30.5 percent), Taiwan (20 percent) and South Korea (15 percent). Bituminous Coal makes up 96 percent of all coal commodities exports. Major exporters of coal were PT. Kaltim Prima Coal (18.7 percent), PT. Adaro Indonesia (17.7 percent), PT. Arutmin (16 percent), and PT. Kideco Jaya Agung (10.4 percent).
Coal exports consisted of 86 percent of Bituminous coal. Exports mainly went to Japan, Taiwan, Korea and India.
The major imported commodity was "Other bituminous coal", accounting for about 70 percent of total imports. Countries of origin were Vietnam, China, Singapore, Thailand, Japan and Australia
During 2007, both production and exports of coal increased as operators took advantage of soaring coal prices. Production was estimated to increase by around 11 percent compared to 2005. In 2007 India's Tata Power purchased 30% equity stakes or around US$ 1.3 billion in two major Indonesian coal producers, PT Kaltim Prima Coal, and PT Arutmin Indonesia, all of which are owned by the Indonesian energy firm Bumi Resources. PT. Bumi Resources was paid a total of US$ 685 million for the two coal mining firms in 2001 and 2003. The current deal values those assets at US$ 4.3 billion. As part of the deal, Tata Power would also buy 10 million tons of coal from Kaltim Prima Coal for two proposed power projects, totaling 7,000 MW, it plans to build in India by 2012.
Last edited by netrashetty; April 8th, 2011 at 05:45 PM..