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Investing in Coal Mines

Shares in coal mines in Indonesia for the future promises significant market advantages

Coal from Indonesia, which still in October of the last year was offered for 80 USD/MT amounts at present to roughly 120.00 USD/MT. Experts assume, however, that during the next bull position of raw materials - that many anticipate from 2012 on at the latest - the prices will even grow stronger than in the last year. This would mean that the second or also third quarter of this year could be the perfect opportunity to acquire low-cost coal mines which can be operated profitably, which provide cash and important reserves and which can rely on a sound connection of infrastructures. But the problem here is (as in almost all areas of the economy at present) that many of the large mine groups such as Anglo-American, BHP Billiton or Rio Tinto, which could be possible purchasers, are undergoing rigorous cost saving plans. Jobs are slashed, production slows down and in particular all expansion ambitions are being closely examined. In contrast to these international and listed companies, potential Indian and Chinese purchasers are primarily driven by the necessity to secure their stocks in raw materials in the long term. Many of them are state-owned or are subsidized by their governments, so that they have enough capital to make investments on the one hand – and that they do not need to care about shareholders, on the other. Indian state owned companies such as Coal India have since many years now been looking for potential mines in Indonesia, Australia or South Africa. And we are convinced that also China will be active in this area. Experts think that among others also Indonesia and Colombia could come to the fore of potential buyers. This it true for Colombia, among other reasons, also because of the fact that this South American country is well positioned to supply the markets of both the Atlantic and Pacific region, because it has considerable reserves and also because the local government very strongly subsidizes the coal production. In addition to this and due to their positive cost structure many Colombian coal mining companies record healthy profits despite the currently low prices. Indonesia the world’s biggest coal exporter is said to be interesting especially because of the situation of the growing Asian markets.


ORGAKOM Milindo can help you by a investment in Indonesia.


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