PTBA may miss rail project schedules, Credit Suisse says

PT Tambang Batubara Bukit Asam (PTBA), a state-owned coal miner, may not complete planned rail lines on schedule, preventing it from benefiting from rising Asian demand for the fuel, Credit Suisse Group said in a report, The Jakarta Post reported on Thursday.

PTBA, based in Tanjung Enim in South Sumatra, plans to complete by 2010 two 500-kilometer rail lines to help move 40 million tons of coal a year. Half of that is for Chinese demand over 30 years, according to agreements signed in July last year.

The miner "may not be able to complete its new projects within the target project deadlines," said Credit Suisse analyst Haider Ali in the report dated July 10, noting the projects remain under study. "The transportation projects are critical for PTBA's long-term growth."

Indonesia, which overtook Australia as the world's largest exporter of power-station coal last year, has more than doubled coal production in the last five years . Asian utilities are boosting their use of the fuel as oil has risen to records.

Credit Suisse, Switzerland's second-biggest bank, raised its Asian coal price forecasts by 15 percent on July 6 on higher demand from projects that will turn the commodity into liquid fuels. Coal prices in 2010 may average US$45 a metric ton, compared with an earlier forecast of $39, the bank said.

Thermal coal for immediate delivery from Australia's Newcastle port, the world's largest coal-export harbor, rose to $52 a ton in the week ended July 7 from $40.23 a ton at the end of last year, according to the globalCOAL NEWC Index.

Ali maintained his "under-perform" rating on PTBA's stock, with a 12-month target price of 2,200 rupiah. The stock has gained 85 percent since the year started to 3,350 rupiah on the Jakarta Stock Exchange. (*)