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Friday, 19 June 15
INDONESIA'S COAL-TRAFFICKING PROBLEM REQUIRES IMPARTIAL INQUIRY - JAKARTA GLOBE
 Indonesia, the leading supplier to the seaborne thermal coal market, produces 420 million tons of coal per year, according to its official tally.
But the unofficial tally is much higher.
It’s an open secret, in fact, that millions of tons of Indonesian coal are being mined and shipped out of the country illegally. Last year at the Coaltrans Asia conference in Bali, R. Sukhyar, the minerals and coal director at Indonesia’s Energy and Mineral Resources Ministry, estimated such shipments totaled 50 million tons to 60 million tons annually. Other estimates put annual illegal shipments as high as 90 million tons, worth some $5 billion.
Whatever the exact amount, the government of Indonesia is losing hundreds of millions in royalty revenues each year on these illegal exports. Coal royalties are important to the fiscal health of the country — they account for $4 billion of the Indonesian national budget of $170 billion this year — and government services suffer when royalty programs aren’t rigorously enforced.
Indonesia, of course, is an important global supplier of coal. More than 80 percent of its annual production is exported, mostly to India, Japan, South Korea and India, and its coal exports — both legal and illegal — affect global markets. Illegal exports create a special, pernicious effect on the coal industry as a whole by undermining efforts to manage supply and rebalance prices.
Coal markets today are shrinking rapidly. The price of coal in the Asian seaborne market has dropped by about 50 percent since 2011. The industry is oversupplied and likely to remain so for the foreseeable future. Illegal exports only exacerbate that challenge.
Epidemic of illegal shipping
The country’s process of licensing, customs and royalty collection maintains the official tally of annual coal production. But neither ports nor coal-transfer system are as tightly controlled as they should be. Opportunity abounds for producers to escape regulation. Much of the avoidance happens in Indonesia’s network of small private and unmonitored ports, and much of it occurs at offshore transfer points that are difficult to monitor.
The problem stems from the roaring days of global coal market expansion during the mid-2000s, when Indonesia saw a huge number of new companies, new permits and news investment in coal production.
Indonesian coal production skyrocketed to 420 million tons in 2013 from 174 million tons in 2006 in a difficult-to-manage boom that helped evasive companies get away with either ignoring reporting requirements altogether or simply under-reporting their coal production.
The government is raising coal-royalty rates in a move that will only magnify the competitive advantage royalty-avoiding producers hold over reputable companies that follow production- and export-reporting requirements. Thankfully, Indonesia’s illegal coal-export activity is under growing scrutiny today, although recent central government efforts at various reforms have done little so far to actually reduce illegal shipments.
Indonesian leaders seem well aware that unreported or under-reported exports undermine broader policy objectives of improving national energy security, providing sound management of Indonesia’s finite natural resources, having effective border control and showing leadership in international trade management.
Yet it’s unlikely the government will succeed on its own. Illegal coal mining and shipping is embedded in the economic fabric of Indonesia. Financially powerful interests support the status quo. Unreported or underreported activity has become a crucial source of revenue for regional political interests, and even the Indonesian Coal Mining Association (APBI) says it finds little to support in reform proposals. The drive to police illegal production and trafficking is also stymied by deeply endemic government corruption.
No level playing field
Indonesia and its people are currently being shortchanged by the absence of a business climate committed to a level playing field across its coal industry. Reform is in the national interest — and it makes good business sense, too, because it would tighten up the seaborne coal markets and provide some price stability for Indonesia’s largest source of export revenue.
When corruption is as pervasive as it is today in Indonesia’s coal industry, it is difficult to maintain a national effort to reform it. This is not an uncommon challenge, and is often best addressed by outside parties invited by the authorities to observe, report and enforce change. Reputable business, governmental and judicial officials are often brought in to help companies or countries find the right long-term path toward restoring confidence where confidence has been lost.
Many mechanisms exist to empower an independent organization with the authority to act. An external investigation of illegal coal shipping in Indonesia could go a long way to establishing a strong basis for establishing honest reform.
By Tom Sanzillo
About Tom Sanzillo
Tom Sanzillo is the director of finance at the Institute for Energy Economics and Financial Analysis (IEEFA), which promotes research into global energy markets. Sanzillo has 30 years of experience in public and private finance, including as a first deputy comptroller of New York State, where he held oversight over a $156 billion pension fund and $200 billion in municipal bond programs.
Source: The Jakarta Globe
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Thursday, 17 September 15
LOW DEMAND PUSH COAL SWAP DOWN
COALspot.com: Indonesian coal swap for delivery 4Q 2015 declined month on month and gain week over week.
The 4Q swap declined $ 1.77 (-4.17%) ...
Thursday, 17 September 15
MARKET INSIGHT - KONSTANTINOS KONTOMICHIS
Having experienced, as it was much anticipated, a poor 1st half combined with negative forecasts, summer, in sharp contrast, proved to be more hope ...
Wednesday, 16 September 15
SLOWER GROWTH IN WORLD COAL DEMAND AND LOWER INTERNATIONAL COAL PRICES LED A DECLINE IN INDONESIAN COAL PRODUCTION
COALspot.com: Slower growth in world coal demand particularly China and lower international coal prices have led to a decline in Indonesian coal pr ...
Wednesday, 16 September 15
HIGHER TAXES COULD LEAD GREEK SHIP OWNERS OUT OF THE COUNTRY - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
A potential taxation overhaul of the shipping industry in Hellas, which could see the loss of particular tax benefits for ship owners, could lead t ...
Tuesday, 15 September 15
WORLD SEABORNE TRADE: ENTERING INTO A ROLE REVERSAL? - CLARKSONS
Over the past decade, world seaborne trade growth has been dominated by dry bulk and container trade. However, developments in the global economy t ...
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- Global Coal Blending Company Limited - Australia
- Star Paper Mills Limited - India
- Renaissance Capital - South Africa
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Economic Council, Georgia
- Electricity Generating Authority of Thailand
- Ceylon Electricity Board - Sri Lanka
- Kartika Selabumi Mining - Indonesia
- Sree Jayajothi Cements Limited - India
- The State Trading Corporation of India Ltd
- Planning Commission, India
- Wood Mackenzie - Singapore
- Madhucon Powers Ltd - India
- Formosa Plastics Group - Taiwan
- Bukit Asam (Persero) Tbk - Indonesia
- Barasentosa Lestari - Indonesia
- Uttam Galva Steels Limited - India
- Indian Energy Exchange, India
- Cement Manufacturers Association - India
- Coal and Oil Company - UAE
- Siam City Cement PLC, Thailand
- Indogreen Group - Indonesia
- Price Waterhouse Coopers - Russia
- Kideco Jaya Agung - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Africa Commodities Group - South Africa
- Gujarat Electricity Regulatory Commission - India
- The University of Queensland
- Sojitz Corporation - Japan
- Marubeni Corporation - India
- Mercator Lines Limited - India
- Borneo Indobara - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Salva Resources Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Pipit Mutiara Jaya. PT, Indonesia
- Carbofer General Trading SA - India
- Power Finance Corporation Ltd., India
- ICICI Bank Limited - India
- Banpu Public Company Limited - Thailand
- Intertek Mineral Services - Indonesia
- Australian Coal Association
- Savvy Resources Ltd - HongKong
- Larsen & Toubro Limited - India
- Agrawal Coal Company - India
- Makarim & Taira - Indonesia
- San Jose City I Power Corp, Philippines
- Lanco Infratech Ltd - India
- Siam City Cement - Thailand
- Commonwealth Bank - Australia
- Orica Australia Pty. Ltd.
- Directorate Of Revenue Intelligence - India
- Trasteel International SA, Italy
- Baramulti Group, Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Samtan Co., Ltd - South Korea
- European Bulk Services B.V. - Netherlands
- GN Power Mariveles Coal Plant, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Central Electricity Authority - India
- Port Waratah Coal Services - Australia
- Indian Oil Corporation Limited
- Ministry of Transport, Egypt
- GVK Power & Infra Limited - India
- Edison Trading Spa - Italy
- Parliament of New Zealand
- Coalindo Energy - Indonesia
- Thiess Contractors Indonesia
- The Treasury - Australian Government
- Posco Energy - South Korea
- Gujarat Mineral Development Corp Ltd - India
- Indika Energy - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Oldendorff Carriers - Singapore
- McConnell Dowell - Australia
- Interocean Group of Companies - India
- Riau Bara Harum - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- New Zealand Coal & Carbon
- Anglo American - United Kingdom
- Manunggal Multi Energi - Indonesia
- Binh Thuan Hamico - Vietnam
- Bukit Baiduri Energy - Indonesia
- GAC Shipping (India) Pvt Ltd
- LBH Netherlands Bv - Netherlands
- CIMB Investment Bank - Malaysia
- Indonesian Coal Mining Association
- PetroVietnam Power Coal Import and Supply Company
- Bhushan Steel Limited - India
- Bangladesh Power Developement Board
- Leighton Contractors Pty Ltd - Australia
- Sakthi Sugars Limited - India
- GMR Energy Limited - India
- Grasim Industreis Ltd - India
- Energy Development Corp, Philippines
- Kumho Petrochemical, South Korea
- Mintek Dendrill Indonesia
- Bhatia International Limited - India
- Singapore Mercantile Exchange
- Standard Chartered Bank - UAE
- Merrill Lynch Commodities Europe
- Miang Besar Coal Terminal - Indonesia
- Gujarat Sidhee Cement - India
- Meralco Power Generation, Philippines
- Kepco SPC Power Corporation, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Latin American Coal - Colombia
- Xindia Steels Limited - India
- Essar Steel Hazira Ltd - India
- Straits Asia Resources Limited - Singapore
- Maheswari Brothers Coal Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Electricity Authority, New Zealand
- Simpson Spence & Young - Indonesia
- Ind-Barath Power Infra Limited - India
- Wilmar Investment Holdings
- Pendopo Energi Batubara - Indonesia
- Sinarmas Energy and Mining - Indonesia
- PTC India Limited - India
- Bhoruka Overseas - Indonesia
- Sindya Power Generating Company Private Ltd
- Thai Mozambique Logistica
- Petrochimia International Co. Ltd.- Taiwan
- Malabar Cements Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Medco Energi Mining Internasional
- Globalindo Alam Lestari - Indonesia
- Vizag Seaport Private Limited - India
- Meenaskhi Energy Private Limited - India
- Global Green Power PLC Corporation, Philippines
- ASAPP Information Group - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Dalmia Cement Bharat India
- Holcim Trading Pte Ltd - Singapore
- Deloitte Consulting - India
- Timah Investasi Mineral - Indoneisa
- Sical Logistics Limited - India
- OPG Power Generation Pvt Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- SN Aboitiz Power Inc, Philippines
- Eastern Coal Council - USA
- International Coal Ventures Pvt Ltd - India
- Tata Chemicals Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Billiton Holdings Pty Ltd - Australia
- Kobexindo Tractors - Indoneisa
- Krishnapatnam Port Company Ltd. - India
- Sarangani Energy Corporation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Directorate General of MIneral and Coal - Indonesia
- Karaikal Port Pvt Ltd - India
- Bayan Resources Tbk. - Indonesia
- Jindal Steel & Power Ltd - India
- Jaiprakash Power Ventures ltd
- Tamil Nadu electricity Board
- South Luzon Thermal Energy Corporation
- Parry Sugars Refinery, India
- Rashtriya Ispat Nigam Limited - India
- Kaltim Prima Coal - Indonesia
- Videocon Industries ltd - India
- SMG Consultants - Indonesia
- Heidelberg Cement - Germany
- Bukit Makmur.PT - Indonesia
- Georgia Ports Authority, United States
- VISA Power Limited - India
- MS Steel International - UAE
- Iligan Light & Power Inc, Philippines
- Ambuja Cements Ltd - India
- White Energy Company Limited
- CNBM International Corporation - China
- IEA Clean Coal Centre - UK
- Global Business Power Corporation, Philippines
- Australian Commodity Traders Exchange
- Aditya Birla Group - India
- Minerals Council of Australia
- Central Java Power - Indonesia
- Mjunction Services Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Antam Resourcindo - Indonesia
- Energy Link Ltd, New Zealand
- Cigading International Bulk Terminal - Indonesia
- PNOC Exploration Corporation - Philippines
- Independent Power Producers Association of India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Eastern Energy - Thailand
- Bulk Trading Sa - Switzerland
- Rio Tinto Coal - Australia
- Metalloyd Limited - United Kingdom
- Attock Cement Pakistan Limited
- Indo Tambangraya Megah - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Coastal Gujarat Power Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- PowerSource Philippines DevCo
- Toyota Tsusho Corporation, Japan
- Altura Mining Limited, Indonesia
- IHS Mccloskey Coal Group - USA
- Chettinad Cement Corporation Ltd - India
- Petron Corporation, Philippines
- Orica Mining Services - Indonesia
- Bharathi Cement Corporation - India
- India Bulls Power Limited - India
- Aboitiz Power Corporation - Philippines
- TeaM Sual Corporation - Philippines
- London Commodity Brokers - England
- Goldman Sachs - Singapore
- Therma Luzon, Inc, Philippines
- Semirara Mining Corp, Philippines
- Chamber of Mines of South Africa
- SMC Global Power, Philippines
- AsiaOL BioFuels Corp., Philippines
- Ministry of Mines - Canada
- Alfred C Toepfer International GmbH - Germany
- Ministry of Finance - Indonesia
- Mercuria Energy - Indonesia
- Romanian Commodities Exchange
- Vedanta Resources Plc - India
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