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Tuesday, 19 January 10
COAL FOR DOMESTIC USERS
 While the government is already almost a year behind schedule in issuing regulations to implement the new mining law, mineral producers have been worried about the domestic market obligation (DMO) that the Energy and Mining Resources Ministry imposed through a ruling late last month.
Their concern is not so much about the requirement to allocate a portion of their output to domestic users, but the lack of clarity regarding how the volume of domestic needs for each mineral is set, how the obligation will be distributed among the producers and how the prices will be determined.
Mineral producers (other than oil and natural gas) are fully aware that they should fulfill domestic needs. That requirement is also by and large stipulated in their mining contracts. However, the DMO will create new uncertainty if this obligation is not based on clear-cut regulations.
Unfortunately, the Dec. 31, 2009 decree by the energy and mineral resources minister is mostly about repressive measures for companies failing to meet their DMO. It stipulates that producers who fail to realize their DMO are liable to a 50 percent cut of their output for the following year.
What is encouraging to note is that a similar penalty is also imposed on domestic users failing to take up their annual quota — their annual quota will also be cut by 50 percent. This enforcement is important because the volume of the DMO is based on the domestic market demand, which in turn is based on the annual needs of domestic industrial users each year.
The most affected by the DMO policy are certainly coal producers, who have made Indonesia the world’s largest seaborne exporter of thermal coal with an estimated output of 230 million tons last year, of which only about 50 million tons was used locally. However, the domestic demand for coal is estimated to almost double this year with the coming on stream of several power plants run by state electricity company PT PLN, all fired by coal. They are part of the government’s crash program to build 10,000 megawatts in additional capacity at PLN’s plants.
The government has strived to achieve the right balance between maximizing export revenues from coal and also securing supplies for domestic users. The challenge, though, is how to make producers accept domestic prices as fair compared what they get from exports.
Put another way, there should be an Indonesian coal reference price index that is acceptable to both producers and users, taking into account such factors as the coal’s calorific value, moisture content, etc. Such a reference price index is crucial because, unlike other minerals that have commodity exchanges of their own for price formation, coal doesn’t have any exchange of its own.
In the past, the domestic purchasing price of different grades of coal was often considered arbitrary, which acted as a disincentive for some producers to produce and sell higher-quality coal to PLN, the largest single domestic user.
Commercially, as long as the prices are right, producers will happily sell their output to the domestic market as this will cut the delivery time and freight costs.
The problem, though, is that the latest ministerial decree does not touch at all on a pricing mechanism for the implementation of the domestic market obligation, and this is creating a sense of uncertainty among producers.
Obviously the government needs to address this pricing issue immediately through another clear-cut regulation so as not to adversely affect new investment in the mining sector.
Source: Editorial, The Jakarta Post
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Tuesday, 23 February 10
TRENDS..... DRY BULK MARKET .... TRENDS
The dry bulk market was pulled along by the Capes this week, as fresh enquiry breathed temporary life back into the market. Short period rates also ...
Tuesday, 23 February 10
UAE COMPANY TO ACQUIRE CONTROL OF ALLBOND MAKMUR
The Jakarta globe reported that, Renuka Energy Resources Holding, based in the United Arab Emirates, has signed an agreement to acquire 80 percent o ...
Tuesday, 23 February 10
CIL SHORTLISTS 24 FOREIGN COS FOR JV
India's Economic Times reported that, Coal India has shortlisted 24 foreign firms — six each from the US, Australia, South Africa and Indones ...
Saturday, 20 February 10
THE FREIGHT MARKET CONTINUED TO BE SOFT THIS WEEK - CAPT. REDDY
COALspot.com: The freight market continued to be soft this week as still affect of Chinese new year holidays continue. However the index overall had ...
Friday, 19 February 10
MAKING THE JOINT COOPERATION OF PRIVATE GOVERNMENT IN INDONESIA
COALspot.com - Press Release
1. Revision of the presidential decree 67/2005 has been signed by the President on January 28, 2010 with the public ...
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- Romanian Commodities Exchange
- Sarangani Energy Corporation, Philippines
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- Formosa Plastics Group - Taiwan
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- South Luzon Thermal Energy Corporation
- Petrochimia International Co. Ltd.- Taiwan
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- Thai Mozambique Logistica
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- Neyveli Lignite Corporation Ltd, - India
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- Economic Council, Georgia
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- IEA Clean Coal Centre - UK
- Kapuas Tunggal Persada - Indonesia
- Minerals Council of Australia
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- Price Waterhouse Coopers - Russia
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- Energy Link Ltd, New Zealand
- McConnell Dowell - Australia
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- Australian Commodity Traders Exchange
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- White Energy Company Limited
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- Parliament of New Zealand
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- Binh Thuan Hamico - Vietnam
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- Billiton Holdings Pty Ltd - Australia
- Georgia Ports Authority, United States
- Wood Mackenzie - Singapore
- Mintek Dendrill Indonesia
- Central Electricity Authority - India
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- Semirara Mining Corp, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Trasteel International SA, Italy
- Mercator Lines Limited - India
- Bharathi Cement Corporation - India
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- Sical Logistics Limited - India
- Eastern Coal Council - USA
- Jindal Steel & Power Ltd - India
- Sojitz Corporation - Japan
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- New Zealand Coal & Carbon
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- Goldman Sachs - Singapore
- Asmin Koalindo Tuhup - Indonesia
- The University of Queensland
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- Miang Besar Coal Terminal - Indonesia
- Ministry of Transport, Egypt
- Holcim Trading Pte Ltd - Singapore
- Indonesian Coal Mining Association
- ICICI Bank Limited - India
- Medco Energi Mining Internasional
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- Tamil Nadu electricity Board
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- OPG Power Generation Pvt Ltd - India
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- Karbindo Abesyapradhi - Indoneisa
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- Electricity Authority, New Zealand
- London Commodity Brokers - England
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- Planning Commission, India
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- Directorate General of MIneral and Coal - Indonesia
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- Xindia Steels Limited - India
- Commonwealth Bank - Australia
- Kepco SPC Power Corporation, Philippines
- PTC India Limited - India
- Ministry of Finance - Indonesia
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- Vedanta Resources Plc - India
- Toyota Tsusho Corporation, Japan
- Global Coal Blending Company Limited - Australia
- Bhoruka Overseas - Indonesia
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- Pipit Mutiara Jaya. PT, Indonesia
- Jaiprakash Power Ventures ltd
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- SMG Consultants - Indonesia
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- Aboitiz Power Corporation - Philippines
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- Baramulti Group, Indonesia
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- Siam City Cement - Thailand
- San Jose City I Power Corp, Philippines
- Maheswari Brothers Coal Limited - India
- Attock Cement Pakistan Limited
- Edison Trading Spa - Italy
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- Kartika Selabumi Mining - Indonesia
- Bangladesh Power Developement Board
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- IHS Mccloskey Coal Group - USA
- Rashtriya Ispat Nigam Limited - India
- Savvy Resources Ltd - HongKong
- Cigading International Bulk Terminal - Indonesia
- Indian Energy Exchange, India
- Straits Asia Resources Limited - Singapore
- Alfred C Toepfer International GmbH - Germany
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- Maharashtra Electricity Regulatory Commission - India
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- Kideco Jaya Agung - Indonesia
- Indika Energy - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
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- Global Green Power PLC Corporation, Philippines
- SN Aboitiz Power Inc, Philippines
- Meenaskhi Energy Private Limited - India
- Merrill Lynch Commodities Europe
- European Bulk Services B.V. - Netherlands
- Indogreen Group - Indonesia
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- Coal and Oil Company - UAE
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- Indian Oil Corporation Limited
- Gujarat Sidhee Cement - India
- Ministry of Mines - Canada
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- ASAPP Information Group - India
- Singapore Mercantile Exchange
- Independent Power Producers Association of India
- Metalloyd Limited - United Kingdom
- Grasim Industreis Ltd - India
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