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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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Saturday, 23 January 10
COAL CAMARADERIE
Union coal minister Shriprakash Jaiswal feels Asian countries should join hands in developing minerals, particularly coal.
At the third Asian Min ...
Friday, 22 January 10
ENERGY ADVISORY COUNCIL MULLS - COAL EXPORT BAN
The National Energy Council, which advises the House of Representatives and the president on energy issues, has begun to debate a proposal to ban ex ...
Friday, 22 January 10
MERCATOR EYES MORE COAL MINES IN INDONESIA
India’s second-largest private shipping company Mercator Lines is looking at acquiring more coal mines in Indonesia as part of its strategy&nb ...
Friday, 22 January 10
BHAKTI ENERGI IN TALKS OVER COAL VENTURES IN KALIMANTAN
PT Bhakti Energi Persada, one of Indonesia’s biggest miners of brown coal, revealed on Thursday that it was in talks to form a joint venture w ...
Friday, 22 January 10
SHENHUA ENERGY 09 YIELDED 210MN TONS COMMODITY COAL
China Shenhua Energy Co., Ltd. yielded 210 million tons of commodity coal in 2009, hiking 13.2% year on year, the Chinese energy titan announced tod ...
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- Maharashtra Electricity Regulatory Commission - India
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- The Treasury - Australian Government
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- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Riau Bara Harum - Indonesia
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- SMC Global Power, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Australian Commodity Traders Exchange
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- Economic Council, Georgia
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- Samtan Co., Ltd - South Korea
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- Standard Chartered Bank - UAE
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- Intertek Mineral Services - Indonesia
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- Oldendorff Carriers - Singapore
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bukit Baiduri Energy - Indonesia
- Bhushan Steel Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- CNBM International Corporation - China
- Baramulti Group, Indonesia
- Essar Steel Hazira Ltd - India
- Binh Thuan Hamico - Vietnam
- Port Waratah Coal Services - Australia
- Price Waterhouse Coopers - Russia
- Semirara Mining Corp, Philippines
- Bayan Resources Tbk. - Indonesia
- Interocean Group of Companies - India
- Ministry of Mines - Canada
- Chamber of Mines of South Africa
- Singapore Mercantile Exchange
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- Therma Luzon, Inc, Philippines
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- Sojitz Corporation - Japan
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- LBH Netherlands Bv - Netherlands
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- Grasim Industreis Ltd - India
- Dalmia Cement Bharat India
- Aditya Birla Group - India
- Goldman Sachs - Singapore
- Global Coal Blending Company Limited - Australia
- Antam Resourcindo - Indonesia
- PNOC Exploration Corporation - Philippines
- The University of Queensland
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- Madhucon Powers Ltd - India
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- Indonesian Coal Mining Association
- European Bulk Services B.V. - Netherlands
- Bhoruka Overseas - Indonesia
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- Simpson Spence & Young - Indonesia
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- India Bulls Power Limited - India
- Kepco SPC Power Corporation, Philippines
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- Renaissance Capital - South Africa
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- Asia Pacific Energy Resources Ventures Inc, Philippines
- Energy Link Ltd, New Zealand
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- Lanco Infratech Ltd - India
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- Mjunction Services Limited - India
- CIMB Investment Bank - Malaysia
- London Commodity Brokers - England
- Eastern Coal Council - USA
- PowerSource Philippines DevCo
- Ind-Barath Power Infra Limited - India
- Karbindo Abesyapradhi - Indoneisa
- IHS Mccloskey Coal Group - USA
- White Energy Company Limited
- Pendopo Energi Batubara - Indonesia
- Wood Mackenzie - Singapore
- Rio Tinto Coal - Australia
- Ministry of Transport, Egypt
- Malabar Cements Ltd - India
- Formosa Plastics Group - Taiwan
- Orica Australia Pty. Ltd.
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