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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, 19 January 10
CESC TO BUY 100,000 MT OF INDONESIAN SUB BITUMINOUS COAL
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Tuesday, 19 January 10
RISING DEMAND FROM POWER FIRMS TO PUSH COAL PRICES
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Tuesday, 19 January 10
ESSAR'S MEGA ACQUISITION PLANS
India’s Essar Group has carved a mega plan that includes a slew of acquisitions and investments in assets across various businesses. CNBC-TV18 ...
Monday, 18 January 10
INDONESIA SHIPPED 15.90 PERCENT OF TOTAL COAL EXPORTS IN 2009 TO INDIA
COALspot.com (Indonesia): Indonesia, the world largest coal exporter, exported 19.07 percent of the total coal export in 2009 to China and 15. ...
Monday, 18 January 10
BHP TO SPEND $267 MILLION ON QUEENSLAND COKING COAL
BHP Billiton Ltd, the world’s largest mining company, will spend $267 million to accelerate development of the Caval Ridge mine and the Hay Po ...
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- Semirara Mining and Power Corporation, Philippines
- Dalmia Cement Bharat India
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- Ministry of Mines - Canada
- Billiton Holdings Pty Ltd - Australia
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- Coastal Gujarat Power Limited - India
- Leighton Contractors Pty Ltd - Australia
- Parliament of New Zealand
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- Africa Commodities Group - South Africa
- Bayan Resources Tbk. - Indonesia
- London Commodity Brokers - England
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- Directorate Of Revenue Intelligence - India
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- Power Finance Corporation Ltd., India
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- Straits Asia Resources Limited - Singapore
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- Economic Council, Georgia
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- Standard Chartered Bank - UAE
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- IHS Mccloskey Coal Group - USA
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- Orica Australia Pty. Ltd.
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- Larsen & Toubro Limited - India
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- CNBM International Corporation - China
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- Toyota Tsusho Corporation, Japan
- Thiess Contractors Indonesia
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- The University of Queensland
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- Renaissance Capital - South Africa
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- The Treasury - Australian Government
- Metalloyd Limited - United Kingdom
- Goldman Sachs - Singapore
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- Bangladesh Power Developement Board
- Kohat Cement Company Ltd. - Pakistan
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- Coal and Oil Company - UAE
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- Sical Logistics Limited - India
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- New Zealand Coal & Carbon
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- Trasteel International SA, Italy
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- The State Trading Corporation of India Ltd
- Heidelberg Cement - Germany
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- Ind-Barath Power Infra Limited - India
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- Independent Power Producers Association of India
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- Anglo American - United Kingdom
- Jorong Barutama Greston.PT - Indonesia
- Maheswari Brothers Coal Limited - India
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- Petrochimia International Co. Ltd.- Taiwan
- GAC Shipping (India) Pvt Ltd
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- CIMB Investment Bank - Malaysia
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- International Coal Ventures Pvt Ltd - India
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- Romanian Commodities Exchange
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- McConnell Dowell - Australia
- Mjunction Services Limited - India
- Agrawal Coal Company - India
- Barasentosa Lestari - Indonesia
- Cement Manufacturers Association - India
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- GMR Energy Limited - India
- Bukit Baiduri Energy - Indonesia
- Australian Commodity Traders Exchange
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- Therma Luzon, Inc, Philippines
- Ministry of Finance - Indonesia
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- Planning Commission, India
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- Price Waterhouse Coopers - Russia
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- Thai Mozambique Logistica
- SMG Consultants - Indonesia
- Malabar Cements Ltd - India
- Indonesian Coal Mining Association
- Sree Jayajothi Cements Limited - India
- SMC Global Power, Philippines
- San Jose City I Power Corp, Philippines
- Wood Mackenzie - Singapore
- Sakthi Sugars Limited - India
- Eastern Coal Council - USA
- Globalindo Alam Lestari - Indonesia
- Commonwealth Bank - Australia
- Sindya Power Generating Company Private Ltd
- Kumho Petrochemical, South Korea
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