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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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Wednesday, 16 December 09
INDONESIA'S FIRST PRIVATE RAILWAY TO BOOST RAK'S MINING INTERESTS
MEC infra to invest $1b in construction of 130-km transport link
A 130-kilometre railway that will ease the transport of raw materials and finish ...
Tuesday, 15 December 09
KOMIPO HAS ISSUED A NEW TENDER FOR 30000 MT OF 5200 NAR KCAL/KG COAL
COALspot.com (South Korea): South Korean state-owned utility Korea Midland Power (KOMIPO) has issued an new tender for prompt supply of 30000 M ...
Tuesday, 15 December 09
CHINA CUTS IMPORT DUTIES ON COAL, RAISES FOR OTHERS
China will lower import duties on more than 600 products next year, including coal, naphtha and phosphate ore, the Finance Ministry said on Tuesday. ...
Tuesday, 15 December 09
NTPC'S COAL WOES UNLIKELY TO END SOON
State-owned power producer NTPC’s woes over shortages of coal may not end soon. Though the company is importing 12.5 million tonnes of coal&nb ...
Monday, 14 December 09
RICHARDS BAY COAL TO FINISH EXPANSION IN 1ST QUARTER
Richards Bay Coal Terminal, which ships more than a quarter of Europe’s energy coal, said it will complete its Phase 5 expansion project in th ...
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- Grasim Industreis Ltd - India
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- Ministry of Transport, Egypt
- Ceylon Electricity Board - Sri Lanka
- Pendopo Energi Batubara - Indonesia
- Toyota Tsusho Corporation, Japan
- Deloitte Consulting - India
- Ministry of Mines - Canada
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- CNBM International Corporation - China
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- Simpson Spence & Young - Indonesia
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- White Energy Company Limited
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- Standard Chartered Bank - UAE
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- The Treasury - Australian Government
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- Siam City Cement PLC, Thailand
- Tata Chemicals Ltd - India
- Independent Power Producers Association of India
- Xindia Steels Limited - India
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- Chamber of Mines of South Africa
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- VISA Power Limited - India
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- PTC India Limited - India
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- Trasteel International SA, Italy
- Romanian Commodities Exchange
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- Salva Resources Pvt Ltd - India
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- Rashtriya Ispat Nigam Limited - India
- European Bulk Services B.V. - Netherlands
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- Larsen & Toubro Limited - India
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- Sojitz Corporation - Japan
- Sarangani Energy Corporation, Philippines
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- Heidelberg Cement - Germany
- Maheswari Brothers Coal Limited - India
- MS Steel International - UAE
- Directorate General of MIneral and Coal - Indonesia
- Africa Commodities Group - South Africa
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- Karbindo Abesyapradhi - Indoneisa
- Bahari Cakrawala Sebuku - Indonesia
- Interocean Group of Companies - India
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- Metalloyd Limited - United Kingdom
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- SMC Global Power, Philippines
- Indogreen Group - Indonesia
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- Bharathi Cement Corporation - India
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- Australian Commodity Traders Exchange
- Bank of Tokyo Mitsubishi UFJ Ltd
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- Minerals Council of Australia
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- Singapore Mercantile Exchange
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- Altura Mining Limited, Indonesia
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- Kobexindo Tractors - Indoneisa
- Wood Mackenzie - Singapore
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- Baramulti Group, Indonesia
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- Kumho Petrochemical, South Korea
- Indian Energy Exchange, India
- Savvy Resources Ltd - HongKong
- Economic Council, Georgia
- The State Trading Corporation of India Ltd
- Alfred C Toepfer International GmbH - Germany
- Parliament of New Zealand
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