How gravely will export limits on coal affect importing power producers?
Indonesia May Allow Coal Producers to Trade Domestic Quotas
Indonesia, the world's biggest exporter of thermal coal, may allow producers to trade in the fuel to meet proposed domestic sales quotas, a move that may limit overseas sales.
The government will determine annually the minimum percentage of coal production that must be sold in the domestic market, according to a copy of a draft ministerial decree.
Domestic coal demand for power generation will jump by 32 million metric tons annually by 2010, when most of the 10,000 megawatts of new coal-fired generators start operation. The sales quotas may affect exports unless Indonesia, which doubled output in five years, boosts production.
"Anything that damages the ability of Indonesia to supply to the export market will have very severe ramifications," said Michael Dixon, executive general manager at AME Mineral Economics. "The market is currently very, very tight."
The domestic obligations may be applied starting next year and companies that don't meet their quotas may be fined, according to the draft.
"We're still talking with stakeholders" about the proposed decrees, said Bambang Gatot Ariyono, director of coal and mineral resources, who confirmed that companies may be allowed to trade quotas. "No decisions have been made."
The Indonesian Coal Mining Association forecasts production may increase 9 percent to 235 million tons in 2008. Mining companies may export 180 million tons this year to benefit from record global prices.
Benchmark Price
Surging Asian demand, an export cut by China, the world's biggest producer and consumer of coal, and infrastructure bottlenecks in Australia have helped to more than double prices of the fuel. Thermal-coal prices at Australia's Newcastle port, a benchmark for Asia, reached a record $194.79 a ton, according to the globalCOAL NEWC Index.
Indonesia will set a monthly benchmark price for coal, which will be the minimum for export prices, Bambang Setiawan, director general of coal and mineral resources, said.
The benchmark may use the Indonesian Coal Index or global indexes, Ariyono said. Coal that produces 4,200 kilocalories for each kilogram burnt was at $49.65 a ton while that which produces 5,000 kilocalories was at $90.41 a ton in the week ended Aug. 1, according to the Indonesian Coal Index.
Prices of coal sold in term contracts must be adjusted monthly to follow global prices, according to another draft decree, also obtained by Bloomberg News. Companies will have three months to renegotiate long-term contracts to comply with the new rule, it said.
The energy ministry has ordered six companies, with combined annual exports of 9.3 million tons, to halt overseas shipments since July because they charged too little for the fuel, Ariyono said.
Companies will have to report and seek approval from the energy ministry for the coal they sell, according to the draft.
The government will determine annually the minimum percentage of coal production that must be sold in the domestic market, according to a copy of a draft ministerial decree.
Domestic coal demand for power generation will jump by 32 million metric tons annually by 2010, when most of the 10,000 megawatts of new coal-fired generators start operation. The sales quotas may affect exports unless Indonesia, which doubled output in five years, boosts production.
"Anything that damages the ability of Indonesia to supply to the export market will have very severe ramifications," said Michael Dixon, executive general manager at AME Mineral Economics. "The market is currently very, very tight."
The domestic obligations may be applied starting next year and companies that don't meet their quotas may be fined, according to the draft.
"We're still talking with stakeholders" about the proposed decrees, said Bambang Gatot Ariyono, director of coal and mineral resources, who confirmed that companies may be allowed to trade quotas. "No decisions have been made."
The Indonesian Coal Mining Association forecasts production may increase 9 percent to 235 million tons in 2008. Mining companies may export 180 million tons this year to benefit from record global prices.
Benchmark Price
Surging Asian demand, an export cut by China, the world's biggest producer and consumer of coal, and infrastructure bottlenecks in Australia have helped to more than double prices of the fuel. Thermal-coal prices at Australia's Newcastle port, a benchmark for Asia, reached a record $194.79 a ton, according to the globalCOAL NEWC Index.
Indonesia will set a monthly benchmark price for coal, which will be the minimum for export prices, Bambang Setiawan, director general of coal and mineral resources, said.
The benchmark may use the Indonesian Coal Index or global indexes, Ariyono said. Coal that produces 4,200 kilocalories for each kilogram burnt was at $49.65 a ton while that which produces 5,000 kilocalories was at $90.41 a ton in the week ended Aug. 1, according to the Indonesian Coal Index.
Prices of coal sold in term contracts must be adjusted monthly to follow global prices, according to another draft decree, also obtained by Bloomberg News. Companies will have three months to renegotiate long-term contracts to comply with the new rule, it said.
The energy ministry has ordered six companies, with combined annual exports of 9.3 million tons, to halt overseas shipments since July because they charged too little for the fuel, Ariyono said.
Companies will have to report and seek approval from the energy ministry for the coal they sell, according to the draft.
How will Indonesian coal exporters fare with this new ruling?
posted by Charltonmedia.com @ 2:38 AM
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