Indonesian coal miner halts deliveries

MAJOR Indonesian thermal coal producer PT Adaro Energy has declared a force majeure as Indonesian government wrangling forces the miner to temporarily suspend deliveries to three unnamed customers.

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Adaro said negotiations with the customers failed to achieve a new required price by December 3.

The company added the repricing negotiations and the deadline were part of Indonesian government requirements.

“We regret the company had to declare force majeure on these three customers. The government required deliveries be suspended to those customers that do not agree by the deadline to a new higher price,” Adaro Energy president director Garibaldi Thohir said.

“Once the new price is achieved, the suspension will be lifted. Adaro Indonesia has reached agreements with most of the affected customers, but unfortunately not yet with these remaining three. Negotiations continue and we are hopeful of achieving a satisfactory outcome.”

Adaro says demand for its Envirocoal product remains firm and the company is on track to achieve its production and sales volumes targets of 39 million tonnes for 2008 and 42-45Mt for 2009.

The company states its Envirocoal is an ultra-low sulfur, ash and NOx sub-bituminous steaming coal which is widely used throughout Europe, Asia and the Americas.

Back in September, Adaro was one of five companies that forked out a total of $US65 million in royalty debts to the Indonesian government, resolving a long running dispute.

The Indonesian government passed a new mining law two days ago, with Dow Jones reporting the draft included higher royalty payments of around 10%.