Some Indonesia Coal Traders Declare Force Majeure on Rule Change

JAKARTA, Feb 1 (Reuters) – Some Indonesian coal traders have declared force majeure after a trade rule change, with around 60-70 vessels stuck in various ports and 3.5 million tonnes unable to be shipped, the chairman of the Indonesian Coal Mining Association said on Tuesday.

The delays to shipments for buyers in China and India from the world’s top thermal coal exporter comes as a cyclone threatens exports from the largest coal exporter Australia, and global markets are vulnerable to further supply disruptions.

The Indonesian problems have come after the trade ministry ordered surveyors in January to temporarily halt issuing surveyor reports to traders who are in the process of reapplying for trading permits under a new coal and mining law system.

“The vessels have been stuck in various coal ports around the country. Stockpiles have been building up because the coal can’t be loaded to vessels,” Bob Kamandanu said.

“At least one big company has declared force majeure.”
It was not clear which firms had declared force majeure and the trade rule so far has not affected shipments from top producers such as Bumi Resources and Adaro Energy, whose share prices rose 5.5 percent and 6.7 percent respectively on Tuesday in a flat Indonesian stock market.

Regional coal prices have dipped from January but picked up again this week. Australia’s coal industry, still recovering from floods, is bracing for a huge cyclone moving towards Queensland state, forcing two mines and several ports to shut.

Indonesia has required exports of mining products including coal and tin to be checked by surveyors before shipping them out as the country seeks to keep illegal mining in check and boost revenue from the sector.

The rule appeared to affect traders who do not own mines and buy blended coal, or aggregate coal, from various small miners, as well as traders who buy coal in barges.

“They have submitted requests for processing permits to the energy and mines ministry since three months ago but with no response,” Kamandanu told reporters, without identifying firms.

Surveyor reports, required for shipping the fuel, show the origin of the cargoes and are used to calculate royalties. Surveyors are still allowed to issue reports for coal exports from producers, but the shipping delays could affect the country’s output if they continue for a longer period, said Kamandanu.

Indonesia is expected to produce 340 million tonnes of coal this year with about 80 percent coming from medium or big sized miners and the rest from small miners.

The delays come as Indian traders and end-users are close to resuming prompt buying on thermal coal after a break of several months, some of India’s largest traders said last week.

Australia’s thermal coal prices on the global COAL weekly index, a benchmark for Asia, closed at $127 per tonne for the week to date on Monday, up from $124.25 a week earlier.