Adaro halts coal supply to German electricity firm

Major coal producer PT Adaro Energy Tbk has declared force majeure and halted coal deliveries to German electricity firm RWE Power after they failed to agree on new higher prices proposed by the former, The Jakarta Globe reported.

Sandiago Uno, a director of Adaro, said on Thursday the company had been talking to Essen-based RWE Power about increasing coal prices by between 20 percent and 30 percent over existing contracts.

The government is pressing coal producers to renegotiate their export contracts with international customers so as to increase the value of the royalties accruing to the government.

?We are doing what the government wants. Of seven of our major buyers, only three of them haven?t agreed to new prices. One of them is RWE,? Sandiago said, adding that Adaro hoped the negotiations would be finalized by the end of the year.

Earlier, President Director of Adaro Energy Garibaldi Thohir said: ?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. 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.?

The company expects to achieve its production and sales volumes targets of 38- 39 million tons for 2008 and 42-45 million tons for 2009.(*)