Adaro negotiating with three 'force majeure' buyers

Coal mining firm PT Adaro Indonesia Tbk is continuing talks with three buyers, including German electricity firm RWE Power, on possible increase in contract price.

The firm has declared force majeure on supplies to the three buyers and thus halted coal shipment to them following their refusal to increase their purchasing price as requested by Adaro.

Sandiaga Uno, a director of Adaro, said on Monday that following the force majeure declaration, the firm has been holding talks with the three firms. He refused to identify the other two firms, saying only one is from Europe and the other is from the United States. The three have contracts to buy a total of 3 million tons per year from the South Kalimantan-based Adaro.

"Thus far, the negotiation is progressing well. We hope they quickly follow the governmental regulation. Otherwise, we shall terminate contracts with them," Sandiaga said.

Adaro would sell the contractual volume to the local market if the contracts were terminated, he said.

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

Adaro has notified its customers about the government's demand. Of its seven major customers, four firms had agreed to renegotiate the price but three rejected, Sandiaga earlier said. (alex)