Adaro says no reduced demand from India

By Cepi Setiadi

IDX-listed coal mining giant PT Adaro Energy Tbk said that export to India has not been affected by the current plunge in the value of the rupee against the US dollar.

Devindra Ratzarwin, Adaro's corporate secretary told Petromindo.com so far there has been no reduction in demand or request for renegotiation of contracts from coal buyers in India.

"India is still the biggest consumer of Adaro's coal. We have long contract with them, so far it doesn't influence our export," Devindra said. About 22 percent of Adaro?s first-half 2013 coal output of 24.5 million tons were exported to India. Last year, India accounted for about 15 percent of Adaro?s total export.

An earlier report, quoting sources in India and Indonesia, said that coal shipment from Indonesia to India has been reduced and buyers are seeking for contract renegotiation as the current plunge in the rupee has made import more costly.

India is the second largest export market for Indonesian coal after China. The rupee has dropped by about 18 percent since May. Indonesia, the world?s largest thermal coal exporter, is expected to export about 317 million tons of its projected more than 400 million tons coal output this year.

Meanwhile, Chairman of the Indonesian Coal Mining Association (ICMA) Bob Kamandanu acknowledged that the weakening of the rupee would affect the coal purchase by India.

He, however, said that the Indian buyers are unlikely to reduce demand, but will rather shift to lower calorific value coal, which is cheaper, amid the rising import cost.

"As we have already known and familiar with India's market, the coal demand will remain exist. But because of the weakening of the rupee they will be lowering the coal calorie demand. For instance, today they need 4,800 GAR, but as their currency weakens, their demand will be lowered to 3,000 GAR or even to 2,000 GAR," Bob explained, adding that Indian buyers are also likely to seek for contract renegotiation.

Editing by Reiner Simanjuntak