Kadin wants coal supply worries to be solved through B-to-B mechanism

The Indonesian Chamber of Commerce and Industry (Kadin) has said that the ongoing crisis in the supply of coal to cement producers should be solved through “business to business” mechanism, Kompas daily reported on Wednesday.

Kadin’s vice president for energy and resources, Dito Ganinduto said in Jakarta on Tuesday said cement producers which currently suffered a shortage of coal supply should be able to negotiate directly with coal producers to solve their coal supply problem.

Dito acknowledged that local buyers such as cement producers should be given a first priority to purchase the coal produced from local producers. But he warned that the privileges given to cement producers should not cause a loss to the local coal producers.

Many local companies such as cement producers are worried that the Chinese government’s decision banning the country’s coal exports would further worsen the coal supply in the domestic market. The ban will encourage local coal producers to export larger part of their production to take the advantage of the rise in coal prices in the international market.

Separately the chairman of the association of Indonesian coal producers, Jeffrey Mulyono, said that cement producers’ demand to buy coal from local coal producers at a low price was unrealistic.

Comparing the price of coal sold by local coal producers to those sold by illegal miners is quite unrealistic. “The price of coal sold by illegal coal producers is 17 percent lower because they don’t pay royalty and reclamation cost,” he said. (*)