Indonesia's Ministry of Energy and Mineral Resources has revoked the mining license of the country's only hard coking coal miner Asmin Koalindo Tuhup, with the miner looking to contest the ruling, sources aware of the matter confirmed Monday.
Tuhup operates out of Indonesia's Central Kalimantan. Specifications of the coal it produces has 60% coke strength after reaction, 27.5% volatile matter, 9% total moisture, 8% ash, 97% vitrinite, 9 CSN and 1.2% MMR. The reason behind the revoke of the license was understood to be for breach of contract and negligence, as it had not obtained necessary governmental approvals.
A ministry source confirmed the license was revoked.
Tuhup will contest the ruling and has commenced legal proceedings against the relevant government authorities in the Jakarta State Administrative Court, or PTUN, said a source close to the company.
The company is hoping to "obtain a stay of enforcement while the formal legal process is finalized," the source said, adding that the company believed the termination to be "invalid."
In terms of production, Tuhup had been producing consistently up to last Saturday when it was forced to halt operations, with its last trade for November laycan cargoes heading to Asia.
This placed its year-to-date production of hard coking coal at 1.2 million mt, of which a high proportion is exported.
The impact would be most acutely felt in Tuhup's key buyer India, two market sources said. One miner source said that China would not be affected much from the production halt.
One steelmaker shrugged off the possible loss of Tuhup's coking coal as there are "lots of tier II coals with similar ash" profiles.
One trader said that there would not be much impact for the time being, as the volume was too small to affect the market.
Tuhup coking coals are typically recognized as second-tier HCCs which track closely Platts HCC 64 Mid Vol FOB Australia index.
In the past week, second-tier coal prices have been strengthening as buyers sought low ash material. S&P Global Platts assessed HCC 64 Mid Vol at $163.40/mt FOB Australia Monday, up $2.20/mt from Friday.
Source : Elizabeth Low & Edwin Yeo/Platts
28 November 2017