KPC declares force majeur as strike continues<\/p>\n
JAKARTA (JP): PT Kaltim Prima Coal (KPC), a subsidiary of
\nAustralian mining giant Rio Tinto, announced a force majeur to
\nits local and foreign buyers on Wednesday as a workers' strike
\nhad made it impossible to continue coal shipments.<\/p>\n
KPC president Grant Thorne said that the force majeure was
\neffective on the company's sales contracts with various power
\nplants and steel mills around the world.<\/p>\n
\"It means that any penalties for breach of contract are not
\neffective,\" he told reporters at a media conference.<\/p>\n
A force majeure is a public statement by a company, declaring
\nthat it is unable to meet contractual obligations due to events
\nbeyond its control, he explained.<\/p>\n
KPC, which is 50 percent owned by Rio Tinto, with PB Amoco
\nowning the other 50 percent, stopped operating on June 15 after
\nsome 150 protesting workers took control of its important mining
\nfacilities to demand, among other things, a 15 percent increase
\nin salaries.<\/p>\n
Thorne said that due to the strike, the company had to rely on
\nits stockpiles, which, however, had run out.<\/p>\n
\"We have four vessels sitting waiting for coal today,\" he
\nsaid.<\/p>\n
Without the force majeure, he said, the company would have to
\npay each ship demurrage charges amounting to tens of thousands of
\nU.S. dollars per day.<\/p>\n
Thorne said that typically a vessel of 150,000 to 170,000 tons
\nin size would have cost KPC about US$20,000 per day.<\/p>\n
\"The penalty now is our reputation,\" he said.<\/p>\n
With the force majeure, he said, customers would have to find
\nother suppliers to meet their coal needs. \"Our hope is that they
\n(customers) will come back,\" he added.<\/p>\n
The company currently has 31 customers worldwide, of which 64
\npercent are power plants, 34 percent steel mills and the
\nremainder industrial users.<\/p>\n
Long-term contracts<\/p>\n
KPC secures the majority of its coal output under long-term
\nsales contracts, with customers including Taiwan Power Company,
\nHokuriku, Chubu and Tohoko Power companies in Japan, China Light
\nand Tenaga Nasional Berhad in Malaysia.<\/p>\n
It also supplies customers in Germany, Italy, Portugal, the
\nUnited States, Japan, Taiwan, the Philippines and India under
\nother contract agreements.<\/p>\n
Domestically, KPC supplies coal to, among others, giant gold
\nmining company PT Freeport Indonesia in Irian Jaya.<\/p>\n
The company expected this year's export to reach 15.5 million
\ntons of coal, up from 14 million tons in 1999.<\/p>\n
According to Thorne, KPC customers were concerned that a
\nreliable operation like KPC could be forced to shut down.<\/p>\n
A company news release said that KPC was working with its
\ncustomers to mitigate, where possible, the effects on their
\nbusinesses.<\/p>\n
KPC, it added, was maintaining regular contact with its
\ncustomers so that they fully understood the situation.<\/p>\n
Thorne said that KPC was losing $1.4 million per day, or an
\nequivalent of 50,000 metric tons of coal, due to the mine
\nblockade.<\/p>\n
According to KPC, the mine blockade was costing the government
\nup to Rp 3 billion (US$337,000) a day in royalties and tax
\nrevenue.<\/p>\n
Should the condition not improve, Thorne said, KPC would
\nconsider declaring a force majeure to the government.<\/p>\n
He said that a declaration of a force majeure on its coal
\ncontract of work required the government's endorsement.<\/p>\n
\"Under the endorsement, they (the government) agree that the
\ncircumstances surrounding our operation mean that we are not able
\nto benefit from our rights under the coal agreement,\" he
\nexplained.<\/p>\n
Thorne said KPC had enough reasons to declare a force majeure
\nto the government, but added that it would only be as a last
\nresort.<\/p>\n
KPC began operating in 1991 and currently employs about 2,600
\nworkers.<\/p>\n
KPC external relations manager Bambang Susanto expressed
\nappreciation of the government's attention to the company's
\nsituation.<\/p>\n
He said that Minister of Mines and Energy Susilo Bambang
\nYudhoyono had notified the minister of industry and Trade, the
\nminister of manpower, the minister of home affairs and the
\nNational Police chief about the issue.<\/p>\n
\"What's missing are the results,\" he added.<\/p>\n
In the latest situation, he said, women and children had
\njoined the striking workers, who were blocking several roads
\nleading to the mining locations.(bkm)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/kpc-declares-force-majeur-as-strike-continues-1447893297",
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