Natural Resources Created By The Creator

If you are allowed by the AL  MIGHTY to stay ==>  in this World  for quite a while, at a certain stage of your life Cycle  you will  realize that your life journey also rotates similarly  as :

• sun and and moon, day and night, 
• hungry, eat, full stomach, hungry, start eating again, full stomach, 
• you earn money, you spent your money, you are out of cash, start working  hard again, your earn money, you spent money  etc. 
• ups and down 
• like a merry go round; 
• spinning around 

If you happen to be a Muslim Believer, you can found this Rotation Fenomena  in the Holly Book        Al Quran, where it actually shows  the Sign of the Greatness, the Merciful of ALLAH the AL Mighty;

• The Important and significant thing is that  you start realizing  that ALLAH The Al Mighty has created this World  with all the Natural Resources distributed and scattered around the world  ready to be searched, find out, explored, mining out  it out, exploited, developed, transported, stored and sell  for the benefit of all mankind.  
• This process of Awareness of knowing our Creator : ALLAH is also following the ups and down rythm, where you have to maintain it on the up level by continously listening to the words of ALLAH  from the Al Quran and testing its reality in the Real World of your Real Day to day life; . 
  

Well, my life experienced as a Business Lawyer makes me becoming interested in looking and observing the Nature of the Hard Minerals such : as Copper, Iron Ore, Gold, Diamond, Bentonite, and Hydro carbon (Oil and Gas); 

• Gold is Valuable in its price ; 
• Diamond is the strongest Minerals if you want to crush with other Minerals, which therefore is  being used in the Drilling Bit,  known among others as Diamond Shamrock  Drilling Bit,  where the price of such Diamond Drilling Bit is equal to 2( two) new Brand Mercedes Car
• Benton  "cannot be melted down"  even in a very High Degree Temperature Plant and thus is used as to Shape other Minerals  in a High Boiling Temperature  Plant;        

The ALL Mighty has granted the Indonesian Archipelago  with full of Natural Resources; 

It is not human being who planted and created this Natural Resources regardless of their nationality; The human being are only being given Brain with  its built in Mind, capacity,  Soul, and Heart, instinct, willingness to search these Natural Resources by conducting General Survey, with Knowledge, Science,  and Capital Engineering, Infrastructure.

• Further this Human Being has to explore these Natural Resources  by conducting Seismic line services  in several appointed Coordinates, by first clearing the Surface Land from trees or houses ; and than planting the dynamite to be blown, where the sounds are detected ind captured  in the Seismographic instruments which will than be shown in a graphic picture showing the prospective contents of what is in the structure below the ground.   

If there are Mineral Resources determined to be commercial developed, these Human Being start developing  the production facilities from pipeline, station gathering, separation instruments to separate the  Oil from the water and sulfur if it is Hydrocarbon, and if it is Hard Minerals such as Coal to split the Coal from the Water, Sulfur, Ash; with the Technical Instruments developed by the Human Being using their Brain, and Mind; and develop the Coal Plant.

As a Business Lawyer in reviewing the Mineral Contracts, Cooperation Agreement between the relaeant Parties, the  Sales Coal Contract,  we have to understand the Nature of this  Mineral Business in order to be able to accommodate the willingness and desires of  the Business Players /Investors who are your Client in giving legal advice and drafting or reviewing the Purchase Sales Coal Contracts or if you are requested to conduct Legal Due Diligence if your Client is interested to acquire share of the Company who is operating a Mining Activities either Coal, Iron Ore or Magnesium. 

• It is really enjoying if you love your professional work and if you happen to search the real meaning of life and start questioning why are we dropped in this World and who had created these Huge World together with all what is contain  below  the Ground  which includes those Natural Resources which can really be useful to increase the Quality of Mankind. 
• Well, these are my thoughts  this morning when I walked up from my bed and start writing what is in my mind in this Blog of mine;Cheers and Good Luck and success
• Jakarta, April 17, 2011 Agung S.Suleiman 

Coal Trading Business

During this recent weeks, I have been really busy  involved in a team work  with our group members  relating to a certain Coal Trade  Project. It is really exiting, interesting and frustrating  because there seems to be difference of manners and attitude in approaching the price settlement  of Coal that had been loaded on the Vessel,  for approximately 15,000,000 MT of Coal. 

The issue was that the Coal Quality spec was not reaching the spec but was not rejected by the Purchaser, and requested to be loaded to the Vessel, with  conditions  proposed by the Purchaser that if the Coal is below  5500 Kcal/GAR, the price will be renegotiated. 

However, when we as  Seller had followed the instruction to load the Coal to the Vessel for shipment, the Purchaser seems not having room for negotiation, and had keep on insisting  to decide unilaterally, for which purpose we as the Seller who had followed the instructions of the Purchaser to load the Coal,  feels of not being treated fairly, which also resulted several of the stockholders, suffers delay in payment for their rendered services.

The Purchaser had requested that the pricing of the Coal must apply CV prorated basis plus discount of 20%, which resulted the figure far below the market price of the Coal. We as the Seller had moved our position from just applying prorated basis with discount to applying the market price. 

Well, in doing Coal Trading Business, we have to be professional and also have to honor the commitment that we had made. In practice even though the Sale and Coal Purchase Agreement  had been signed, if one of the Party   particularly the Purchaser had waived their rights to reject the Coal Commodity which had reached the rejection point, and requested to load the Coal immediately to the Vessel,  subsequently, such instructions has to be treated as a legal contractual binding commitments, for which  we have to honor our wordings made through such email,  which suggested for negotiation on the pricing of the Coal,  which in average had shown a certain Gross Caloric Value that had  been be determined by the Independent Consultant mutually agreed by the parties. 

There appears to be Coal Pricing Index,  where there are several Coal Kg Calorie  Value Indexes, where according to the Indonesian Mining Association News, Indonesia, one of the major Coal Exporter  through  PT. Coalindo Energi (PT CE), will soon launch the Indonesian Coal Mining Index ("ICI")  for example ICI 1 to 3 ranging from ICI 1 GROSS caloric Value GAR 6500 Kg Calorie, ICI 2 - 5500 Kg Calorie  and ICI  3 - 5000 Kg Calorie, where there is a range of pricing deduction, if it falls between these range index. From our brain storming discussions, it indicates that we may  have several alternatives /options to either apply (i) the prorate basis to get the pricing of the Coal or (ii) deducting a certain percentage, or (iii) we just  seek the market price of such average Coal Kg calorie on As Received Basis (ARB). 

As a Business Lawyer who is a member of  the Professional Coal Trading Team,  we really have to anticipate how if in the real practice there occurs, condition where the Quality of the Coal did not meet the required spec quality and rather had reached the rejection point but from the commercial basis,  the Purchaser had requested to waive its right to reject the Coal and insist on loading the Coal to the Vessel, but do not want to open its room for negotiation on the Price of the Coal that had been actually loaded to the Vessel ( FOB) and delivered to the Purchaser and had reached the End-user  .

The Rainy weather, must also be taken into consideration, since the Naught of the Vessel had to be closed to avoid flood of water causing The Total Moisture (TM) contents in the Coal Increase dramatically. 

One of the issues that also  have to be taken into consideration is relating to Demmurrage and Dead Freight issue, particularly if the Inventory of the Coal in the Stock Pile,  either within the Mining Location or in the Stock Pile in the Port is not sufficient in quantity, to fulfill the agreed amount  of Coal Bulk to be supplied,   which could cause Demmurrage and Dead Freight Exposures.     

Well, those are some of the issues that has to be anticipated in the real world of trading Coal for shipment.                      

Comparison between Oil & Gas Contracts and General Mining Contracts in Indonesia

Comparison between Oil & Gas Contracts and General Mining Contracts in Indonesia From my experience working for 5 Years as In house Legal Counsel in the Oil and Gas Sectors(Virginia Company Indonesia / Huffco Indonesia)(Oil and Gas), 5 Years as in house Legal Counsel in the General Mining Sectors (Copper and Gold) (PT Freeport Indonesia Company), 5 Years in a reputable Law Firm in Indonesia, 2 Years as Partner of a Leading Reputable Law Firm in Indonesia, and 10 Years as Partner in the Law Firm of Suleiman Agung & Co in Indonesia, I can conclude that even though both resources are from the same Indonesian below grounds deposits, the treatment in entering into agreements for general survey, exploration, exploitation, producing up to marketing between the products of Oil and Gas and the General Mining are different.

In the Oil and Gas Sectors, the Government of the Republic of Indonesia now being represented by BP Migas will usually enter into a Production Sharing Contracts (PSC) with the Oil and Gas Contractors, where the Oil and Gas Contractors will be responsible to seek the funds and technology for seeking the oil and gas reserve deposits starting from the general survey, exploration, exploitation and producing the commercial oil and gas products, where all the risks shall be borne solely by the Oil and Gas Contractors.

Once the Oil and Gas produced from a certain field /portion of Contract Area are considered and agreed by BP Migas and the Oil and Gas Contractor, as commercial field / commercial portion of the Contract Area, ready to be developed for commercial production, then all of the expenses and costs incurred by the Oil and Gas Contractors, shall be cost recovered by the Government of Indonesia (GOI).

These cost recovery are taken from the Oil and Gas produced from such Contract Area during the current Year pursuant to the terms and conditions under the PSC. Since there is a cost recovery mechanism introduced by the GOI, then the GOI through BP Migas shall have the right to manage the oil and gas operations conducted by the Oil and Gas Contractors in terms of approvals of performing the services and procuring the services and contracts relating to the operations of the oil and gas activities.

Accordingly, all the material and goods being purchased and used by the Oil and Gas Contractors shall be owned by the GOI, however, for the term of the PSC, the oil and gas Contractors shall have the right to use such materials and goods for performing the oil and gas operations. Furthermore after the operating cost and expenses are being recovered by GOI or BP Migas, there will be an Equity oil and gas split between the Oil and Gas Contractors and BP Migas / the GOI.

Whereas, relating to the General Mining Activities, there is no any such cost recovery mechanism made and developed by the Government of Indonesia to the Mining Contractors for the costs incurred and spent by the Mining Contractors. There is also no any Equity split of production of the General Mining Products between the GOI and the General Mining Contractors, except to Coal Mining Contractors where there is a certain split of production around 13, 5 % for the GOI pursuant to the Coal Mining Cooperation Agreement between the Coal Mining Contractors and the GOI.

The Government’s take in the General Mining is from the royalty of the Production of the Mining products which are being sold to the Buyers of the General Mining products which is around 1 % to 3 %. There is a certain sort of rental fee of the Area per HA, which is a progressive rate starting from the General Survey period, which will be increased in a certain percentage during the explorations phase, production phase until marketing phase.

These rental fee is being adjusted and modified from year to year. There are also some instances, where the General Mining Contractors are entering into an agreement with the Local Government, where a certain Community Development program is being agreed upon, for which a certain percentage of its annual production is agreed upon to be contributed for the development of the Local Area in the frame work of Community Development.

In these arrangements, the General Mining Contractor may try to request for assurance from the Local Authority such as the Bupati, that such contribution is really being used for the Local Area Development and not being transferred to the Central Government, which was frequently experienced, as not being used for such respective Local Area Development.

Accordingly we can see that, even though, the products are taken from the same Indonesian Mining Territory within the Territory of the Republic of Indonesia, the treatment in entering the agreements between the GOI and the Contractors, are being ruled and treated differently.

Agung Supomo Suleiman October 7, 2008 Practicing as Business Lawyer particularly in the Oil and Gas and General Mining, and Coal Mining Sectors in Indonesia for more than 25 Years since 1985. Partner at the Law Firm of Suleiman Agung & Co http://www.sacolaw.blogspot.com http://www.agungssuleiman.blogspot.com email : agungsacolaw@telkom.net agungsuleiman@gmail.com Mobile Phone : 0816830647