FAILED COAL TRADING DEALS IN INDONESIA

Recently we have seen many coal deals that have failed, below i will list the most common reasons why and what should happen in brackets to try and get the coal actually shipped out, i will list them in the order that they fail by, no 1 being the most common.

1. Contract was signed before the funding was sorted out and the outcome was the deal never happened because the seller could not find a funder, a seller should NEVER sign a contract unless they already have a funder on board, a contract is a binding agreement and should never be signed unless both sides can perform as per the terms of the contract. ( get a funder on board at start of contract negotiations with buyer, then ALL can mutaully agree BEFORE signing the contract)

2. L/C is issued by buyer to the seller but the buyer NEVER gets the BPG from the seller ( make the L/C non-operational and conditional to a BPG from a seller within a time frame, let us say max 7 days, then if no BPG then L/C is dead, but proof of funds from seller is the easiest way before sending and L/C)

3. Seller is not real, has no coal and punts it around to everyone to try and find the coal (a buyer should NEVER sign a contract unless they are certain the seller is real and genuine)

4. inspection and testing of coal does not meet the contract specification. (past performance documentation is best way to avoid this, but sometimes the past performance given is not genuine and you find out after testing, a risk that a buyer has to take)

5. MV is sent by buyer but no coal ready, most times this relates to no funder or funder fails to do what he agreed with the seller, not always the seller at fault, but it is the buyer that loses the most. (buyer must ensure the mine has a funder in place and they have the funds or that the mine has their own funds, in either case the buyer should ask for proof of funds via the bank to bank system)

6. Buyer issues an L/C without a BPG clause, then once seller gets the L/C they then turn around to a buyer and say they can only do deal on a cash basis and basically try and blackmail the buyer into paying cash or the L/C is stuck until it runs out. (again we go to proof of funds via bank to bank to ensure they have the money to complete the contract)

The above are the main reasons for failed deals, of course there are others, it is also not always one sided,both buyers and sellers cause failed deals, but if most stick to the basic common sense way of doing coal trading then the failed deals will be very few rather than many as there are now.

Please contact me [email protected] if you should have any questions relating to the above.