We welcome article submissions from experts in the areas of coal, mining,
shipping, etc.
To Submit your article please click here.
|
|
|
Tuesday, 03 November 15
THE DISCHARGE OF CARGO IN THE PRC WITHOUT ORIGINAL BILLS OF LADING - CLYDE&CO
 KNOWLEDGE TO ELEVATE
On occasions, a vessel may arrive at a port and be ready to discharge but the original bills of lading in respect of the cargo have not passed through the banking chain to the ultimate receivers, cargo is then discharged against a letter of indemnity (“LOI”) and released to a party who has not paid for the goods, resulting in a claim against the carrier for mis-delivery and, ultimately, a call under the LOI. This scenario is becoming increasingly common in the PRC, particularly in the iron ore trade where banks are looking to enforce their rights in view of the deteriorating financial health of local steel mills and traders. This article highlights the key risks and considers ways in which a party can minimise their potential exposure.
Carriers often come under pressure to deliver cargo without production of the original bills. In light of the potential liabilities, no prudent carrier would agree to delivering cargo without the original bills until they had received an LOI from a party who is financially reliable. Often the carrier will not accept an LOI from the end receiver, who they have had no previous dealings with, and will demand one from its direct contractual counterparty, the charterer. The charterer will in turn want an LOI from the sub-charterer, if there is a charter chain, who may look to its buyer under the cargo sale contract and so on down the chain to the ultimate receiver.
Often the charterer, as shipper the goods, has received payment and, in order to facilitate the discharge of cargo without delay and to avoid a demurrage claim, may issue an LOI without a full appreciation of the risks involved.
There is always a risk of the LOI being called upon. This can happen in circumstances where the bills of lading do not make their way through the chain to the receiver to whom delivery of the cargo has been facilitated by the LOI. The bank, which has paid the seller under the letter of credit, may not have received payment from its customer and therefore retains the bills of lading. The bank then demands delivery of the cargo which has already been delivered (to the party named in the LOI, often the bank’s customer). The bank may have a claim against its customer, but the easier target is a claim against the carrier for mis-delivery. The carrier then inevitably makes a call under the LOI.
Clearly the safest option is for a party to refuse to issue an LOI. However, it not be commercially viable to suggest that LOIs should be avoided at all costs.
If a party is considering providing an LOI, careful scrutiny of the security for payment under the sale contract and of the risk of the bills of lading being stuck in the chain should be conducted first. If practicable, the internal authority for the issuance of LOIs should be reserved to senior staff in the credit or finance functions of the business as the provision of an LOI re-opens the counterparty risk.
The vast majority of LOIs are issued on the International Group of P&I Clubs standard wording and there is often very little, if any, scope for seeking to negotiate this wording. However, if possible, a party should try to limit its liability under the LOI to be issued with regard to amount and duration.
If a party issues an LOI then it should always obtain an LOI from its charterer/buyer down the chain. The indemnity should be on materially identical terms to the LOI provided (subject to any limits included). Parties should always remember that security is only as sound as the solvency of the party providing it and so the indemnity should be backed by a guarantee from a first class international bank or, at the very least, a parent company of substance.
It is important to consider the enforceability of the indemnity and the appropriate law and jurisdiction clause and whether the LOI would need to be registered.
At ports in the PRC, cargoes are often discharged from vessels to customs controlled warehouses or holding areas pending collection by the cargo owner. Effective control over the cargo is often difficult to monitor following discharge. Bills of lading are often exchanged for delivery orders issued by the carrier's agent which can be used to collect the cargo. If the bills have not arrived, the delivery order is often given to the receiver named in the LOI without due consideration as to whether they are entitled to the delivery order and the cargo released against presentation of it.
In the PRC, it is this lack of physical control of the cargo that is leading to the exposures/losses. Parties should try to insert provisions into its contracts which ensure that delivery orders are only exchanged in return for original bills of lading and find ways of asserting greater control over local agents. Charterers should also instruct the vessel to retain the delivery order until the original bills of lading are presented and insist that the carrier's and receiver's agents are different entities.
Another option which should be explored is increasing the usage of independently owned or leased warehouses or bonded warehouses into which cargo can be discharged. Whether this is viable would largely depend on the facilities at the relevant port and the point at which import duty will become payable.
Written by Gerald Yee, Leon Alexander and Kate Docton | Clyde&Co
If you believe an article violates your rights or the rights of others, please contact us.
|
|
Thursday, 05 November 15
Q2'16 INDO THERMAL COAL SWAP CONTRACT FOB INDONESIA FALLS TO $39.90/T
COALspot.com: Indonesian coal swap for delivery Q4 2015 declined month on month and week over week. Price of coal seen no improvements this past we ...
Thursday, 05 November 15
INFORMATION EXCHANGE GROUP'S LATAM MINING SECURITY SUMMIT 2016 - INTERNATIONAL CONFERENCE ON TECHNOLOGY SECURITY IN MINING
Press Release: LATAM Mining Security Summit 2016 is a carefully designed event that will bring together the leading stakeholders in the mining sect ...
Wednesday, 04 November 15
MARKET INSIGHT - CHRISTOPHER THOMAS WHITTY
Four companies dominate global iron ore production, namely; BHP Billiton, Vale, Rio Tinto, and Fortescue Metals Group. Together these companies con ...
Wednesday, 04 November 15
FOB RICHARDS BAY COAL SWAPS GAIN W-W AND M-M
COALspot.com: API4 FOB Richards Bay Coal swap for delivery Q4' 2015 gained week over week and month over month.
The Q4 swap was up US$ 1.4 ...
Tuesday, 03 November 15
API 5 FOB NEWCASTLE COAL SWAPS DECLINE CONTINUES
COALspot.com: API 5 FOB Newcastle Coal swap for Q4’ 2015 delivery slid $1.84 per ton (4.34%) month over month to US$ 40.54 per ton. The swap ...
|
|
|
Showing 2731 to 2735 news of total 6871 |
|
 |
|
|
|
|
| |
|
 |
|
|
| |
|
- Binh Thuan Hamico - Vietnam
- Indika Energy - Indonesia
- Meralco Power Generation, Philippines
- Antam Resourcindo - Indonesia
- Straits Asia Resources Limited - Singapore
- Coalindo Energy - Indonesia
- Energy Link Ltd, New Zealand
- Orica Australia Pty. Ltd.
- Indonesian Coal Mining Association
- Maheswari Brothers Coal Limited - India
- Ambuja Cements Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Mercuria Energy - Indonesia
- Sical Logistics Limited - India
- Vizag Seaport Private Limited - India
- Global Green Power PLC Corporation, Philippines
- Oldendorff Carriers - Singapore
- Cigading International Bulk Terminal - Indonesia
- Deloitte Consulting - India
- Directorate General of MIneral and Coal - Indonesia
- IHS Mccloskey Coal Group - USA
- Latin American Coal - Colombia
- GVK Power & Infra Limited - India
- LBH Netherlands Bv - Netherlands
- Bhatia International Limited - India
- European Bulk Services B.V. - Netherlands
- AsiaOL BioFuels Corp., Philippines
- Kalimantan Lumbung Energi - Indonesia
- Indian Oil Corporation Limited
- Billiton Holdings Pty Ltd - Australia
- Sinarmas Energy and Mining - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Borneo Indobara - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Singapore Mercantile Exchange
- Sojitz Corporation - Japan
- Cement Manufacturers Association - India
- Global Coal Blending Company Limited - Australia
- Bhoruka Overseas - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Thai Mozambique Logistica
- Goldman Sachs - Singapore
- Asmin Koalindo Tuhup - Indonesia
- Timah Investasi Mineral - Indoneisa
- Bukit Asam (Persero) Tbk - Indonesia
- Economic Council, Georgia
- Port Waratah Coal Services - Australia
- Barasentosa Lestari - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Electricity Authority, New Zealand
- Salva Resources Pvt Ltd - India
- Sindya Power Generating Company Private Ltd
- Commonwealth Bank - Australia
- Bangladesh Power Developement Board
- Mercator Lines Limited - India
- Indo Tambangraya Megah - Indonesia
- IEA Clean Coal Centre - UK
- Mintek Dendrill Indonesia
- Trasteel International SA, Italy
- Bukit Makmur.PT - Indonesia
- Interocean Group of Companies - India
- Neyveli Lignite Corporation Ltd, - India
- Baramulti Group, Indonesia
- PTC India Limited - India
- Essar Steel Hazira Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Simpson Spence & Young - Indonesia
- Bukit Baiduri Energy - Indonesia
- Renaissance Capital - South Africa
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kartika Selabumi Mining - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Global Business Power Corporation, Philippines
- Australian Coal Association
- PowerSource Philippines DevCo
- Directorate Of Revenue Intelligence - India
- Gujarat Electricity Regulatory Commission - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Star Paper Mills Limited - India
- Rio Tinto Coal - Australia
- Merrill Lynch Commodities Europe
- Intertek Mineral Services - Indonesia
- Kepco SPC Power Corporation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- VISA Power Limited - India
- Price Waterhouse Coopers - Russia
- TNB Fuel Sdn Bhd - Malaysia
- Grasim Industreis Ltd - India
- Sakthi Sugars Limited - India
- SMG Consultants - Indonesia
- London Commodity Brokers - England
- Holcim Trading Pte Ltd - Singapore
- OPG Power Generation Pvt Ltd - India
- Medco Energi Mining Internasional
- Bharathi Cement Corporation - India
- Parliament of New Zealand
- Carbofer General Trading SA - India
- Parry Sugars Refinery, India
- Power Finance Corporation Ltd., India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Uttam Galva Steels Limited - India
- CIMB Investment Bank - Malaysia
- Romanian Commodities Exchange
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kapuas Tunggal Persada - Indonesia
- Independent Power Producers Association of India
- Metalloyd Limited - United Kingdom
- Rashtriya Ispat Nigam Limited - India
- Indian Energy Exchange, India
- Leighton Contractors Pty Ltd - Australia
- Alfred C Toepfer International GmbH - Germany
- PetroVietnam Power Coal Import and Supply Company
- Australian Commodity Traders Exchange
- Kaltim Prima Coal - Indonesia
- Standard Chartered Bank - UAE
- Thiess Contractors Indonesia
- Chamber of Mines of South Africa
- SMC Global Power, Philippines
- The University of Queensland
- Heidelberg Cement - Germany
- Tamil Nadu electricity Board
- Dalmia Cement Bharat India
- Coal and Oil Company - UAE
- International Coal Ventures Pvt Ltd - India
- GMR Energy Limited - India
- San Jose City I Power Corp, Philippines
- Vedanta Resources Plc - India
- Petron Corporation, Philippines
- Kobexindo Tractors - Indoneisa
- Siam City Cement - Thailand
- Africa Commodities Group - South Africa
- Ind-Barath Power Infra Limited - India
- Meenaskhi Energy Private Limited - India
- Ceylon Electricity Board - Sri Lanka
- Bhushan Steel Limited - India
- Posco Energy - South Korea
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Malabar Cements Ltd - India
- Therma Luzon, Inc, Philippines
- Videocon Industries ltd - India
- Larsen & Toubro Limited - India
- Minerals Council of Australia
- Central Java Power - Indonesia
- Jindal Steel & Power Ltd - India
- Edison Trading Spa - Italy
- Samtan Co., Ltd - South Korea
- Bayan Resources Tbk. - Indonesia
- Central Electricity Authority - India
- Marubeni Corporation - India
- Eastern Coal Council - USA
- Mjunction Services Limited - India
- Miang Besar Coal Terminal - Indonesia
- Lanco Infratech Ltd - India
- Toyota Tsusho Corporation, Japan
- South Luzon Thermal Energy Corporation
- Georgia Ports Authority, United States
- Makarim & Taira - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- GN Power Mariveles Coal Plant, Philippines
- Semirara Mining and Power Corporation, Philippines
- Pendopo Energi Batubara - Indonesia
- Karaikal Port Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- Kumho Petrochemical, South Korea
- Jaiprakash Power Ventures ltd
- Gujarat Sidhee Cement - India
- Aboitiz Power Corporation - Philippines
- Agrawal Coal Company - India
- Aditya Birla Group - India
- Ministry of Transport, Egypt
- MS Steel International - UAE
- Energy Development Corp, Philippines
- Electricity Generating Authority of Thailand
- Coastal Gujarat Power Limited - India
- ASAPP Information Group - India
- Tata Chemicals Ltd - India
- Banpu Public Company Limited - Thailand
- White Energy Company Limited
- Krishnapatnam Port Company Ltd. - India
- The Treasury - Australian Government
- Attock Cement Pakistan Limited
- GAC Shipping (India) Pvt Ltd
- Sarangani Energy Corporation, Philippines
- Riau Bara Harum - Indonesia
- Sree Jayajothi Cements Limited - India
- Kideco Jaya Agung - Indonesia
- New Zealand Coal & Carbon
- Bulk Trading Sa - Switzerland
- Wilmar Investment Holdings
- CNBM International Corporation - China
- Asia Pacific Energy Resources Ventures Inc, Philippines
- The State Trading Corporation of India Ltd
- Formosa Plastics Group - Taiwan
- Xindia Steels Limited - India
- Orica Mining Services - Indonesia
- SN Aboitiz Power Inc, Philippines
- Altura Mining Limited, Indonesia
- McConnell Dowell - Australia
- Chettinad Cement Corporation Ltd - India
- Madhucon Powers Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- PNOC Exploration Corporation - Philippines
- ICICI Bank Limited - India
- Planning Commission, India
- Globalindo Alam Lestari - Indonesia
- India Bulls Power Limited - India
- TeaM Sual Corporation - Philippines
- Eastern Energy - Thailand
- Wood Mackenzie - Singapore
- Semirara Mining Corp, Philippines
- Savvy Resources Ltd - HongKong
- Indogreen Group - Indonesia
- Anglo American - United Kingdom
- Ministry of Finance - Indonesia
- Ministry of Mines - Canada
- Manunggal Multi Energi - Indonesia
- Siam City Cement PLC, Thailand
|
| |
| |
|
