Straits Asia Resources Ltd., a coal producer with mines in Indonesia, may miss contracted deliveries to customers after wet weather disrupted mining at its Sebuku project. The shares fell 13.4 percent.
Straits Asia has declared force majeure, a legal clause allowing companies to default on deliveries because of circumstances beyond their control, the Singapore-based company said in a statement to the stock exchange today. The company is ``reassessing'' whether it can meet a 4 million-ton target this year, Chief Financial Officer Jim Carter said by phone.
Straits Asia, which supplies coal to countries including Japan, Taiwan and Korea, is struggling to meet sales commitments as heavy rainfall cuts second-quarter production. Output in the three months ended June 30 fell 25 percent to 623,000 metric tons from the previous quarter because of bad weather.
``The rainfall event was beyond our reasonable control and its impact has affected and will affect the performance of obligations under agreements to deliver coal to customers,'' the company said in the statement. ``The force majeure event commenced July 30.''
The stock dropped 18 cents to close at S$1.16 in Singapore, the lowest since May 28. The stock climbed as much as 3.7 percent before the announcement. A total of 36.1 million shares were traded, higher than the six-month daily average of 7.1 million shares.
Sales declined to 652,000 tons from 851,000 tons, it said in a July 26 statement. In the first six months, coal output fell to 1.45 million tons from 1.64 million tons, with sales declining 14 percent to 1.5 million tons.
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