Coal Supply in Indonesia

Directorate General of Mineral Coal and GeothermalMinistry of Energy and Mineral Resources

Republic of Indonesia2006

Bambang SetiawanDirector of Programme Guidance

Coal Supply and DevelopmentIn Indonesia

APEC CLEAN FOSSIL ENERGY TECHNICAL AND POLICY SEMINAR

At present, it is known that the Indonesia coal resources potentAt present, it is known that the Indonesia coal resources potential ial is around 57 billion tons.is around 57 billion tons.

7 billions can be categorized as 7 billions can be categorized as mineablesmineables reserves.reserves.

The quality of coal varies and mostly consists of low grade coalThe quality of coal varies and mostly consists of low grade coalor lignite (58%), subor lignite (58%), sub--bituminous (27%); bituminous (14%) and a bituminous (27%); bituminous (14%) and a little amount of anthracite.little amount of anthracite.

The low grade coals are characterized by it high moisture The low grade coals are characterized by it high moisture content of 20content of 20--40% and low calorific value of less than 5000 40% and low calorific value of less than 5000 kkalkkal/kg./kg.

COAL RESOURCESCOAL RESOURCES

COAL RESOURCES, RESERVES AND QUALITY

3 % 30 %

39 %

1%

5 %

13 %

6,981.6257,847.74TOTAL

532.80Hypothetic

24,314.96Inferred

20,533.56Indicated

12,466.42Measured

Reserves(Million Ton)

Resources(MillionTon)

Low 26%

Medium 57%

High 16%Very High 1%

Quality Criteria (cal/gr)

Low Rank < 5100Medium Rank 5100 - 6100High Rank 6100 - 7100Very High Rank >7100

CURRENT SITUATION OF COAL INDUSTRYCURRENT SITUATION OF COAL INDUSTRY

Type of License :Type of License :Mining Authorization Holder (MA): 442 Companies; Status in Mining Authorization Holder (MA): 442 Companies; Status in Production Stage : 169 Companies (Central Gov Licenses: 40 Production Stage : 169 Companies (Central Gov Licenses: 40 Companies: Local Government License: 129 Companies). 273 Companies: Local Government License: 129 Companies). 273 companies in general survey and exploration stagescompanies in general survey and exploration stagesCoal Contract of Work (CCoW): 89 Companies, Status in Coal Contract of Work (CCoW): 89 Companies, Status in Production Stage : 24 Companies and the rest in general survey,Production Stage : 24 Companies and the rest in general survey,exploration, feasibility and construction stages.exploration, feasibility and construction stages.

Mining Players:Mining Players:State Own Enterprises : 2 CompaniesState Own Enterprises : 2 CompaniesPrivate National Companies : 65 CompaniesPrivate National Companies : 65 CompaniesForeign Mining Companies : 18 CompaniesForeign Mining Companies : 18 Companies

Total Coal Production in 2005 : 134 Mt, Coal Export 93 MtTotal Coal Production in 2005 : 134 Mt, Coal Export 93 Mt

Total Coal Terminal is 17 with capacity between 5,000 Total Coal Terminal is 17 with capacity between 5,000 –– 200,000 200,000 DWTDWT

Coal Contribution in National Energy Mix is 14,1% in 2003 and abCoal Contribution in National Energy Mix is 14,1% in 2003 and about out 46% for electricity sector46% for electricity sector

COAL EXPORT1. Indonesia coal export have increased from time to

time, over 74.1 million tons in 2002 to be 92.8 million tons in 2005.

2. Indonesia coal markets are mainly in Asia-Pacific

countries. In 2005, around 85 % of its coal exports

went to Asian countries, including around 16 % of

coal exports went to some of ASEAN countries

(Malaysia, Singapore, Thailand and Philippine), and

the rest to European countries, Australia-America and

other countries.

COAL DOMESTIC CONSUMPTION 2005-2025

Consumer 2004 ( R)

2005 2010 2015 2020 2025 Remarks

1. Electricity 23.0 26.2 49.2 74.8 119.2 156.5 Electricity growth 7%

2. Cement 5.5 6.5 10.0 11.00 13.0 17.0

In average 1 ton coal = 6.6. ton cement resulted

3. Metalirgy industryand Pulp peper 1.3 1.5 7.0 10.0 11.0 12.0

4. Small Industries (textile, briectburning roof/llimstone, etc)

0.02 1.0 5.0 7.0 9.0 10.0 Direct Use+ briquette

5. UBC - - 1.7 8.5 17.0 25.5 UBC Product for export

6. Liquefaction - - 2.0 10.8 27.0 37.8

Total 29,82 35.2 74.9 122.1 196.2 258.8

Stage

Type of Enterprises GS EXPL FS CONST PROD Sub Total

Coal Contract of WorkGEN. I (1981-1990) - - - - 10 10 1 11

GEN. II (1994) - 1 1 2 8 12 6 18

GEN. III (1997-2000) 1 22 23 4 10 60 54 114

Total 1 23 24 6 28 82 61 143

Termination Total

STATUS of Coal Contract of Work (CCoW)(As December 2005)

The Major Coal Mine (CCOW) in Indonesia

INDONESIAN COAL PRODUCTIONINDONESIAN COAL PRODUCTIONYEAR 2000YEAR 2000-- 20042004

0.00

20,000.00

40,000.00

60,000.00

80,000.00

100,000.00

120,000.00

140,000.00

Th

ousa

nd

ton

s

2000 2001 2002 2003 2004

MA (STATE OWNED & PRIVATE) CCOW (GEN I, II, III) TOTAL

CURRENT PERFORMANCE OF COAL INDUSTRYCURRENT PERFORMANCE OF COAL INDUSTRYAND FUTURE PROJECTION* AND FUTURE PROJECTION*

9 1537

65

97

128150

2546

93107

121135

150

32

62

132

173

215

260

300

0

50

100

150

200

250

300

350

1994 1998 2004 2008 2012 2016 2020

Year

Mill

Ton

Domestic

Export

Production

Remarks:•Based On NCP and Blueprint Draft of National Development of Energy Industry •Growth Rate of Export < Growth Rate for Domestic use

INDONESIA COAL FLOW

Export

JAVA

KALIMANTAN

SUMATRA

SULAWESI

IRIAN JAYA

Coal Fired Power Plant

Coal Flow

Export

Export

Export

INDONESIAINDONESIA’’S COMPARATIVE ADVANTAGES S COMPARATIVE ADVANTAGES FOR INVESTMENT ON COALFOR INVESTMENT ON COAL

Indonesian Coal is generally environmental friendly; low Indonesian Coal is generally environmental friendly; low ash, low ash, low sulphursulphur

Emerging domestic and International market on coalEmerging domestic and International market on coal

Demographically Demographically -- good for supply to Asia Pacific Regiongood for supply to Asia Pacific Region

At present, Indonesia economically and politically stableAt present, Indonesia economically and politically stable

INVESTMENT OPPORTUNITYINVESTMENT OPPORTUNITY

• Low Rank Coal Development (Upgrading Brown Coal, Coal Liquefaction and Mine Mouth Power Plant) in Central and Southern Part of Sumatra and East Kalimantan

• Development of Integrated Coal Transportation System to link between coal mines and terminals, which are located in the southern part of Sumatra, and the whole area of Kalimantan

• Enhancing Coal Bed Methane and Underground Coal Gasification Technology is very viable to be developed in many coal area

• Joint venture and strategic alliances with existing mining companies on coal mining development

Primary Energy Mix 2025

(Optimization Scenario)

Hydro2.4%

Geothermal3.8%

Biofuel 1.335%

Microhydro 0.216%

Solar 0.020%

Biomass 0.766%

Fuel cell 0.000%

Wind 0.028%

Nuclear 1.993%

Others4.4%

Coal32.7%

Gas30.6%

Oil26.2%

TARGET OF INDONESIAN PRIMARY ENERGY MIX 2025TARGET OF INDONESIAN PRIMARY ENERGY MIX 2025*)*)

Hydro3.4%

Geothermal1.4%

Other NRE0.2%

Oil54.4%

Gas26.5%

Coal14.1%

*) Based on Blueprint Draft of National Development Of Energy Industry, 2005

Coal46.00%

Oil17.50%

Natural gas16.60%

Geothermal5.00%

Hydro7.20%

Primary Energy Mix (2003)

Coal contribution to electricity (2003)

Coal Terminal and Capacity(Max vessel Capacity in DWT)

KALIMANTAN

SULAWESI

IRIAN JAYA

SUMATRA

JAVA

Tarahan 40.000 Pulau Baai 35.000 Kertapati 10.000 Teluk Bayur 35.000

Tanjung Redep* 5.000 Tanjung Bara 200.000 B l o r o* 8.000Loa Tebu* 8.000

Balikpapan 60.000 Tanah Merah 20.000

North Pulau Laut 150.000 IBT – 70.000Sembilang* 7.500Air Tawar* 7.500Banjarmasin* 10.000South Pulau Laut 200.000 S a t u i* 5.000Kelanis* 10.000

* River Terminal

Port and Region Operator Start Max. Vessel Size (DMT)

Throughput Capacity (000 ton)

Total Capacity (Mt)

1. Sumatera

Kertapati PTBA 1962 7,000 400 1.5Tarahan PTBA 1988 40,000 3,100 6Teluk Bayur PTBA 1991 40,000 900 2Pulau Bai Harbour Authority 1985 35,000 2,000 2.3

2. Kalimantan

Tanjung Bara PT KPC 1991 180,000 5,000 15Tanah Merah PT Kideco 1992 60,000 2,600 2.3Pulau Laut Utara PT BTI 1994 150,000 5,000 5.5Balikpapan PT BCT 1995 60,000 5,000 3Tanjung Redep PT Berau Coal 5,000 750 2Beloro PT MHU 8,000 1,350 2,5 - 3,0Loa Tebu PT Tanito Harum 8,000 6,300 1.7Tanjung Pemancingan PT Arutmin 60,000 5,000 -Sembilang PT Arutmin 7,500 1,000 -Air Tawar PT Arutmin 7,500 1,800 -Satui PT Arutmin 5,000 1,500 2Banjarmasin Harbour Authority 5,000 - -Kelanis PT Adaro 8,000 1,700 3.5Bontang PT Indominco 150,000 5,000 7.5

THE EXISTING INDONESIAN COAL TERMINALS

PT Bumi LaksanaPerkasa

(Resource: 521 Mt)CV 5305 kcal/kg

PT Bara Mutiara Prima(Resource 428 MtCV 5312 kcal/kg

PTBA(Resource: 1,340 Mt

CV 4650 kcal/kg)

PT Arutmin Indonesia(Resource: 724 Mt)

CV 5000 kcal/kg

PT Astaka Dodol(Resource: 429 Mt)

CV 5313 kcal/kg

PTBA(Resource:3,750 Mt)

CV 5825 kcal/kg

PT Berau coal(Resouce : 1,130 Mt

CV:5475 kcal/kg

INVESTMENT OPPORTUNITY ON COAL DEVELOPMENTINVESTMENT OPPORTUNITY ON COAL DEVELOPMENT(selected companies suitable for UBC and (selected companies suitable for UBC and LiquafactionLiquafaction Project)Project)

INVESTMENT OPPORTUNITY ONINVESTMENT OPPORTUNITY ONSUMATRA COAL TRANSPORTATION SYSTEMSUMATRA COAL TRANSPORTATION SYSTEM *)*)

Study Area of PKP2B

Scheme of Railway Coal Transportation

*) Based On Integrated Study on South Sumatra CoalTransportation System, IEEJ-DOC, 1998

◎

◎ ◎ ◎

◎

◎

◎Tarahan

Prabumulih

Tanjung Api Api

Tanjung Enim

Lahat

Lubklinggau

Muaran Enim

◎

Increasing Railway CapacityBy Siding

Kertapati

Simpang

305km

411km

400km

New RailwayTo Tanjung Api-api (80 km)

Palembang

Prabumulih

Muara Enim

Baturaja

Bandarlampung

Jambi ProvincePropinsi Sumsel

Bengkulu

Lampung Province

JAKARTA

TgTg. Enim . Enim -- TgTg. . ApiApi--apiapi : ( 250 Km): ( 250 Km)TgTg. . EnimEnim -- MuntokMuntok *)*) : ( 410 Km): ( 410 Km)TgTg. Enim . Enim -- KertapatiKertapati : (180 Km): (180 Km)TgTg. Enim . Enim -- TarahanTarahan *)*) : (420 Km): (420 Km)

KERTAPATI

TJ. ENIM MINE

P. Bangka

Jambi

Tj. Api Api

MuntokCoal Terminal

Lahat

CanalCanal Port

New Railway

TarahanCoal Terminal

INVESTMENT OPPORTUNITY ON INVESTMENT OPPORTUNITY ON SOUTH SUMATRA COAL TRANSPORTATION DEVELOPMENTSOUTH SUMATRA COAL TRANSPORTATION DEVELOPMENT

*) under negotiation between PTBA and Chinese Company

INVESTMENT OPPORTUNITY ON INVESTMENT OPPORTUNITY ON KALIMANTAN COAL TRANSPORTATION KALIMANTAN COAL TRANSPORTATION (RAILWAY AND TERMINAL)*(RAILWAY AND TERMINAL)*

* Based on Coal Transportation Study, IEEJ-DMCE, 2000-2001

• Coal Mines that need railway in 2020: 38 Coal mines of CCOW• Railway coal transportation system will feasible for 2020 to linkage coal deposits and terminals located in northern part

East Kalimantan, Central Kalimantan, and southern part South Kalimantan (Study Results, calculated by LP Model)

Calorific Value

Sulfur Content (adb) Ash Content (adb)

(adb)

MEASURED INDICATED TOTAL

R I A U 800.72 539.91 1340.631. PT BUKIT ASAM (KP) Exploration 800.72 539.91 1340.63 4650 0.27 10

SOUTH SUMATRA 4615.47 4129.7 8897.29

2. PT BUKIT ASAM (KP) Exploration 2141.34 1609.12 3750.37 4700 - 6950 0.33 – 0.90 5.67 – 9.00

3. PT ASTAKA DODOL (PKP2B) Exploration 143.2 286.4 429.6 5241-5388 0.19 - 0.24 6.04-7.60

4. PT BARA MUTIARA PRIMA (PKP2B) Exploration 84.1 344.49 428.59 5162 - 5463 0.42 - 1.38 3.09 - 5.00

5. PT BATURONA ADIMULYA (PKP2B) Exploration 53.59 46. 63 100.22 5.287 0.17 - 2.07 1.6 - 24.3

6. PT PENDOPO ENERGI BATUBARA (PKP2B) Feasibility Study 1500.94 1675.54 3176.48 3740 - 5370 0.1 - 0.5 4.10 - 6.50

7. PT SELOARGO DEDALI (PKP2B) Exploration 51.99 50.37 102.36 4180 - 5250 0.20 - 0.70 3.1 - 20.2

8. PT TRIMATA COAL PERKASA (PKP2B) Feasibility Study 38.54 77.08 115.62 4303 - 5345 0.20 - 2.27 1.28 - 8.36

9. PT TRIMATA BENUA (PKP2B) Feasibility Study 43.35 86.7 130.05 4600 - 5310 0.2 - 0.7 1.5 - 4.0

10. PT TRIARYANI (KP) Exploration 664 664 4650 - 6750 0.31 – 0.92 5.50 – 9.12

EAST KALIMANTAN 104.47 883.57 988.0411. PT DELMA MINING COORPERATION (PKP2B) Exploration 20.28 166.92 187.2 3145 - 4595 0.12 - 1.94 0.99 - 24.02

12. PT INTEREX SACRA RAYA (PKP2B) Feasibility Study 25.57 137.7 163.27 5325 - 7126 0.78 12.38 - 30.0

13. PT PERKASA INAKAKERTA (PKP2B) Construction 58.62 57.55 116.17 5252 - 5880 1.03 – 3.32 1.35 – 9.09

14. PT BUMI LAKSANA PERKASA (PKP2B) Exploration 521.4 521.4 5305 1.45 2.72

CENTRAL KALIMANTAN 134.35 460.09 594.44

15. BHP BILLITON GROUP (7 Companies) (PKP2B)Exploration/Feasibilirty Study 60.7 351 411.7 5030 - 8283 0.30 – 2.59 2.7 – 18.1

16. PT BATUBARA DUARIBU ABADI (PKP2B) Feasibility Study 73.65 109.09 182.74 5242 - 7685 0.19 - 2.74 0.6 - 8.4

17. PT SUPRABARI MAPANINDO M. (PKP2B) Exploration 63.39 56.86 120.25 5021 – 7454 0.36 – 3.11 6.5 – 29.09

TOTAL 5655.01 6013.27 11820.4

RESOURCES (Million Tones)

P R O V I N C E S T A G E

INVESTMENT OPPORTUNITY FOR COAL DEVELOPMENT(List of Companies on Exploration - Construction Stages)

KP : Coal Concession; PKP2B : Coal Contract of Work; BHP Billiton Group: PT Maruwai Coal, PT Lahai Coal, PT Kalteng Coal, PT Ratah Coal, PT Pari Coal, PT Sumber Barito Coal, PT Juloi Coal

Indonesia CBM Resources (TCF)

(Stevens and Hadiyanto, 2004)

CBM ResourcesBasin Province Target

Formation

CompleteableCoal

Thickness

Coal Rank

AvgDepth

High Graded

AreaComplet

ableConcentration

(m) (R0 %) (m) (Km2) (Tcf) (Bcf/mi2)

1 S. Sumatera Sumatera M. Enim 37 0,47 762 7.350 183.0 24.9

2 Barito Kalimantan Wakukin 28 0,45 915 6.330 101.6 16.0

3 Kutei Kalimantan Prangat 21 0,50 915 6.100 80.4 13.2

4 C. Sumatera Sumatera Petani 15 0,40 762 5.150 52.5 10.2

5 N. Tarakan Kalimantan Tabul 15 0,45 701 2.734 17.5 6.4

6 Berau Kalimantan Latih 24 0,45 671 780 8.4 10.8

7 Ombilin Sumatera Sawaht 24 0,80 762 47 0.5 10.7

8 Pasir / Asem Kalimantan Warukin 15 0,45 701 385 3.0 7.9

9 NW Java Java T. Akar 6 0,70 1524 100 0.8 7.6

10 Sulawesi Sulawesi Toraja 6 0,55 610 500 2.0 4.0

11 Bengkulu Sumatera Lemau 12 0,40 610 772 3.6 4.7

Total 30.248 453.3 15.0

PRINCIPLE BASIC OF NEW LAW OF MINERAL AND COAL MINING

One type license or mining permit, no more contract applied between mining company and the government;

Foreign mining company will be taken contract with the State Owned Mining Company;

Simplification of Licensing Permit; Exploration and Exploitation;

Determination of mining areas through bidding and self reservation;

Community development is focused for local people welfare;

CLOSING REMARKSCLOSING REMARKSTo maintain the coal export needs capacity and To maintain the coal export needs capacity and volume, important efforts that should be conducted to volume, important efforts that should be conducted to push the increase of foreign direct investment are:push the increase of foreign direct investment are:–– Improving coal mineable reserveImproving coal mineable reserve–– Utilizing LRCUtilizing LRC–– Developing InfrastructureDeveloping Infrastructure

For the time being Indonesia still need big investment For the time being Indonesia still need big investment to develop the potency on coalto develop the potency on coal

Based on all of have been mentioned above, there are Based on all of have been mentioned above, there are many opportunities for foreign parties to participate the many opportunities for foreign parties to participate the opportunities.opportunities.