PT Adaro Indonesia - Petromindo.Com Alam Tri Abadi 60.23 Indonesia PT Viscaya Investment 28.33 Indonesia PT Dianlia Setyamukti 5.84 Indonesia Indonesia Coal Pty, Ltd 4.67 Australia

Indonesian Coal Book 2006/2007

56

PT Adaro Indonesia

Head Offi ceWorld Trade Centre, 7th FloorJl. Jend. Sudirman Kav. 29-31 Jakarta 12920☎ +62-21-5211265ù +62-21-5211266, 2522310ö [email protected]ø www.adaro-envirocoal.com

Dahai Offi ceDahai, Balangan RegencySouth Kalimantan☎ +62-526-2021997/8ù +62-526-2021996ö [email protected]

Status

Contract Scheme : First Generation PKP2B

Contract Signing : November 16, 1982

Investment Scheme : Domestic Investment (PMDN)

Tenement Status : Production

Production Commencement : 1992

Initial Area : 148,148 hectares (ha)

Retained Area : 35,800 ha

Ownership

Shareholder Share (%) Country of Origin

PT Alam Tri Abadi 60.23 Indonesia

PT Viscaya Investment 28.33 Indonesia

PT Dianlia Setyamukti 5.84 Indonesia

Indonesia Coal Pty, Ltd 4.67 Australia

Mec Indo Coal, B.V. 0.93 Netherlands

Company Offi cer

Name Position

Edwin Soeryadjaya President Commissioner

Theodore P. Rachmat Commissioner

Thomas T. Lembong Commissioner

Ir. Subianto Commissioner

Graham H. Wong Commissioner

Garibaldi Thohir President Director

Ah Hoo Chia Director and Chief Operating Offi cer

Sandiaga S. Uno Director

Bratanata Perdana Director and Chief Financial Offi cer

Ariano Rachmat Director

Soegeng Wibowo Director

Putu Sastrawan General Manager Operations

Susanti Halim General Manager Finance and Accounting

Priyadi General Manager External Relations

Alastair Grant Chief Marketing Offi cer

Adaro, which began mining activities in 1982, commenced commercial production in 1991. The mining activities were initially conducted in the Paringin area but now all production activities are concentrated on the Tutupan mine, the largest single pit coal mine in Indonesia, with total production of about 26 million tons in 2005.

Adaro completed the mandatory divestment program to sell up to 51 percent of its stake to national companies in August 2001. Adaro employs about 7,000 employees, mostly contract workers.

Agreement area

Adaro’s concession area is located near the town of Tanjung, some 230 km from the province’s capital city Banjarmasin, or at the midway between the cities of Balikpapan and Banjarmasin. The two-lane Kalimantan Highway linking the two cities pass by the company’s mining site.

Both Banjarmasin and Balikpapan can be reached by fl ights from Jakarta. International fl ights from Balikpapan to several neighboring countries are also available at present.

PT Adaro has built a number of sealed and unsealed roads to link mining areas within the company’s mining site.

Exploration was initially carried out by a Spanish company Enadimsa. Coal deposits are found in three mining areas including Paringin, Tutupan, and Wara. The mining activities in the Paringin area were

OverviewPT Adaro Indonesia signed a contract with the government, which was represented by state-owned mining fi rm PT Tambang Batubara Bukit Asam (PTBA), on November 16, 1982 to develop a coal mine in the Tanjung district in South Kalimantan province.

Under the contract, PT Adaro is the sole operator of the concession area, which has an operating period until October 2022. The company has the rights for an extension of the contract for another term under a mutual agreement with the government which receives 13.5 percent of the company’s annual production as royalty.

��������������

��������������

��������

Trans ShipmentLocation

Taboneo

��������������

�����������

�����������������

���������������

Wara Mine

Tutupan Mine

Paringin Mine

Mantimin Coal Mining

Bara Pramulya

IBT Export Coal Terminal

Kelanis Barge Loading Facilities

Warukin Mine

Indonesian Coal Book 2006/2007

56

Coal Mining Company

57

commenced in 1991 and continued until 2000, with a peak production level of over 8.5 million tons in 1996. Production activities at the Tutupan area were begun in 1997 with total production of 4.4 million tons a year. The production from this mining area rapidly increased in the following years, reaching over 26 million tons in 2005.

The Wara mining site produced about 500,000 tons during the trial production which was conducted between 1995 and 1998.

The coal deposit in the Tutupan mining area, with strikes of approximately 16 km in length has been extensively mined. The coal seams are generally between 10 to 50 meters in thickness.

Coal reservesThe Adaro coal deposit is located on the north-eastern margin of the Barito Basin, which is up to 250 km wide, of Eocene to Pilocene age and occupies much of the province of Central Kalimantan and the western part of South Kalimantan. It is bounded to the west by the Sunda Shield and to the east by basement rocks which form the Meratus Range.

Eight separate coal deposits are found in the Adaro project area, and although up to 13 seams may be present within a single deposit, correlation of seams between deposits is generally not possible. The seams are lenticular in shape and also vary in thickness due to converging and splitting. Individual seams may be up to 60 meters thick.

The reserves and resources are defined by over 1,000 drillholes, mostly in the Tutupan area, and the details have been confirmed by independent mining consultants. The reserve and resources are all surface mineable with coal quality essentially being consistent over the life of the mine. Reserves are based on open pit mining to a maximum cut off ratio of 4 BCM overburden to 1 tons of coal or 250 m in depth. Further resources definition will be undertaken as required.

Coal reserves and resources (in million tons)

Field Tutupan Paringin NorthTutupan Wara Total

Reserves 474 0 0 846 1,320

Resources 1.021 273 364 168 1,826

Total 1,495 273 364 1,014 3,146

Coal quality

Parameter Unit Tutupan Wara

Calorific Value (adb) kcal/kg 5,900 4,000

Sulphur (adb) % 0.1 0.14

Ash (adb) % 1.2 2.3

Total Moisture (ar) % 26 40

adb: air dried basis; ar: as received

Mining and hauling

Adaro has used open pit mining methods to produce coal since start-up in 1991, with primary waste stripping and coal mining being performed by hydraulic excavators and trucks.

Overburden and interburden are loaded into rear-dump haul trucks and hauled to out-of-pit dumps in or to in-pit dumping at the south end of the Tutupan mine.

Coal is loaded into rear-dump haul trucks and transported from the pit to one of a number of run of mine (ROM) coal stockpile areas adjacent to the pit. Trucking is conducted via a series of footwall, highwall and hanging wall ramps, as well as across in-pit access bridges.

Haul roads are designed with 12 meter high mining benches, although where backhoe excavators are in use, a split bench of 6 meters is used. Approximately 70 percent of the overburden requires blasting prior to excavation.

Four different Indonesian mining contractors are hired by Adaro to carry out mining activities at the Tutupan area. All the contracts are for overburden removal and dumping, coal mining, and transportation of coal to processing and barge loading facility at Kelanis

Coal Mining Company

57

Indonesian Coal Book 2006/2007

58

Indonesian Coal Book 2006/2007

on the Barito River. The contactors include PT Pamapersada Nusantara, PT Rahman Abdijaya, and PT Bukit Makmur Mandiri Utama and PT Sapta Indra Sejati

Coal from the ROM stockpile areas adjacent to the open pit is loaded into a coal haul trains using front end loaders and transported to Adaro’s coal processing and barge loading facility at Kelanis. Each coal haul train consists of a primer mover and up to three 65-ton trailers

Stockpiled coal is recovered by bulldozing into reclaim feeders, which feed onto 2,000-ton per-hour conveyors leading to the barge-loaders. Barges from 6,000 dwt to 14,000 dwt are loaded. From Kelanis the barges are tug-hauled 200 km down the Barito River to the river mouth. From here the coal is transported by barge to either:

-- a transshipment facility 14 km offshore at Taboneo; or

- to the PT Indonesia Bulk Terminal (IBT) facilities, some 250 km to the south-east at Pulau Laut; or

- direct to domestic customers in Indonesia.

The barging is carried out under contract, with 5 year or longer contracts in place with three separate contractors.

Ship loading at TaboneoTransshipment of coal from barge to bulk carriers is carried out at Taboneo anchorage, offshore Banjarmasin. This transshipment is carried out using floating crane barges or self geared vessels. For crane loading, three loading cranes are used, with capacities of between 10,000 tons and 15,000 tons

The haulage to Kelanis is via an 80-km purpose-built private all-weather haul road and is carried out by contractors as part of the mining contracts. This road was built by Adaro and the surface is a chipseal.

Processing and barge loadingAt Kelanis Adaro owns and operates:- a truck receival facility;- a coal processing and stockpiling facility; and- a barge loading facility beside the Barito River.

The truck receival facility has three parallel streams, both of which incorporate screening at 50 mm followed by crushing of oversize coal to a maximum 50 mm sizing. Coal is then either delivered by overhead tripper conveyor to one of two 200,000-ton stockpiles, or fed directly to one of two barge-loaders.

58

Coal Mining Company

59

Coal Mining Company

Production and sales (in million tons)

Year 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005Production 0.95 1.37 2.42 5.55 8.64 9.41 10.93 13.60 15.48 17.71 20.80 22.49 24.40 26.61

Sales Europe 0.80 1.40 2.08 2.81 4.12 4.50 2.93 3.21 3.69 3.83 3.33 4.63 4.57

Asia 0.20 0.18 2.01 2.73 2.62 2.96 6.61 5.78 7.59 8.29 9.76 10.32 11.51

Americas 0.12 0.50 0.64 1.10 1.24 0.96 0.51 0.14 0.16 0.64 1.12 1.47 1.23

Export 0.85 1.12 2.07 4.73 6.64 7.98 8.42 10.05 9.13 11.44 12.76 14.21 16.42 17.31

Indonesia 0.02 0.09 0.44 0.87 1.69 1.64 2.79 3.78 7.19 7.34 8.49 8.87 8.69 8.78

Total 0.87 1.21 2.51 5.60 8.33 9.62 11.21 13.83 16.32 18.78 21.25 23.08 25.11 26.09

per day for each crane. Vessels up to 200,000 dwt can be loaded.

Pulau Laut Coal TerminalAdaro is the major user of the IBT located on the island of Pulau Laut in the south-east of Kalimantan. The IBT coal terminal is a public, common-user facility, which services a number of coal producers in south-eastern Kalimantan. The terminal is located in a sheltered, natural deep water location which allows safe and easy berthing of bulk carriers. The facility includes a barge unloader for coal receival, coal stockpiles, and a shiploader.

Coal product

Adaro’s coal is a thermal coal suitable for power plant consumption or use in industrial markets. The coal has ultra-low ash and ultra-low sulphur and is promoted and marketed under the brand name envirocoal. Despite having a lower energy than most of the competing coals, envirocoal has achieved good market penetration worldwide because of its very low levels of impurities. More than 60 percent of Adaro’s production is exported to countries in Asia, Europe and North America, with the remainder being sold domestically in Indonesia.

Shown are the standard specifications for enviro-coal.

Coal product: Envirocoal

Parameter Unit ValueTotal Moisture (ar) % 26.0

Inherent Moisture (adb) % 14.5

Ash (adb) % 1.2

Volatile Matter (adb) % 43.5

Fixed Carbon (adb) % 40.5

Calorific Value (ar) kcal/kg 5,200

Calorific Value (adb) kcal/kg 5,900

Total Sulphur (ar) % 0.1

HGI 53

adb: air dried basis; ar: as received; HGI: Hardgrove Grindability Index

MarketFor the year of 2006, Adaro has term or annual contracts for over 95 percent of production, with the balance being sold as optional tonnage under contracts or on a spot basis. Long-term contracts for approximately 25 percent of sales are held with the following:

- Carboex in Spain;

- Quezon Power in the Philippines;

- Paiton Energy in East Java; and

- Newmont in West Nusa Tenggara

Compared to other internationally traded thermal coals, envirocoal has very low levels of ash and sulphur. Those low levels have been important in the marketing of envirocoal.

59