APEC CLEAN FOSSIL ENERGY TECHNICAL AND POLICY SEMINAR

Coal Supply and Development In Indonesia

Bambang Setiawan Director of Programme Guidance Directorate General of Mineral Coal and Geothermal Ministry of Energy and Mineral Resources Republic of Indonesia 2006

COAL RESOURCES
At present, it is known that the Indonesia coal resources potential is around 57 billion tons. 7 billions can be categorized as mineables reserves. The quality of coal varies and mostly consists of low grade coal or lignite (58%), sub-bituminous (27%); bituminous (14%) and a little amount of anthracite. The low grade coals are characterized by it high moisture content of 20-40% and low calorific value of less than 5000 kkal/kg.

COAL RESOURCES, RESERVES AND QUALITY

1% 5% 39 % 3% 30 %

13 %

Resources (MillionTon) Measured Indicated Inferred Hypothetic TOTAL 12,466.42

Reserves (Million Ton)

High 16%

Very High 1% Low 26%

Medium 57%
20,533.56 24,314.96 532.80 57,847.74 6,981.62 Quality Low Rank Medium Rank High Rank Very High Rank Criteria (cal/gr) < 5100 5100 - 6100 6100 - 7100 >7100

CURRENT SITUATION OF COAL INDUSTRY

Type of License : Mining Authorization Holder (MA): 442 Companies; Status in Production Stage : 169 Companies (Central Gov Licenses: 40 Companies: Local Government License: 129 Companies). 273 companies in general survey and exploration stages Coal Contract of Work (CCoW): 89 Companies, Status in Production Stage : 24 Companies and the rest in general survey, exploration, feasibility and construction stages. Mining Players: State Own Enterprises : 2 Companies Private National Companies : 65 Companies Foreign Mining Companies : 18 Companies Total Coal Production in 2005 : 134 Mt, Coal Export 93 Mt Total Coal Terminal is 17 with capacity between 5,000 200,000 DWT Coal Contribution in National Energy Mix is 14,1% in 2003 and about 46% for electricity sector

COAL EXPORT
1.

Indonesia coal export have increased from time to time, over 74.1 million tons in 2002 to be 92.8 million tons in 2005. 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.

2.

COAL DOMESTIC CONSUMPTION 2005-2025

Consumer 2004 ( R) 23.0 2005 2010 2015 2020 2025 Remarks Electricity growth 7% In average 1 ton coal = 6.6. ton cement resulted

1. Electricity

26.2

49.2

74.8

119.2

156.5

2. Cement

5.5

6.5

10.0

11.00

13.0

17.0

3. Metalirgy industry and Pulp peper

1.3

1.5

7.0

10.0

11.0

12.0

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

0.02

1.0

5.0

7.0

9.0

10.0

Direct Use+ briquette

5. UBC 6. Liquefaction Total 29,82

35.2

1.7 2.0 74.9

8.5 10.8 122.1

17.0 27.0 196.2

25.5 37.8 258.8

UBC Product for export

STATUS of Coal Contract of Work (CCoW)

(As December 2005)

Stage

Type of Enterprises Coal Contract of Work GEN. I (1981-1990) GEN. II (1994) GEN. III (1997-2000) Total

GS

EXPL

FS

CONST

PROD

Sub Total

Termination

Total

1 1

1 22 23

1 23 24

2 4 6

10 8 10 28

10 12 60 82

1 6 54 61

11 18 114 143

The Major Coal Mine (CCOW) in Indonesia

INDONESIAN COAL PRODUCTION

YEAR 2000- 2004

140,000.00 120,000.00 100,000.00 Thousand tons 80,000.00 60,000.00 40,000.00 20,000.00 0.00 2000 2001 2002 2003
TOTAL

2004

MA (STATE OWNED & PRIVATE)

CCOW (GEN I, II, III)

CURRENT PERFORMANCE OF COAL INDUSTRY AND FUTURE PROJECTION*

350 Domestic 300 250 M ill Ton 200 150 100

62 93 65 37 46 15 132 107 97 300 260 215 173 150 150 121 128 135

Export Production

50
9

25 32

0 1994 1998 2004 2008 Year

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

2012

2016

2020

INDONESIA COAL FLOW

Export

Export

SU M AT

Export

KALIMANTAN

RA

IRIAN JAYA

Export

SULAWESI JAVA

Coal Flow Coal Fired Power Plant

INDONESIAS COMPARATIVE ADVANTAGES FOR INVESTMENT ON COAL

Indonesian Coal is generally environmental friendly; low ash, low sulphur Emerging domestic and International market on coal Demographically - good for supply to Asia Pacific Region At present, Indonesia economically and politically stable

INVESTMENT 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

TARGET OF INDONESIAN PRIMARY ENERGY MIX 2025*)

Coal contribution to electricity (2003)
Hydro 7.20% Geothermal 5.00% Oil 17.50%

Primary Energy Mix 2025 (Optimization Scenario)

Microhydro 0.216%

Natural gas 16.60%

Coal
32.7% Hydro 2.4% Geothermal 3.8% Others 4.4%

Biofuel 1.335% Solar 0.020% Wind 0.028% Fuel cell 0.000% Biomass 0.766%

Coal 46.00%

Primary Energy Mix (2003)

Coal 14.1% Gas 26.5% Hydro 3.4% Geothermal 1.4% Other NRE 0.2%

Gas
30.6% Nuclear 1.993%

Oil
26.2%

Oil 54.4%

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

Coal Terminal and Capacity

(Max vessel Capacity in DWT)
Tanjung Redep* 5.000 Tanjung Bara 200.000 B l o r o* 8.000 Loa Tebu* 8.000 Balikpapan 60.000 Tanah Merah 20.000

Tarahan 40.000 Pulau Baai 35.000 Kertapati 10.000 Teluk Bayur 35.000

* River Terminal

M SU R AT A
IRIAN JAYA
KALIMANTAN

SULAWESI JAVA

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

THE EXISTING INDONESIAN COAL TERMINALS

Port and Region 1. Sumatera Kertapati Tarahan Teluk Bayur Pulau Bai 2. Kalimantan Tanjung Bara Tanah Merah Pulau Laut Utara Balikpapan Tanjung Redep Beloro Loa Tebu Tanjung Pemancingan Sembilang Air Tawar Satui Banjarmasin Kelanis Bontang PT KPC PT Kideco PT BTI PT BCT PT Berau Coal PT MHU PT Tanito Harum PT Arutmin PT Arutmin PT Arutmin PT Arutmin Harbour Authority PT Adaro PT Indominco 1991 1992 1994 1995 180,000 60,000 150,000 60,000 5,000 8,000 8,000 60,000 7,500 7,500 5,000 5,000 8,000 150,000 5,000 2,600 5,000 5,000 750 1,350 6,300 5,000 1,000 1,800 1,500 1,700 5,000 15 2.3 5.5 3 2 2,5 - 3,0 1.7 2 3.5 7.5 PTBA PTBA PTBA Harbour Authority 1962 1988 1991 1985 7,000 40,000 40,000 35,000 400 3,100 900 2,000 1.5 6 2 2.3 Operator Start Max. Vessel Size (DMT) Throughput Capacity (000 ton) Total Capacity (Mt)

INVESTMENT OPPORTUNITY ON COAL DEVELOPMENT

(selected companies suitable for UBC and Liquafaction Project)
PTBA (Resource: 1,340 Mt CV 4650 kcal/kg) PT Bumi Laksana Perkasa (Resource: 521 Mt) CV 5305 kcal/kg PT Arutmin Indonesia (Resource: 724 Mt) CV 5000 kcal/kg PT Berau coal (Resouce : 1,130 Mt CV:5475 kcal/kg

PTBA (Resource:3,750 Mt) CV 5825 kcal/kg

PT Astaka Dodol (Resource: 429 Mt) CV 5313 kcal/kg

PT Bara Mutiara Prima (Resource 428 Mt CV 5312 kcal/kg

INVESTMENT OPPORTUNITY ON SUMATRA COAL TRANSPORTATION SYSTEM *)

Scheme of Railway Coal Transportation
Tanjung Api Api

New Railway To Tanjung Api-api (80 km)

Lubklinggau

305km

Muaran Enim

Kertapati

Simpang

Lahat

Prabumulih Increasing Railway Capacity By Siding

Study Area of PKP2B

Tanjung Enim
400km

411km

Tarahan

*) Based On Integrated Study on South Sumatra Coal

Transportation System, IEEJ-DOC, 1998

INVESTMENT OPPORTUNITY ON SOUTH SUMATRA COAL TRANSPORTATION DEVELOPMENT

Jambi Jambi Province
Muntok Coal Terminal

Propinsi Sumsel
Tj. Api Api

P. Bangka

Canal Port Canal Palembang New Railway

KERTAPATI
Prabumulih

Muara Enim

Bengkulu

Lahat

TJ. ENIM MINE

Baturaja

Lampung Province Tarahan Coal Terminal Tg. Enim - Tg. Api-api Tg. Tg. ApiTg. Enim - Muntok *) Tg. Tg. Enim - Kertapati Tg. Tg. Enim - Tarahan *) Tg. : ( 250 Km) : ( 410 Km) : (180 Km) : (420 Km)
Bandarlampung

JAKARTA

*) under negotiation between PTBA and Chinese Company

INVESTMENT OPPORTUNITY ON KALIMANTAN COAL TRANSPORTATION (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)

INVESTMENT OPPORTUNITY FOR COAL DEVELOPMENT

(List of Companies on Exploration - Construction Stages)
RESOURCES (Million Tones) Calorific Value (adb) MEASURED INDICATE D TOTAL Sulfur Content (adb) Ash Content (adb)

PROVINCE

STAGE

RIAU
1. PT BUKIT ASAM (KP) Exploration

800.72
800.72

539.91
539.91

1340.63
1340.63 4650 0.27 10

SOUTH SUMATRA
2. PT BUKIT ASAM (KP) 3. PT ASTAKA DODOL (PKP2B) 4. PT BARA MUTIARA PRIMA (PKP2B) 5. PT BATURONA ADIMULYA (PKP2B) 6. PT PENDOPO ENERGI BATUBARA (PKP2B) 7. PT SELOARGO DEDALI (PKP2B) 8. PT TRIMATA COAL PERKASA (PKP2B) 9. PT TRIMATA BENUA (PKP2B) 10. PT TRIARYANI (KP) Exploration Exploration Exploration Exploration Feasibility Study Exploration Feasibility Study Feasibility Study Exploration

4615.47
2141.34 143.2 84.1 53.59 1500.94 51.99 38.54 43.35 664

4129.7
1609.12 286.4 344.49 46. 63 1675.54 50.37 77.08 86.7

8897.29
3750.37 429.6 428.59 100.22 3176.48 102.36 115.62 130.05 664 4700 - 6950 5241-5388 5162 - 5463 5.287 3740 - 5370 4180 - 5250 4303 - 5345 4600 - 5310 4650 - 6750 0.33 0.90 0.19 - 0.24 0.42 - 1.38 0.17 - 2.07 0.1 - 0.5 0.20 - 0.70 0.20 - 2.27 0.2 - 0.7 0.31 0.92 5.67 9.00 6.04-7.60 3.09 - 5.00 1.6 - 24.3 4.10 - 6.50 3.1 - 20.2 1.28 - 8.36 1.5 - 4.0 5.50 9.12

EAST KALIMANTAN
11. PT DELMA MINING COORPERATION (PKP2B) 12. PT INTEREX SACRA RAYA (PKP2B) 13. PT PERKASA INAKAKERTA (PKP2B) 14. PT BUMI LAKSANA PERKASA (PKP2B) Exploration Feasibility Study Construction Exploration

104.47
20.28 25.57 58.62

883.57
166.92 137.7 57.55 521.4

988.04
187.2 163.27 116.17 521.4 594.44 411.7 182.74 120.25 5030 - 8283 5242 - 7685 5021 7454 0.30 2.59 0.19 - 2.74 0.36 3.11 2.7 18.1 0.6 - 8.4 6.5 29.09 3145 - 4595 5325 - 7126 5252 - 5880 5305 0.12 - 1.94 0.78 1.03 3.32 1.45 0.99 - 24.02 12.38 - 30.0 1.35 9.09 2.72

CENTRAL KALIMANTAN
15. BHP BILLITON GROUP (7 Companies) (PKP2B) 16. PT BATUBARA DUARIBU ABADI (PKP2B) 17. PT SUPRABARI MAPANINDO M. (PKP2B) Exploration/Fea sibilirty Study Feasibility Study Exploration

134.35 60.7 73.65 63.39

460.09 351 109.09 56.86

TOTAL

5655.01

6013.27

11820.4

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)

Completeable Coal Thickness High Graded Area CBM Resources Complet able Concen tration

Basin

Province

Target Formation

Coal Rank

Avg Depth

(m)
1 2 3 4 5 6 7 8 9 10 11 S. Sumatera Barito Kutei C. Sumatera N. Tarakan Berau Ombilin Pasir / Asem NW Java Sulawesi Bengkulu Total Sumatera Kalimantan Kalimantan Sumatera Kalimantan Kalimantan Sumatera Kalimantan Java Sulawesi Sumatera M. Enim Wakukin Prangat Petani Tabul Latih Sawaht Warukin T. Akar Toraja Lemau 37 28 21 15 15 24 24 15 6 6 12

(R0 %)
0,47 0,45 0,50 0,40 0,45 0,45 0,80 0,45 0,70 0,55 0,40

(m)
762 915 915 762 701 671 762 701 1524 610 610

(Km2)
7.350 6.330 6.100 5.150 2.734 780 47 385 100 500 772 30.248

(Tcf)
183.0 101.6 80.4 52.5 17.5 8.4 0.5 3.0 0.8 2.0 3.6 453.3

(Bcf/mi2)
24.9 16.0 13.2 10.2 6.4 10.8 10.7 7.9 7.6 4.0 4.7 15.0

(Stevens and Hadiyanto, 2004)

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 REMARKS
To maintain the coal export needs capacity and volume, important efforts that should be conducted to push the increase of foreign direct investment are: Improving coal mineable reserve Utilizing LRC Developing Infrastructure For the time being Indonesia still need big investment to develop the potency on coal Based on all of have been mentioned above, there are many opportunities for foreign parties to participate the opportunities.