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BY : BOB KAMANDANU

CHAIRMAN OF INDONESIAN COAL MINING ASSOCIATION (ICMA)

INDONESIAN COAL MINING OUTLOOK

Presented at the IEA workshop COAL MARKETS OUTLOOK , 14 April 2011

ORIENTAL BAY INTERNATIONAL HOTEL, BEIJING, P.R. CHINA

Reserves : 21,13 b. tLignite : 29 %Subituminous : 60 %Bituminous : 11 %

11.23b.tSUMATRA

Resources : 104,842 b. tLignite : 20 %Subituminous : 66 %Bituminous : 14 %

52.53 b.t

b.t : billion tons

0.01 b.t

51.92b.t

0.23 b.t 0.002 b.t0.15 b.t

9.90b.t

Source: Bada n Geology/Geological Agency,2009

INDONESIAN COAL MAP RESOURCES AND RESERVES

Source: Geological Agency, 2010, and other sources

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Source : Indonesian Coal Book,2008/2009, ICMA, July 2008

DISTRIBUTION OF INDONESIAN COAL RESOURCES

REPORTED IN 2007

8%

48%

1 %

10%

32%

SUMATRA

JAVA

KALIMANTAN

BALI

SULAWESI

MALUKU

PAPUA

Distribution of Coal Resources Potential

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0.00

10,000.00

20,000.00

30,000.00

40,000.00

50,000.00

60,000.00

70,000.00

Low < 5100 Medium ( 5100 - 6 100 ) High ( 6100 - 7100 ) Very high > 7100

21,183.05 M ton

( 20.22 % )

69,550.65 M ton

( 66.39 % )

13,021.50 M ton

( 12.43 % )

1,001.64 M ton

( 0.96 % )

Low < 5100

Medium ( 5100 - 6100 )

High ( 6100 - 7100 )

Very high > 7100

INDONESIAN COAL RESOURCE STATUS - 2009

By Calorific Value ( adb )

Source : Indonesian GeologicalAgency

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PRODUCTION, EXPORT AND DOMESTICSALES AND FUTURE FORECASTS

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INDONESIAS THERMAL COAL PRODUCTION, EXPORT AND

DOMESTIC SALES

Coal production increased by 14.8 %,from 283 milliontons in 2009 to be around 325 million tons by 2010, and

in 2011 is predicted to be around 335 to 350 million

tons.

Export increased by 15.22 %, i.e. from 230 million tons to bearound 265 million tons by 2010; and in 2011 is predicted

to be around 270 to 285million tons.

Domestic sales increased about 13.21 %, i.e. from 53 millionton to be around 60 million tons by 2010. In 2011 the

domestic sales is predicted to be around 63 to 69 million tons.

China, India, Japan, South Korea, and Taiwan are the maincountries of destination of Indonesian coal export. Almost 72 %

of the coal production are exported, while the rest are sold

domestically;

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46.254.1

62.1

72.979.3

90.7

102.6

121.04

130.86

152.86

190.48

221.1

240

283

325

35.540.9

46.753.9 57.2

63.4

73.4

85.393.76

110.79

144.94

158.6

191

230

265

10.9 13.215.4 19

22.127.3 29.2

35.74 37.141.3

45.54

62.5

4953

60

0

50

100

150

200

250

300

350

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

ProductionExportDomestic

INDONESIAN COAL PRODUCTION, EXPORT AND DOMESTIC SALES

(1996-2010)

Production Growth : 14,8 % per year

Export Growth : 15,12 % per year

Domestic Sales Growth : 13.8%per year

LRC Production in 2009 was about 5,8 % of the

total production, and increased to about 8,7 % by

2010 %.

Miliontons

INDONESIAN COAL EXPORT BY MAIN DESTINATION COUNTRIES

0.00

5,000.00

10,000.00

15,000.00

20,000.00

25,000.00

30,000.00

35,000.00

40,000.00

45,000.00

2004 2005 2006 2007 2008 2009 2010*

Japan

India

Korea, Republic of

Taiwan

China

Thousandt

ons

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Country of

Destination 2004 2005 2006 2007 2008 2009 2010*

Shares

(%)

India 10,674.1 16,255.4 20,742.4 25,179.1 26,327.5 39,109.0 43,432.4 16.70

China 1,473.1 2,503.2 6,656.5 14,122.3 15,673.7 38,657.6 42,931.1 16.51

Korea, Republic of 11,669.3 14,376.6 21,314.1 27,371.5 26,286.8 33,418.3 37,112.3 14.27

Japan 22,612.1 27,312.8 35,295.7 35,198.5 36,259.8 32,217.7 35,779.3 13.76

Taiwan 17,765.5 17,895.8 26,723.8 24,863.1 24,669.4 24,723.4 27,456.5 10.56

Malaysia 6,112.8 7,399.8 8,782.6 9,376.5 11,104.3 12,483.3 13,863.3 5.33

Thailand 4,787.2 6,404.5 8,475.1 11,963.2 12,822.8 11,229.5 12,470.9 4.80

Hongkong 7,367.3 9,408.6 10,985.2 11,235.5 10,497.1 10,714,2 11,898.6 4.58

Philippines 3,603.1 3,906.1 5,818.2 6,023.5 6,338.0 7,517.9 8,349.0 3.21

Italy 5,198.1 6,285.5 7,637.8 6,193.8 5,592.8 5,796.9 6,437.7 2.48

Spain 2,775.7 3,317.0 4,444.9 4,308.6 4,387.4 4,808.3 5,339.8 2.05

Netherlands 1,105.7 2,138.7 5,690.9 1,266.9 3,740.7 3,384.8 3,759.0 1.44

United States 1,959.9 2,050.3 3,740.8 4,557.7 3,993.8 2,081.5 2,312.0 0.90

Others 8,526.0 9,789.8 17,701.0 14,125.7 13,327.6 7,976.3 8,858.1 3.41

TOTAL 105,629.9 129,044.1 184,009.0 195,785.9 201,021.7 234,118.7 260,000.0 100.00

INDONESIAN COAL EXPORT BY DESTINATION COUNTRIES(Million Tons)

Source : Statistical Yearbook of Indonesia, 2009, BPS Statistics of IndonesiaNote : * Estimation

10

190.48

221.1240

283

325

398

414

560

144.94 158.6

191

230 265

250 240 260

45.5462.5 49 53

60

148

184

300*

0

100

200

300

400

500

600

2006 2007 2008 2009 2010 2015 2020 2025

Production Export Domestic

Realization

THE DEVELOPMENT OF COAL PRODUCTION, EXPORT AND DOMESTICSALES, AND ESTIMATION UP TO 2025

(based on the existing infrastructure capability)

Prediction

Note :

*Calculated based on Government t arget on Primary Energy Mix ( Pres. Decree No.5 /2006 )

Milliontons

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FACTS:

Increasing pressure on conservation of Indonesian coal

Numbers of Mining Permits (IUP) issued: 4000 to 5000 permits; companies in

operation: 300 to 400 companies

Increasing number of small mining companies without Good Mining Practices, Proper

CSR Practices, and Good Corporate Governance, hence industry images deteriorates.

Low infrastructure capacity

New regulations tend to limit agressive expansion of coal mining activities, andcampaigning more local/domestic consumption.

There is more Low Rank Coal available than High Quality Coal

Indonesia is rich of other mineral as well (Nickel, Iron Ore, Manganese, Bauxite,

Aluminium, Copper, Gold, etc,)

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KEYS TO FUTURE DEVELOPMENT OF INDONESIAN COAL MININGINDUSTRY

ADDRESSING THE CHALLENGES:

Development must be expanded to be beyond conventional produce and sell ofthermal coal.

Investing in infrastructure (railways, hauling roads, etc.)

Continuing exploration

Investing in coal minings with sizeable operations by consolidating small IUPs

(permits) to become at least 5,000 ha.

Investing in Coal Upgrading (UBC, Lignite to semi-soft coking coal, CWM, etc.), Coal

Conversion (CTL, Coal Gasification, etc.) technologies as well as CBF (Coal BlendingFacilities)

Relocating mineral precessing industries such as Nickel, Manganese, iron ore

smelterings, or even further to steel making closer to source of energy (coal and

natural gas) by way of mine-mouth power plants (cheaper energy).

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KEYS TO FUTURE DEVELOPMENT OF INDONESIAN COAL MININGINDUSTRY

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Thank You

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E-mail: apbi-icma@indo.net.idMenara Kuningan Building, 1st Floor Suite A

Jl. H. R. Rasuna Said Blok X-7 Kav.5Jakarta 12940 - INDONESIA

Phone/Fax : 021-30015935, 30015936, 30015674Website : www.apbi-icma.com