Daily News Update Page 1

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Four Substances in the Latest Minerba Law Empat Substansi Dalam UU Minerba Terbaru Next year, Vale Indonesia Allocates 'Capex' of US$ 130 Million Tahun Depan, Vale Indonesia Alokasikan 'Capex' US$ 130 Juta Working on Smelters, MIND ID Collaborates with a Company from the United Arab Emirates Garap Smelter, MIND ID Gandeng Perusahaan Asal Uni Emirat Arab The Indonesian Metallurgical Professional Association (APMI) was formed Asosiasi Profesi Metalurgi Indonesia (APMI) dibentuk Take Care of the Environment, Adaro Wins Gold Proper 2020 Jaga Lingkungan, Adaro Raih Proper Emas 2020 In 2024, the government targets 13 million tons of coal for gasification Tahun 2024, Pemerintah Targetkan Batubara Untuk Gasifikasi Sebesar 13 Juta Ton IEEFA Update: Coking coal’s decline likely to follow the path of thermal coal’s progressive demise Production at Las Bambas hit by road blockades Canadian Government stops gold mine sale to China's Shandong Gold Mining China's own goal on Australian coal ban gives traders a massive free kick

Tempo Investor Daily Bisnis Kontan Bisnis Dunia Tambang IEEFA Mining.com Kitco News The Sydney Morning Herald

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Daily News Update Page 2

Four Substances in the Latest

Minerba Law

THE GOVERNMENT hopes that Law No. 3

of 2020 concerning Amendments to Law

no. 4 of 2009 has a positive impact on economic growth and employment in

Indonesia. The presence of this regulation on mineral and coal mining is the answer

to the various challenges that have occurred in mining governance so far.

In general, there are four main substances in this latest Minerba Law. First, relating to

efforts to improve national mining governance. Second, related to the aspect

of siding with the national interest, marked by the obligation to divest 51 percent of

foreign investment which confirms the country's sovereignty over its natural

resources.

Third, this regulation regulates legal

certainty and ease of investment, which are a pillar in improving the economy. Finally,

providing better environmental manage-ment in the management of mining

businesses. This section emphasizes sanctions for mining business actors who

do not carry out their environmental management obligations.

This is indicated by the existence of arrangements for reclamation and post-

mining obligations to a 100 percent success rate which was previously difficult

to enforce. There are also arrangements regarding the balance between the

fulfillment of land that has been cleared with land that has been reclaimed, as well

as arrangements for special criminal sanctions for parties who do not carry out

reclamation and post-mining obligations.

Empat Substansi Dalam UU

Minerba Terbaru

PEMERINTAH berharap kehadiran Undang-Undang No. 3 Tahun 2020 tentang Perubahan atas UU No. 4 Tahun 2009 memberi dampak positif untuk pertum-buhan ekonomi dan penyerapan tenaga kerja di Indonesia. Kehadiran beleid tentang pertambangan mineral dan batu bara ini menjadi jawaban dari berbagai tantangan yang terjadi pada tata kelola pertambangan selama ini.

Secara umum ada empat substansi pokok dalam UU Minerba terbaru ini. Pertama, berkaitan dengan upaya perbaikan tata kelola pertambangan nasional. Kedua , berkaitan dengan aspek keberpihakan terhadap kepentingan nasional, ditandai dengan kewajiban divestasi 51 persen untuk investasi asing yang menegaskan kedaulatan negara atas sumber daya alamnya.

Ketiga, beleid ini mengatur kepastian hukum dan kemudahan berinvestasi yang merupa-

kan satu pilar dalam perbaikan ekonomi. Terakhir, menghadirkan pengelolaan ling-

kungan hidup yang lebih baik dalam pengelolaan usaha pertambangan. Bagian ini

menegaskan sanksi bagi para pelaku usaha pertambangan yang tidak melaksanakan

kewajiban pengelolaan lingkungan.

Ini ditandai dengan adanya pengaturan

kewajiban reklamasi dan pascatambang hingga tingkat keberhasilan 100 persen yang

sebelumnya sulit ditegakkan. Ada pula pengaturan tentang keseimbangan antara

pemenuhan lahan yang sudah dibuka dengan lahan yang sudah direklamasi, serta

pengaturan sanksi pidana khusus bagi pihak yang tidak melakukan kewajiban reklamasi

dan pasca tambang.

Daily News Update Page 3

Currently, the government is preparing three Draft Government Regulations

(RPPs) as implementing regulations for the Minerba Law. First, the RPP concerning the

Implementation of Mineral and Coal Mining Business Activities, the second is

the RPP on Mining Areas, and finally the RPP concerning Guidance and Supervision

as well as Reclamation and Post-mining.

In parallel with the preparation of the Government Regulation, the Ministry of

Energy and Mineral Resources (ESDM) is preparing a Draft Presidential Regulation

on the Delegation of the Authority for Granting Licensing in the Mineral and Coal

Mining Sector to the Provincial Govern-ment. This regulation serves as the legal

umbrella for the implementation of the delegation of authority regulated in the

Minerba Law.

The government also continues efforts to

increase added value through down-streaming. As of December, 18 units of

mineral processing and refining facilities or smelters have been completed, leaving

30 more units under construction. Of the 18 smelters that have been operating, 12

are nickel, two are bauxite and copper and one is iron and manganese.

In the development plan, by 2024 Indonesia is expected to have 31 nickel

smelters, 11 bauxite smelters, four copper and iron smelters and two manganese, lead

and zinc smelters.

The presence of all these smelters will support the development of the down-

stream industry and further increase state revenues in the future. For this reason,

intensive escort efforts are carried out to ensure that development targets can be

achieved. (*)

Saat ini pemerintah sedang menyusun tiga Rancangan Peraturan Pemerintah (RPP) sebagai peraturan pelaksanaan UU Minerba. Pertama, RPP tentang Pelak-sanaan Kegiatan Usaha Pertambangan Mineral dan Batubara, kedua RPP tentang Wilayah Pertambangan,dan terakhir yakni RPP tentang Pembinaan dan Pengawasan serta Reklamasi dan Pasca tambang.

Pararel dengan penyiapan Peraturan Pemerintah, Kementerian Energi dan Sumber Daya Mineral (ESDM) sedang me-nyiapkan Rancangan Peraturan Presiden tentang Pendelegasian Kewenangan Pemberian Perizinan di Bidang Pertam-bangan Mineral dan Batubara kepada Pemerintah Provinsi. Regulasi ini sebagai payung hukum pelaksanaan pendelegasian kewenang an yang diatur dalam UU Minerba.

Pemerintah juga terus melanjutkan upaya peningkatan nilai tambah lewat hilirisasi. Hingga Desember ini, telah selesai dibangun fasilitas pengolahan dan pemurnian mineral atau smelter sebanyak 18 unit, menyisakan 30 unit lagi masih dalam proses pembangunan. Dari 18 smelter yang telah beroperasi, sebanyak 12 unit untuk komoditas nikel, dua unit untuk bauksit dan tembaga serta satu unit untuk besi dan mangan.

Dalam rencana pengembangan, hingga 2024 mendatang Indonesia diharapkan dapat memiliki 31 unit smelter nikel, 11 unit smelter bauksit, empat unit smelter komoditas tembaga dan besi serta dua unit smelter mangan, timbal dan seng.

Kehadiran seluruh smelter ini akan mendukung pengembangan industri hilir dan meningkatkan penerimaan negara lebih jauh di masa depan. Untuk itu, upaya pengawalan secara intensif terus dilakukan untuk memastikan target pembangunan dapat tercapai. (*)

Daily News Update Page 4

Next year, Vale Indonesia Allocates 'Capex' of US$130

Million Gita Rossiana

PT VALE Indonesia Tbk (INCO) allocates capital expenditure (capex) of US$ 130 million in 2021. This allocation is higher than the 2020 projection of US$ 120 million.

Vale Indonesia Finance Director Bernadus Irmanto said the capex in 2021 will be used for rebuilding furnace 4 and rejuvenating heavy mining equipment as well as mine development. "Funds for capital spending in 2021 will come from internal cash," he explained to Investor Daily, Tuesday (22/12).

With this capital expenditure, Irmanto hopes to support next year's performance. Although from the production side it will decline because one furnace will stop operating for approximately 5 months. "Hopefully nickel prices stil l show an improving trend so that they can compensate for the decline in production," he said.

Meanwhile, until the third quarter of 2020, Vale Indonesia posted a profit before tax of US$ 32.2 million, an increase of 53% compared to the second quarter of 2020 which reached US$ 21.1 million. Meanwhile, net profit and EBITDA for the same period were US$ 23.5 million and US$ 84.7 million, respectively.

President Director and CEO of Vale Indonesia Nico Kanter said the increase in EBITDA was driven by a higher average nickel price. The actual nickel price in the third quarter of 2020 was recorded to have increased by 13% compared to the price in the second quarter of 2020.

Tahun Depan, Vale Indonesia Alokasikan 'Capex' US$130

Juta Gita Rossiana

PT VALE Indonesia Tbk (INCO) meng-alokasikan belanja modal (capital expenditure/ capex) sebesar US$ 130 juta pada 2021. Alokasi ini lebih tinggi dibandingkan proyeksi 2020 yang mencapai US$ 120 juta.

Direktur Keuangan Vale Indonesia Bernadus Irmanto mengatakan, belanja modal pada 2021 akan digunakan untuk pembangunan kembali furnace 4 dan peremajaan alat berat tambang serta pengembangan tambang. "Dana untuk belanja modal pada 2021 akan bersumber dari kas internal," jelas dia kepada Investor Daily, Selasa (22/12).

Dengan adanya belanja modal tersebut, Irmanto berharap bisa mendukung kinerja tahun depan. Meski dari sisi produksi akan mengalami penurunan karena satu furnace akan berhenti beroperasi selama kurang lebih 5 bulan. "Mudah-mudahan harga nikel masih menunjukkan tren membaik sehingga bisa mengkompensasi penurunan produksi," ujar dia.

Sementara hingga kuartal III-2020, Vale Indonesia membukukan laba sebelum pajak sebesar US$32,2 juta, meningkat 53% diban-dingkan kuartal II-2020 yang mencapai US$ 21,1 juta. Sedangkan laba bersih dan EBITDA pada periode yang sama masing-masing sebesar US$ 23,5 juta dan US$ 84,7 juta.

Presiden Direktur dan CEO Vale Indonesia Nico Kanter mengatakan, peningkatan EBITDA didorong oleh harga realisasi rata-rata nikel yang lebih tinggi. Harga realisasi nikel pada kuartal III-2020 tercatat me-ningkat 13% dibandingkan harga pada kuartal II-2020.

Daily News Update Page 5

On the shipping side, the company can ship 19,954 metric tons (mt) of nickel in the third quarter of 2020. Then the cost of revenue in the third quarter of 2020 increased by 0.4% compared to the second quarter of 2020.

"Our operations in the third quarter of 2020 were better despite the pandemic situation. We also produced higher production volumes and the cost of revenue was manageable, at the same time, we also benefited from the increase in nickel prices," explained Nico.

Then on the cash side, on September 30, 2020, it was recorded at US$ 361.4 million, up from the period of June 30, 2020 which reached US$ 72.7 million. This increase in cash was driven by higher receipts from customers.

As for the first half of next year, Vale Indonesia targets to meet all the require-ments for the Pomalaa smelter project in Southeast Sulawesi and Bahodopi in Central Sulawesi. The company estimates that the investment for the two smelter projects is around US$ 4 billion.

Irmanto said, for the smelter project in Pomalaa, the company is in the process of completing a final investment decision (FDI). Then, the company is also having the same views and meeting the requirements of strategic partners involved in the Pomalaa project.

According to Irmanto, so far the company has not experienced significant obstacles in fulfilling the requirements and obtaining permits. The government, especially from the Investment Coordinating Board (BKPM) is also very helpful in fulfilling these requirements. "All requirements are expected to be met in the first half of next year so that in the third quarter of 2021, investment decisions (FDI) can be made," he said.

Di sisi pengiriman, perseroan bisa mengirim 19.954 metrik ton (mt) nikel pada kuartal III-2020. Kemudian beban pokok penda-patan pada kuartal III-2020 meningkat 0,4% dibandingkan kuartal II-2020.

"Operasi kami pada kuartal ketiga tahun 2020 lebih baik meskipun dalam situasi pandemi. Kami juga menghasilkan volume produksi yang lebih tinggi dan beban pokok pendapatan bisa dikendalikan, di saat yang bersamaan, kami juga diuntungkan dari kenaikan harga nikel," jelas Nico.

Kemudian di sisi kas, pada 30 September 2020 tercatat sebesar US$ 361,4 juta, naik dari periode 30 Juni 2020 yang mencapai US$ 72,7 juta. Peningkatan kas ini didorong oleh penerimaan yang lebih tinggi dari para pelanggan.

Adapun pada semester pertama tahun depan, Vale Indonesia menargetkan bisa memenuhi semua persyaratan untuk proyek smelter Pomalaa di Sulawesi Tenggara dan Bahodopi di Sulawesi Tengah. Perseroan memperkirakan investasi untuk kedua proyek smelter tersebut sekitar US$ 4 miliar.

Irmanto mengatakan, untuk proyek smelter di Pomalaa, perseroan sedang dalam mem-proses untuk menyelesaikan final investment decision (FDI). Kemudian, perseroan juga sedang menyamakan pandangan dan memenuhi persyaratan dari mitra strategis yang terlibat dalam proyek Pomalaa.

Menurut Irmanto, sejauh ini perseroan tidak mengalami kendala berarti dalam me-menuhi persyaratan dan juga memperoleh perizinan. Pemerintah, terutama dari pihak Badan Koordinasi Penanaman Modal (BKPM) juga sangat membantu dalam memenuhi persyaratan tersebut. "Semua persyaratan diharapkan sudah bisa dipenuhi pada semester pertama tahun depan sehingga pada kuartal III-2021, keputusan investasi (FDI) bisa diambil," kata dia.

Daily News Update Page 6

As for the smelter project in Pomalaa, the company is partnering with Sumitomo Metal Mining. Bernadus estimates that the smelter project in the Southeast Sulawesi region will use around US$ 2.5 billion in funds.

Furthermore, for the smelter project in Bahodopi, the company is also preparing requirements for a final investment decision. The company is also processing permits which is slightly behind the Pomalaa project. In addition, there was a Covid-19 pandemic which disrupted the process.

However, the company hopes to complete all requirements and permits in the first semester of next year. The company has also found strategic partners to carry out the project, namely investors from China. However, the company cannot mention the name of the partner from China because there is a confidentiality agreement agreed between the two parties. For investment, the value will reach around US$ 1.5 billion. However, the amount will be adjusted after all technical studies are completed. Editor:

Jauhari Mahardhika

Adapun untuk proyek smelter di Pomalaa, perseroan menggandeng Sumitomo Metal

Mining. Bernadus memperkirakan proyek smelter di kawasan Sulawesi Tenggara ini

akan menggunakan dana sekitar US$ 2,5 miliar.

Lebih lanjut, untuk proyek smelter di

Bahodopi, perseroan juga tengah memper-siapkan persyaratan untuk keputusan final

investasi. Perseroan juga sedang memproses perizinan yang sedikit tertinggal dari proyek

Pomalaa. Ditambah pula, ada pandemi Covid-19 yang menganggu proses tersebut.

Namun, perseroan berharap bisa menye-

lesaikan semua persyaratan dan perizinan pada semester satu tahun depan. Perseroan

juga telah menemukan mitra strategis untuk menjalankan proyek, yakni investor dari

Tiongkok. Akan tetapi, perseroan belum bisa menyebutkan nama mitra dari negara

Tiongkok tersebut karena ada confidentiality agreement yang disepakati di antara kedua

pihak. Untuk investasi, nilainya akan men-capai sekitar US$ 1,5 miliar. Namun jumlah-

nya akan disesuaikan setelah semua studi teknis selesai. Editor : Jauhari Mahardhika

Working on Smelters, MIND ID Collaborates with a Company

from the United Arab Emirates Finna U. Ulfah

THE STATE-owned company, PT

Indonesia Asahan Aluminum (Persero)/ Inalum or Mind ID signed a contract with Emirates Global Aluminum (EGA), the largest aluminum producer in the United Arab Emirates (UAE).

Garap Smelter, MIND ID Gandeng Perusahaan Asal Uni

Emirat Arab Finna U. Ulfah

PERUSAHAAN pelat merah, PT Indonesia

Asahan Aluminium (Persero)/Inalum atau Mind ID menandatangani kontrak dengan Emirates Global Aluminium (EGA), produsen aluminium terbesar di Uni Emirat Arab (UEA).

Daily News Update Page 7

The contract is a continuation of a business agreement signed by the two companies, and was exchanged in front of President Joko Widodo and the Crown Prince of the UAE in Abu Dhabi on January 12, 2020.

The Ambassador of the Republic of Indonesia to the UAE, Husin Bagi s appreciated the steps of the two companies to continue the cooperation, which could be the start of investment cooperation for the two companies. Meanwhile, the contract is related to the EGA technology license and the placement (secondment) of EGA personnel at Inalum.

The technology license contract is a pilot test for optimization of PT Inalum (Persero)'s aluminum smelter furnace in Batubara, North Sumatra.

One of the projects that PT Inalum (Persero) hopes can be carried out through a strategic partnership with EGA is the Smelter Grade Alumina Refinery (SGAR) in Mempawah, West Kalimantan.

"The total value of the project reaches US$ 800 million," said Ambassador Husin as quoted from his official statement, Tuesday (22/12/2020).

The interest of UAE companies to expand to Indonesia even though during the pandemic is quite high. This is shown by the presence of a business delegation at the Indonesia - UAE Week 2020 event.

Seven PEA companies were recorded participating in the activity, namely: Masdar, Abu Dhabi Holding, Emirates Global Aluminum (EGA), Taqa, Alfoah, FAB and Silverpumps.

The signing of the Inalum-EGA contract also closes the Indonesia-UAE Week 2020 event held by the Indonesian Embassy in Abu Dhabi on December 15-21 2020.

Kontrak tersebut merupakan kelanjutan dari kesepakatan bisnis yang ditanda-tangani kedua perusahaan, dan diper-tukarkan di depan Presiden Joko Widodo dan Putra Mahkota UEA di Abu Dhabi pada 12 Januari 2020.

Duta Besar Republik Indonesia untuk UEA, Husin Bagis mengapresiasi langkah kedua perusahaan untuk melanjutkan kerja sama, yang dapat menjadi awal dari kerja sama investasi bagi kedua perusahaan. Adapun, kontrak itu terkait lisensi teknologi EGA dan penempatan (secondment) personil EGA di Inalum.

Kontrak lisensi teknologi tersebut merupa-kan pilot test untuk optimasi tungku smelter aluminium milik PT Inalum (Persero) di Batubara, Sumatera Utara.

Salah satu proyek yang diharapkan PT Inalum (Persero) dapat dilakukan melalui kemitraan strategis bersama EGA adalah Smelter Grade Alumina Refinery (SGAR) di Mempawah, Kalimantan Barat.

"Nilai total dari proyek tersebut mencapai US$800 juta," ungkap Duta Besar Husin seperti dikutip dari keterangan resminya, Selasa (22/12/2020).

Minat perusahaan-perusahaan UEA untuk melakukan ekspansi ke Indonesia meskipun di masa pandemi cukup tinggi. Hal ini ditunjukkan dengan kehadiran delegasi bisnis pada gelaran Indonesia - UAE Week 2020.

Tercatat tujuh perusahaan PEA ber-partisipasi dalam kegiatan tersebut, yaitu: Masdar, Abu Dhabi Holding, Emirates Global Aluminium (EGA), Taqa, Alfoah, FAB dan Silverpumps.

Penandatanganan kontrak Inalum-EGA sekaligus menutup Event Indonesia-UAE Week 2020 yang digelar KBRI Abu Dhabi pada tanggal 15-21 Desember 2020.

Daily News Update Page 8

The series of activities began with the opening of the First Abu Dhabi Bank (FAB) representative office, cooperation in sending 1,000 nurses, Inauguration of the Cirata Floating PLTS, Hearing to the Minister of ESDM, Signing the Lulu Hyper-market Partnership with national MSMEs, EGA-Inalum Contract Execution, and other business meetings. Editor: Rivki Maulana

Rangkaian kegiatan dimulai dari pem-bukaan kantor perwakilan First Abu Dhabi Bank (FAB), kerja sama pengiriman 1.000 perawat, Peresmian PLTS Terapung Cirata, Audiensi ke Menteri ESDM, Penanda-tanganan Kemitraan Lulu Hypermarket dengan UMKM nasional, Eksekusi Kontrak EGA-Inalum, dan pertemuan bisnis lainnya.

Editor : Rivki Maulana

The Indonesian Metallurgical Professional Association (APMI)

was formed Reporter: Dimas Andi | Editor: Khomarul

Hidayat

HISTORY records that the progress of

human civilization is marked by the use of metals as a material to support life. In addition, history shows that the progress of a country is marked by the progress of metal-based industries.

The industry can grow and develop, one of which is determined by human resources (HR) who are professional in the metallurgical field. It was on this basis that the Indonesian Metallurgical Professional Association (APMI) was formed.

APMI is expected to be a unifying platform for professionals who are active in the metallurgical sector, so as to increase the nation's competitiveness in the form of the contribution of metallurgical expertise to the development of metal-based industries in Indonesia.

Chairman of the Formation Team of the Indonesian Metal lurgical Professional Association (APMI) Helminton Sitanggang during the APMI declaration on 19 December 2020 virtually conveyed that the formation of APMI had gone through a long process.

Asosiasi Profesi Metalurgi Indonesia (APMI) dibentuk

Reporter: Dimas Andi | Editor: Khomarul Hidayat

SEJARAH mencatat bahwa kemajuan peradaban manusia ditandai dengan pemanfaatan logam sebagai material pendukung kehidupan. Selain itu, sejarah menunjukkan bahwa kemajuan suatu negara ditandai dengan kemajuan industri berbasis logam.

Industri tersebut bisa tumbuh dan berkembang salah satunya ditentukan oleh sumber daya manusia (SDM) yang profesional dalam bidang metalurgi. Atas dasar pemikiran itulah Asosiasi Profesi Metalurgi Indonesia (APMI) dibentuk.

APMI diharapkan bisa menjadi wadah pemersatu para profesional yang berkiprah dalam sektor metalurgi, sehingga mampu meningkatkan daya saing bangsa dalam bentuk sumbangsih keahl ian metalurgi kepada pembangunan industri berbasis logam di Indonesia.

Ketua Tim Formatur Asosiasi Profesi Metalurgi Indonesia (APMI) Helminton Sitanggang saat acara deklarasi APMI tanggal 19 Desember 2020 secara virtual menyampaikan, pembentukan APMI telah melewati sebuah proses panjang.

Daily News Update Page 9

APMI was initiated in 2018 by metallurgical alumni of the Bandung Institute of Technology (ITB) who were called to support the spirit of down-streaming minerals and coal (minerba) which was promoted by the government with the issuance of the Minerba Law No. 4 of 2009 and Law no. 3 of 2020 as well as the Industry Law No. 3 of 2014.

"The initiation was then continued with conducting opinion polls and discussions among professionals, universities, and students in the metallurgical field," Helminton said in a press release received by Kontan, Tuesday (22/12).

The survey results showed great interest in forming a forum in the metallurgical field which eventually became the foundation for starting the formulation of the constitution and bylaws (AD/ART) as well as the socialization of the declaration plan for the formation of APMI.

The APMI declaration event itself was attended by 210 participants and jointly inaugurated by the Minister of ESDM represented by Special Staff of the Ministry of ESDM Irwandy Arif, Minister of Defense represented by Director of Technology and Defense Industry Sri Yanto, Director General of the Ministry of ESDM Ridwan Djamaludin, Head of BPPI of the Ministry of Industry Doddy Rahadi, as well as the Director General of Ilmate of the Ministry of Industry, represented by the Director of Metal Industry Budi Susanto.

In general, the officials expressed their full support for the formation of APMI and hoped that this organization could become a strategic partner for the government in increasing the downstream development of metal minerals in the country from the upstream mining industry to the metal industry and its derivatives, including the national defense industry.

APMI diinisiasi pada tahun 2018 oleh para alumni metalurgi Institut Teknologi Bandung (ITB) yang terpanggil untuk mendukung semangat hilirisasi mineral dan batu bara (minerba) yang digalakkan oleh pemerintah dengan terbitnya UU Minerba No. 4 tahun 2009 dan UU No. 3 tahun 2020 serta UU Perindustrian No. 3 tahun 2014.

“Inisiasi tersebut kemudian dilanjutkan dengan melakukan jejak pendapat dan diskusi di kalangan profesional, perguruan tinggi, maupun dari mahasiswa di bidang keilmuan metalurgi,” ujar Helminton dalam siaran pers yang diterima Kontan, Selasa (22/12).

Hasil survei menunjukan animo yang besar untuk membentuk wadah di bidang metalurgi yang akhirnya menjadi pondasi untuk memulai penyusunan anggaran dasar dan anggaran rumah tangga (AD/ ART) serta sosialisasi rencana deklarasi pembentukan APMI.

Acara deklarasi APMI sendiri dihadiri oleh 210 peserta dan diresmikan bersama-sama oleh Menteri ESDM yang diwakili oleh Staf Khusus Kementerian ESDM Irwandy Arif, Menteri Pertahanan yang diwakili oleh Direktur Teknologi dan Industri Pertahanan Sri Yanto, Direktur Jenderal Kementerian ESDM Ridwan Djamaludin, Kepala BPPI Kementerian Perindustrian Doddy Rahadi, serta Direktur Jenderal Ilmate Kemenperin yang diwakili oleh Direktur Industri Logam Budi Susanto.

Secara umum, para pejabat menyampaikan dukungan penuh terhadap pembentukan APMI dan berharap organisasi ini bisa menjadi mitra strategis pemerintah dalam meningkatkan pengembangan hilirisasi mineral logam di dalam negeri dari industri hulu pertambangan hingga ke industri logam dan turunannya, termasuk industri pertahanan nasional.

Daily News Update Page 10

Furthermore, for the benefit of its

members, APMI is also expected to be able

to improve the competence of human

resources and become a forum for

professional networking to achieve the

nation's competitiveness in the field of

metallurgical science.

Not only the government, universities also

fully support the formation of APMI. This

was conveyed by Prof. Syoni Soepriyanto

and Dr. Zulfiadi Zulhan through scientific

oration.

In his oration, Zulfiadi stated that there are

many challenges in carrying out the

domestic downstream of metal minerals.

One of them is mastery of technology. This

is because technology plays an important

role in the success of downstream, so it is

hoped that this association can assist the

government in accelerating technological

mastery.

Helminton also announced the position of

Chairman and Secretary General of APMI

for the period 2021-2023, namely Bouman

T. Situmorang and Muhammad Hanafi.

In his remarks, Bouman invited all parties

to join APMI and provide input to the

management regarding APMI's future

programs and activities. This is so that

APMI can make a real contribution to the

development of the metallurgical industry

in Indonesia.

Lebih lanjut, untuk kepentingan anggota-

nya, APMI juga diharapkan mampu

meningkatkan kompetensi SDM dan

menjadi wadah jejaring profesionalitas

untuk manggapai daya saing bangsa di

bidang keilmuan metalurgi.

Tak hanya pemerintah, perguruan tinggi

juga mendukung penuh pembentukan

APMI. Hal tersebut disampaikan oleh Prof.

Syoni Soepriyanto dan Dr. Zulfiadi Zulhan

lewat orasi ilmiah.

Dalam orasinya, Zulfiadi menyebutkan

bahwa banyak tantangan dalam men-

jalankan hilirisasi mineral logam dalam

negeri. Salah satu di antaranya adalah

penguasaan teknologi. Sebab, teknologi

berperan penting dalam kesuksesan

hilirisasi, sehingga diharapkan asosiasi ini

bisa membantu pemerintah dalam mem-

percepat penguasaan teknologi.

Helminton pun mengumumkan posisi

Ketua dan Sekjen APMI periode 2021-

2023, yaitu Bouman T. Situmorang dan

Muhammad Hanafi.

Dalam sambutannya, Bouman mengajak

semua pihak untuk bergabung dalam APMI

dan memberi masukan kepada pengurus

terkait program dan kegiatan APMI ke

depan. Hal ini supaya APMI dapat

memberikan sumbangan nyata untuk

perkembangan industri metalurgi di

Indonesia.

Daily News Update Page 11

Take Care of the Environment,

Adaro Wins Gold Proper 2020 MG Noviarizal Fernandez

PT ADARO Indonesia (Adaro) is a

subsidiary of PT Adaro Energy Tbk in the coal mining sector (Adaro Mining) which is located in the Provinces of South and Central Kalimantan to get the Gold Proper for its efforts to preserve the environment.

In managing the business and implementing Good Mining Practices (mining practices in accordance with good and correct mining principles), Adaro balances economic, environmental, social and governance considerations.

This commitment has led Adaro to win the Gold Poper for the third time from the Ministry of Environment and Forestry of the Republic of Indonesia. The Minister of Environment and Forestry, Siti Nurbaya, witnessed by the Vice President of the Republic of Indonesia, K.H. Ma'ruf Amin, presented the PROPER Gold 2020 award to the representative of the Board of Directors of PT Adaro Indonesia, Priyadi, Monday (14/12/2020) at the Manggala Wanabakti Auditorium.

This award shows the performance of a company that has consistently demonstrated environmental excellence in the production process, as well as conducting business that is ethical and socially responsible.

Adaro initiates several environmentally conscious projects such as biodiesel facilities, water treatment facilities, ultra-super critical power plants and renewable energy power plants, and participates in water treatment projects across Indonesia to create value for the Adaro Group, local communities and the country.

Jaga Lingkungan, Adaro Raih

Proper Emas 2020 MG Noviarizal Fernandez

PT ADARO Indonesia (Adaro) adalah anak

perusahaan PT Adaro Energy Tbk di bidang pertambangan batubara (Adaro Mining) yang berlokasi di Provinsi Kalimantan Selatan dan Kalimantan Tengah mendapat-kan Proper Emas atas upayanya menjaga kelestarian lingkungan.

Dalam mengelola bisnis dan penerapan Good Mining Practices (praktek pertambangan sesuai kaidah penambangan yang baik dan benar), Adaro menyeimbangkan pertim-bangan ekonomi, lingkungan, sosial dan tata kelola.

Komitmen ini membawa Adaro meraih Poper Emas untuk yang ketiga kalinya dari Kementerian Lingkungan Hidup dan Kehutanan Republik Indonesia. Menteri Lingkungan Hidup dan Kehutanan, Siti Nurbaya, disaksikan Wakil Presiden Republik Indonesia, K.H. Ma'ruf Amin, menyerahkan penghargaan PROPER Emas 2020 kepada perwakilan Direksi PT Adaro Indonesia, Priyadi, hari Senin (14/12/2020) di Auditorium Manggala Wanabakti.

Penghargaan ini menunjukkan kinerja perusahaan yang telah secara konsisten menunjukan keunggulan lingkungan dalam proses produksi, serta melaksanakan bisnis yang beretika dan bertanggung jawab terhadap masyarakat.

Adaro memprakarsai beberapa proyek yang sadar lingkungan seperti fasilitas biodiesel, fasilitas pengolahan air, PLTU ultra-super critical, dan pembangkit listrik energi terbarukan, dan berpartisipasi di proyek-proyek pengolahan air di seluruh Indonesia untuk menciptakan nilai bagi Grup Adaro, masyarakat setempat dan negara.

Daily News Update Page 12

Adaro has also implemented ISO 9001: 2015 (Quality), ISO 14001: 2015 (Environmental Management System), OHSAS 18001: 2008 (K3) with the international certification body TÜV NORD Indonesia and the Energy Management System ISO 50001: 2011 which has been certified by the TÜV Nord institute.

Some of Adaro's flagship programs include energy efficiency, water conservation, land rehabilitation, protection of biodiversity. For example, to meet electricity needs in the operational area of the Adaro port in Kelanis, Central Kalimantan.

In addition, Adaro replaced some of the energy produced by 13 generators with a capacity of 16,124 MW with a solar power plant (PLTS) equipped with smart inverter technology. This innovation has a positive environmental impact, namely reducing the use of fossil fuels and greenhouse gas emissions.

In terms of water conservation and efforts to reduce the burden of water pollution, Adaro has developed a Programmable Logic Controller Supervisory Control and Data Acquisition (SCADA) system at the WTP T300 water treatment facility that processes wastewater into clean water.

The automation process in this clean water treatment system results in more efficient and optimal activities to be able to maintain the quality of clean water according to government regulations and increase the clean water storage capacity from 250 m3 to 600 m3. Through this program, mine wastewater can be used as clean water not only for the company's internal needs but also for the communities around the mine.

In terms of protecting biodiversity, Adaro has been working with the South Kalimantan BKSDA since 2018 to make efforts to conserve the endemic fauna and mascot of South Kalimantan, namely the proboscis monkey (Nasalis larvatus) on Bakut Island.

Adaro juga telah mengimplemantasikan ISO 9001:2015 (Mutu), ISO 14001:2015 (Sistem Manajemen Lingkungan Hidup), OHSAS 18001:2008 (K3) dengan badan sertifikasi lembaga internasional TÜV NORD Indonesia dan Sistem Manajemen Energi ISO 50001:2011 yang telah tersertifikasi dari lembaga TÜV Nord.

Beberapa program unggulan Adaro di antaranya dalam hal efisiensi energi, konser-vasi air, rehabilitasi lahan, perlindungan keanekaragaman hayati. Sebagai contoh untuk memenuhi kebutuhan listrik di area operasional pelabuhan Adaro di Kelanis, Kalimantan Tengah.

Selain itu, Adaro mengganti sebagian energi yang dihasilkan 13 buah genset berkapasitas 16,124 MW dengan pembangkit listrik tenaga surya (PLTS) yang dilengkapi dengan teknologi smart inverter. Inovasi ini mem-berikan dampak lingkungan yang positif yaitu mengurangi penggunaan bahan bakar fosil dan emisi gas rumah kaca.

Dalam hal konservasi air dan upaya penurunan beban pencemaran air, Adaro mengembangkan sistem Programmable Logic Controller Super-visory Control and Data Acquisition (SCADA) pada Fasilitas pengolahan air WTP T300 yang mengolah air limbah menjadi air bersih.

Proses Automation pada sistem pengolahan air bersih ini menghasilkan kegiatan yang lebih efisien dan optimal untuk dapat menjaga kualitas air bersih sesuai peraturan peme-rintah dan meningkatkan kapasitas penyim-panan air besih dari 250 m3 menjadi 600 m3. Melalui program ini air limbah tambang dapat dimanfaatkan sebagai air bersih tidak hanya untuk kebutuhan internal perusahaan tetapi juga untuk masyarakat lingkar tambang.

Dalam hal perlindungan keanekaragaman Hayati, Adaro bekerjasama dengan BKSDA Kalimantan Selatan sejak tahun 2018 untuk melakukan upaya konservasi fauna endemik dan maskot Kalimantan Selatan yaitu Bekantan (Nasalis larvatus) yang berada di Pulau Bakut.

Daily News Update Page 13

This collaboration involving the local community has succeeded in developing Bakut Island as a natural tourism site (Community-based Conservation & Ecotourism), improving the habitat of the proboscis monkey and increasing the proboscis monkey population to 17 (52%). Editor: Kahfi

Kerjasama yang melibatkan masyarakat sekitar ini berhasil mengembangkan Pulau

Bakut sebagai tempat wisata alam (Community-based Conservation &

Ecotourism), perbaikan lingkungan habitat bekantan dan peningkatan populasi

bekantan mencapai 17 ekor (52%). Editor :

Kahfi

In 2024, the government targets

13 million tons of coal for gasification

Author: Edo Fernando, Editor: Umar RP.

THE GOVERNMENT has targeted the

absorption of coal destined for down-stream activities to reach 13 million tons

by 2024. One form of downstream activities that have been launched

currently is the coal gasification project into DME or Dimethyl Ether.

"The total target amount for coal

downstream in 2024 is approximately 13 million tons with an estimated export

value of nearly 600 million dollars for each year . It includes coal gasification,

briquettes, coal making and upgrading,” said Minister of Energy and Mineral

Resources (ESDM) Arifin Tasrif.

The government has been consistently encouraging coal mining companies and

their industries to stop selling raw materials which have been used as fuel for

Steam Power Plants (PLTU), for example, so that coal commodities will get added

value to the industry.

Tahun 2024, Pemerintah

Targetkan Batubara Untuk Gasifikasi Sebesar 13 Juta Ton Penulis : Edo Fernando, Editor : Umar RP.

PEMERINTAH telah menargetkan penye-

rapan batu bara yang diperuntukkan kegiatan hilirisasi jumlahnya mencapai 13 juta ton pada 2024. Salah satu bentuk kegiatan hilirisasi yang telah dicanangkan saat ini seperti proyek gasifikasi batubara menjadi DME atau Dimethyl Ether.

“Jumlah besaran target untuk hilirisasi batubara di tahun 2024 kurang lebih sebesar 13 juta ton dengan nilai perkiraan ekspor hampir mencapai 600 juta dolar untuk setiap tahunnya. Meliputi gasifikasi batubara, briket , coal making dan upgrading,” kata Menteri Energi dan Sumber Daya Mineral (ESDM) Arifin Tasrif.

Pemerintah pun selama ini juga konsisten mendorong perusahaan tambang batubara serta industrinya untuk tidak lagi menjual barang mentah yang selama ini seringkali digunakan untuk bahan bakar Pembangkit Listrik Tenaga Uap (PLTU) misalnya, sehingga komoditas batubara akan men-dapatkan nilai tambah bagi industri.

Daily News Update Page 14

The Ministry of ESDM said that in carrying

out steps to accelerate the downstream

coal program in Indonesia, low calorie coal

is the most preferred. This is because this

type of coal has a high economic value if it

is pursued to increase added value.

From data held by the Ministry of Energy

and Mineral Resources as of December

2019, coal reserves in Indonesia totaled

37.45 billion tonnes. Meanwhile, the total

resources reached 149.01 billion tonnes.

With the amount of reserves and the

amount of coal held, the national

production value could reach around 550

million tons per year. This means that

Indonesia's coal reserves can still be

exploited for at least the next 68 years.

Of the total reserves, 90 percent of which is

low and medium calorie coal. In detail, coal

with moderate calories is known to be

58.56 percent, low calories around 30.90

percent, for high calories around 7.13

percent and while for very high calories it

is 3.41 percent.

Pihak Kementerian ESDM mengatakan dalam menjalankan langkah akselerasi program hiliri-sasi batubara di Indonesia, batubara dengan kalori rendah adalah yang paling diutamakan. Pasalnya jenis batubara tersebut memiliki nilai ekonomis yang cukup tinggi jika diupayakan untuk peningkatan nilai tambah.

Dari data yang dimiliki oleh Kementerian Energi dan Sumber Daya Mineral per bulan Desember 2019, cadangan batubara di Indonesia jumlahnya mencapai 37,45 miliar ton. Sementara untuk jumlah sumber dayanya mencapai angka 149,01 miliar ton.

Dengan besaran cadangan dan jumlah batubara yang dimiliki tersebut, maka nilai produksi nasional bisa mencapai kisaran 550 juta ton per tahun. Hal ini berarti cadangan batubara yang dimiliki Indonesia masih dapat dilakukan eksploitasi sampai setidak-nya 68 tahun ke depan.

Dari besaran jumlah cadangan tersebut, 90 persen di antaranya adalah batubara dengan kalori rendah dan sedang. Rinciannya, batubara dengan kalori sedang diketahui sebesar 58,56 persen, kalori rendah sekitar 30,90 persen, untuk kalori tinggi sekitar 7,13 persen dan sementara untuk kalori sangat tinggi sebesar 3,41 persen.

IEEFA Update: Coking coal’s decline likely to follow the path of

thermal coal’s progressive demise Technology disruption the likely theme of global energy markets in 2021

THERE has been a growing tsunami of climate commitment announcements combined with

fossil fuel exclusion policies by globally significant financial institutions during December 2020, building on the pledges two months earlier by the leaders of China, Japan and South Korea committing to net zero emissions targets.

On top of that, three leading corporate announcements show the building momentum towards a decarbonisation-driven technology disruption.

Daily News Update Page 15

Nippon Steel and POSCO – respectively the largest steel manufacturers in Japan and South Korea – both committed to net zero emissions by 2050 targets over the last ten days. And Australia’s Lendlease has released a roadmap detailing how it will deliver on its commitment to “Absolute Zero Carbon by 2040”.

To IEEFA, Lendlease’s announcement could be a signal of profound global significance. Firstly, like a growing number of global corporate majors, Lendlease is committing to zero emissions, including indirect (scope 3) emissions sourced from activities across its value chain. Secondly, Lendlease has acknowledged that ‘net zero emissions by 2050’ is not sufficient to hold global temperature rises to 1.5°C, suggesting action needs to be much faster, particularly in the developed world. Thirdly, Lendlease will not hide behind the carbon offsets ‘figleaf’. Lendlease mandates that all of its supply chain contracts will include a requirement for Absolute Zero by 2040, including its steel – leveraging the growing power of the now global Responsible Steel standard development and certification body.

We exit 2020 with a growing list of the world’s largest steel manufacturers having now committed to net zero emission by 2050 targets. Nippon Steel and POSCO add global significance to the earlier leadership shown by ArcelorMittal (world #1), Germany’s ThyssenKrupp, Austria’s Voestalpine and Sweden’s SSAB/LKAB/Vattenfall consortium pursing HYBRIT.

All of these steel manufacturers reference two technological paths to the one goal of zero emissions, that being:

1. the avoidance of CO2 through the use of green hydrogen, and

2. the storage or use of CO2 produced in steelmaking (carbon capture, usage & storage, or CCUS).

Both are being piloted, and neither have been implemented at scale and commercially proven as yet. 2020 has seen a global tsunami of announcements for the development of green hydrogen pilot projects. One of the largest and boldest recent announcements came from Fortescue Metals Group, one of the world’s largest iron ore mining firms, which announced a 235 gigawatt of renewables plus green hydrogen ambition in November 2020.

IEEFA has long documented our scepticism that CCUS will prove viable, particularly as a saving angel for ageing coal-fired power plants, but the H2H Saltend trials in the North Sea could prove the long elusive breakthrough at scale. We note the growing strength of the European Union’s emission trading scheme provides a critical pre-requisite to CCUS, namely a price on carbon (EU emission allowances are currently trading above €30/t).

Last week Nippon Steel President Eiji Hashimoto set a goal to reach net-zero emissions by 2050 as a core pillar of its strategy, aligning with Prime Minister Yoshihide Suga’s pledge to achieve carbon neutrality across the country. Japan’s largest steel manufacturer said it will work with its rival JFE Steel to replace coking coal with hydrogen as a reducing agent. It will start using an electric arc furnace (EAF) in a steel mill in Hyogo Prefecture in 2022/23 as a first step to wider use. Nippon Steel also said it will also look into CCUS technologies to ensure it meets its environmental target.

This past week also saw POSCO pledge to achieve carbon neutrality by 2050. POSCO is South Korea’s largest steel manufacturing firm leveraging innovative technologies such as CCUS and hydrogen-based steelmaking.

Daily News Update Page 16

Like an ever lengthening list of financial institutions across banking (Shinhan Financial, KB Financial, Woori Bank, Korea Development Bank), insurance (Samsung Life Insurance, Samsung Fire & Marine Insurance) and asset management, POSCO’s ambition to support the Korean government’s policy of achieving “2050 carbon neutrality” demonstrates its determination to play a leading role in implementing Korea’s “Green New Deal”.

POSCO signed up to the TCFD (Task Force on Climate-related Financial Disclosures) in March 2020 and committed to reduce CO2 emissions by 20% by 2030 and 50% by 2040, and has now added the new target to attain net zero emissions by 2050. POSCO’s CEO Jeong-Woo Choi stressed that industry partnership is a key tool. Additionally, POSCO committed to no new investments that utilise coal.

THERE IS A GLOBAL TREND BUILDING

September 2020 saw the world’s largest steel maker ArcelorMittal announce a group-wide commitment to being carbon neutral by 2050. ArcelorMittal noted that one project key to this strategy is already being piloted in Hamburg, where by 2023 it will operate Europe’s only direct reduced iron (DRI) EAF facility, testing the ability of green hydrogen to reduce the iron-ore and form DRI, then using that carbon-free DRI in the EAF in the actual steel-making process.

At the start of 2019 Germany’s ThyssenKrupp announced plans to invest €10 billion to make its steel production carbon-neutral by 2050, with an interim target to reduce emissions by 30% by 2030 (relative to a 2018 base). ThyssenKrupp plans to run the entire Duisburg-Hamborn steel mill using hydrogen to replace pulverized coal, thereby reducing steel emissions by 20% by 2022 as its key first step. In August 2020 ThyssenKrupp announced it will build a 400,000 tonne per annum green hydrogen-based steel plant for commissioning in 2025 as the second step.

Further, Austria’s Voestalpine is working with Siemens, Austrian hydro utility Verbund, the Austrian Power Grid and other partners to build the world’s biggest research plant for producing green hydrogen, located in Linz in a project called H2Future.

And back in 2016, SSAB (Sweden’s leading steel maker), LKAB (Europe’s largest iron ore producer) and Vattenfall (Sweden’s largest utility) joined forces to create HYBRIT – an initiative to replace coking coal, traditionally needed for ore-based steel making, with green hydrogen at Lulea, Sweden. The result will be the world’s first fossil-free steel-making technology. In December 2020 LKAB announced plans to invest up to 400 billion kronor (US$46bn) over the next two decades to expand into an emissions-free iron process.

According to the government’s Office of the Chief Economist, Australia supplies 55% of the world’s seaborne coking coal. Yet should the world’s steel industry deliver on its net zero emission targets, the demand for coking coal could well enter terminal decline over the coming three decades. The International Energy Agency’s World Energy Outlook 2020 models a halving of coking coal use globally by 2040 under its Sustainable Development Scenario (a 3.5% annual decline each and every year). A review of the performance of the predominantly coking coal producing Coronado Global Resources share pricing since listing in October 2018 shows a near perfect correlation with Whitehaven Coal (a predominantly thermal coal miner), with both destroying over 70% of shareholder wealth relative to a 10% rally in the Australian stock market overall.

Daily News Update Page 17

It is time for Australia to start preparing a transition plan for the growing inevitability of a global energy system transition. The momentum is accelerating and the opportunities, and

risks, for Australia are enormous.

Production at Las Bambas hit by road blockades MINING.COM Staff Writer

LAS Bambas copper mine in Peru, controlled by China’s MMG, said on Tuesday it is

“progressively” reducing production due to local residents blocking a road in protest.

The mine, which supplies around 2% of global production of the red metal, said in a

statement that since December 12 community members, who have long complained about a

lack of benefits for locals flowing from the mine, had been blocking mining trucks from using

a road in Velille district, Cusco region, 200 kilometers from the mine.

In a separate statement, the company said it had reached an agreement in September with the

municipality of Velille to finance sustainable development projects for up to 1.25 million soles

($348,000) over two years, as well as making spot payments to families impacted by the

effects of covid-19.

“Unfortunately, the people carrying out the blockade reject any possibility of dialogue,

hampering the economic reactivation process this country needs,” the statement said.

On November 30th, a strike was launched by the Challhuahuacho district’s Farmers

Federation, the Defense Front and the Youth Federation. They demanded that the national

government complied with Supreme Decree N° 005-2016-PCM, which sets as a priority

Challhuahuacho’s economic and social development, and the payment of a mining canon

starting in 2021.

The mining canon comprises 50% of the corporate income tax collected from mining firms by

the national government and should be transferred to provincial and district municipalities,

where extractive operations take place.

In a statement to the El Comercio newspaper, MMG said that Las Bambas had nothing to do

with the protesters’ claims, as they were to be dealt with by the Peruvian government and the

Challhuahuacho district.

The mine said blockades of public roads have disrupted its operations for 95 days of the last

year.

“We call on the national authorities to enforce the rule of law and guarantee the development

of our operations,” MMG said.

Daily News Update Page 18

Las Bambas is the world’s ninth-largest copper mine. In 2020, it was expected to produce between 350,000 and 370,000 tonnes of copper concentrate or about 2% of the global

projected production.

In April, MMG withdrew the mine’s guidance due to the covid-19 pandemic and did not provide new full-year output guidance. (With files from Reuters)

Canadian Government stops gold mine sale to China's Shandong Gold Mining

By Neils Christensen

AFTER conducting a regulatory review, the Canadian government is stepping in to stop the

sale of one of the nation’s gold mines to a Chinese company.

Monday evening TMAC Resources announced that Governor in Council issued an order under

the Investment Canada Act directing Shandong Gold Mining Co., Ltd. to not proceed with its

takeover plan of TMAC Resources, including its Hope Bay mine in Nunavut.

“The Transaction between TMAC and Shandong will not proceed,” the company said. “TMAC

and Shandong are in discussions regarding termination of the Transaction.”

The government’s decision comes after 97% of TMAC shareholders voted in favor of the

takeover bid. Shandong offered to buy TMAC for US$149 million in May. The offer came as the

Hope Bay mine has struggled to perform since production began in early 2017

“While we are disappointed with the outcome, we are very pleased that TMAC achieved

significant operation improvements at Hope Bay. We will continue to build on these

improvements while considering options to manage our balance sheet,” said Jason Neal,

president and chief executive officer of TMAC, in a statement.

“We continue to believe that the Hope Bay gold belt holds substantial value with long life

production potential that presents a significant development opportunity. We have developed

and are currently evaluating mining and processing plant alternative scenarios with the

objectives of reducing capital expenditures and financing requirements compared with the

2020 PFS while maximizing value.”

Daily News Update Page 19

China's own goal on Australian coal ban gives traders a massive free kick

Stephen Bartholomeusz, Senior business columnist

COAL is a globally-traded commodity, as China appears to be discovering, along with an

unpleasant insight into the nimbleness and creativity of participants in the global markets.

China’s ban on Australian coal is having a more visible effect on China than it is on the Australian coal exporters.

The street lights and billboards are being turned off in its major cities; factories are being shut down or forced into reduced shifts; office lighting and lifts have had their power cut off; consumers have been told not to use electric stoves and to turn off their heating until the temperature falls below three degrees Celsius.

The ban on Australian coal has coincided with a rapid uptick in China’s economy as it emerges from the pandemic and with particularly cold weather, which would normally result in a surge in demand for energy coal and in coal prices.

China imports of coal from Australia are dominated by the metallurgical coal used in steel-making. Only about 30 per cent of the coal exported to China is energy coal and it represents only a fraction of the largely-domestic coal China uses for power generation – overall it imports less than 10 per cent of its needs.

In some of the more industrialised provinces with the most modern generation, however, Australian coal is a key source of energy because of its quality, which leads to greater efficiency and fewer emissions.

That gives Australian coal a significance beyond the simple tonnages sold into China.

While the Chinese authorities are keen to downplay any link between the ban on Australian coal and the power shortages now being experienced, there is a very transparent signal – a price signal – of the impact the ban is having.

As a result of the ban, China’s power companies are scrambling to secure alternate supply, with imports from Indonesia, Russia and South Africa rising sharply. So, too, has the price of their coal.

The price of Australian energy coal plummeted during the pandemic to less than $US50 a tonne but has since recovered to about $US80 a tonne.

Since the ban on Australian coal, however, that price has diverged significantly from the prices being received by other suppliers. South African coal, for instance, is now being sold into China at $US100 a tonne, a 65 per cent increase on its pricing earlier this year.

Thus China, partly as a result of its ban on Australian coal, is paying a significantly higher price for coal of lesser quality.

The world’s biggest seaborne coal producer is Glencore, which is also the biggest of the Australian energy coal exporters.

Daily News Update Page 20

Glencore’s roots are in trading and marketing commodities but it also has a big coal portfolio. While the Australian operations dominate – they represent nearly two-thirds of its production – it also has mines in South Africa and Colombia.

Glencore, and other miners and traders, would look at the impact of China’s ban on coal prices and see as much opportunity as threat.

If the price of South African or Indonesian coal is $US20 a tonne more than Australian coal, the obvious arbitrage is to sell the higher-priced product to China and replace it for either domestic use or to fulfil contracts with other customers by sourcing Australian coal.

Glencore is a “value over volume” producer, so won’t be concerned if it produces a little less but is more than compensated with price and, with nearly half a century of trading and marketing experience, is probably better positioned than any of the coal exporters to extract profits from the arbitrage opportunity.

Those profits would be magnified if, as is occurring, Australian producers (but not, tellingly, Glencore) do shut down meaningful capacity as a result of China’s ban.

China’s steel mills, hit by higher coal prices and a soaring price for iron ore, have been caught in the middle of the Chinese sanctions on Australian products. Their margins would be negligible, even as they are on track – driven by the stimulus-driven rebound in China’s economy – to produce record tonnes of steel.

That’s why the mills have been complaining to BHP and Rio and their own authorities about the prices of their inputs and asking the authorities to investigate the steep increases in prices and crack down on possible violations of Chinese regulations and laws.

It’s not BHP or Rio that are the problem for the mills or power generators; it’s the nature of globally-traded commodities and the sophistication of the traders within those markets, including those within China.

By targeting a commodity – Australian coal - that, because of its quality and the reliability of its producers, has an influence on the market beyond its market share, China has forced the Australian producers to look elsewhere for customers and played into the hands of the traders by creating compelling arbitrage opportunities within the pricing of alternate sources of supply.