Coal Age. Indonesia. Path to success. Perjalanan Menuju kesuksesan. Cokal production within a year. International Mining Expo 2014

Coal Age

®

Edition 6 May 2014 A Mining Media publication www.mining-media.com

Indonesia Path to success

Perjalanan Menuju kesuksesan Cokal production within a year Produksi Cokal selama satu tahun

International Mining Expo 2014 Pameran Pertambangan Internasional 2014

Sumatra Miner preview Ulasan Sumatra Miner 2014

Indonesia FEATURES Road to success Cokal Limited is well advanced on the road to production at Bumi Barito Mineral Coking Coal Project in Central Kalimantan. The company expects production to begin in early 2015 at an initial annual rate of 375,000 tonnes... .......................................................................................3

Coal Age

®

Edition 6 May 2014 A Mining Media publication www.mining-media.com

Sumatra Miner preview Preparations are progressing well for the inaugural Sumatra Miner conference and exhibition wat the Aryaduta Hotel in Palembang, South Sumatra, from October 22-24 ...............25

Indonesia Path to success

IMEX 2014 The inaugural IMEX conference and expo will be in Las Vegas from September 23-25 ....31

Perjalanan Menuju kesuksesan

Cokal production within a year

INDONESIA

Produksi Cokal selama satu tahun

International Mining Expo 2014 Pameran Pertambangan Internasional 2014

Coal production in Indonesia this year is set to grow beyond the 421 million tonnes produced last year, despite the Government downsizing its production target. The Indonesian Coal Mining Association expects production to reach as much as 450 million tonnes... ..............10 Cost reduction programs combined with the solid performance of its power business is helping cushion Banpu from the impact of unfavourable coal prices. ........................................13 PT Bukit Asam is upgrading the capacity of Tarahan Port in South Sumatra through construction of new jetty that can accommodate a cape size vessel. ................................................14 Killara Resources has entered into an agreement with contractor Berkah Ciwi Lestari Kaltim for development of and production from its Borneo Emas Hitam coal project. ......................16 Jatenergy has signed a cooperation agreement with Realm Resources to jointly maximize the value of adjoining coal resources in Central Kalimantan......................................................20

Sumatra Miner preview Ulasan Sumatra Miner 2014

Although falling coal prices have put pressure on producers around the world, including in Indonesia, the local industry is still growing, with Cokal Ltd one company that is moving along the path to production. Pictured is Cokal chairman and CEO Peter Lynch at an outcrop of coking coal at the BBM project in Central Kalimantan. Production is expected to start at BBM in early 2015. (see page 3). Photo courtesy Cokal Ltd

Churchill Mining advises that the International Centre for Settlement of Investment Disputes has rejected the Republic of Indonesia’s challenges to the Tribunal’s jurisdiction. . ..............21

REST OF THE WORLD Kyrgyz Republic Inferred resources at Celsius Coal’s Uzgen Basin project have increased by round 16% ..29 Pakistan A No Objection Certificate has been issued for Block VI of the Thar Coalfield.. .................29 Canada Jameson Resources continues to advance the Crown Mountain Coking Coal Project . ...30 Mongolia Viking Ashanti fast-track production at Auminco’s Berkh Uul project .. ..................................30

Adaro to lift production 7% - 12

Orpheus cash flow positive - 17

DEPARTMENTS Advertisers’ index .............................................46 Events ...............................................................46 From the Editor ...................................................2 Indonesian briefs ..............................................23 Product news ................................................... 42 Supplier news ....................................................37

New feeder at Delta project - 19 May 2014 l Coal Age Indonesia l 1

From The Editor

Timely decision to postpone royalties AT a time when low prices are putting a severe strain on the thermal coal industry, Indonesia’s Government is to be applauded for postponing plans to increase royalties. It appears the government has listened to small and medium miners concerned about the extra burden the proposal would create. A group of miners met Energy Ministry officials in late March to state their opposition to the plan to raise coal royalty payments across the board to 13.5% from the current 3-7%. Among concerns raised were low current prices, a declining imported coal market in China and intense competition to sell coal in India. John Miller, editor Subsequently a spokesman for the ministry’s Directorate for Minerals and Coal said the plan had been postponed because of low prices, stating it was not a good time to implement an increase. It is not certain how long the postponement will stand but for the sake of the industry, it must be as long as prices remain depressed. Major Indonesian companies currently pay 13.5% coal royalty while small and mid-sized producers pay 3-7%. The proposal is to impose a uniform 13.5% for all small and midsized producers holding IUP coal mining licences. It would not affect coal contract of work (CCOW) holders. The price slump means most Indonesian producers, including majors, face tough decisions likely to result in closure of unprofitable mines. Asia Resource Minerals (ARMS), Indonesia’s fifth biggest exporter of thermal coal, is one such miner. It is considering closing its largest pit, Lati, where almost half its 2013 production was sourced but is not alone as Glencore Xstrata, Rio Tinto and BHP Billiton have either halted coal operations or shelved expansion plans. Prices in late March last week dropped to $73 a tonne, the lowest since November 2009, amid a supply glut that’s projected by UBS AG to be the equivalent of 4% of annual seaborne trade this year. ARMS’ chief executive officer Nick von Schirnding says it is crunch time for the business and for the coal industry as a whole. “We are just break-even, but if this level of thermal coal price continues for the rest of the year, and bear in mind we haven’t been above $80 this year, we may have to take further action.” Indonesia can ill afford to see widespread mine closures and the government must do what it can to support the industry in these difficult times.

Waktu yang tepat untuk menangguhkan royalty DITENGAH-tengah harga rendah yang sedang mengakibatkan ketegangan dalam industri batubara termal, penghargaan pada pemerintah Indonesia yang menangguhkan rencanarencana kenaikan royaltinya. Nampaknya pemerintah ada mempertimbangkan keluhan keprihatinan tambang-tambang kecil dan menengah atas tambahan beban yang harus mereka pikul karena rencana-rencana tersebut. Sebuah kumpulan penambang menemui pejabat-pejabat Kementerian Tenaga/Enersi di akhir Maret mengajukan oposisi mereka terhadap rencana kenaikan royalti batubara dari 3.7% ke 13.5%. Antara keprihatinan yang diajukan termasuk harga rendah pada masa ini, pasaran batubara impor di Cina dan perdagangan barubara yang sangat kompetitif di India. Menyusul kejadian tersebut jurubicara Direktorat Logam dan Batubara dari Kementerian itu berkata rencana terkait ditangguhkan oleh karena harga yang rendah, dan dengan demikian sekarang bukanlah waktu yang tepat untuk melaksanakan kenaikan. Tidak diketahui sampai kapan penangguhan ini berlaku, namun untuk kebaikan industri, seharusnya ia berlaku selama harga tetap rendah dan industri tetap meghadapi kesulitan berusaha. Pada waktu ini perusahaan-perusahaan besar Indonesia membayar 13.5% royalti sedangkan kecil dan menengah membayar 3.7%. Rencananya adalah mengenakan 13.5% royalti pada produsen-produsen kecil dan menengah yang memegang izin IUP batubara. Ini tidak berdampak pada pemegang kontrak kerja batubara (CCOW). Jatuhnya harga berarti para produsen termasuk yang besar, menghadapi keputusan-keputusan berat yang akan berakhir dengan penutupan tambang-tambang yang tidak menguntungkan. Pengekspor batubara Indonesia kelima terbesar, Asia Resources Minerals adalah salah satunya. Ia sedang mempertimbangkan penutupan Lati, tambang terbesarnya dimana hampir setengah dari produksi 2013-nya dihasilkan. Tetapi Glencore, Xstrata, Rio Tinto dan BHP Biliton juga telah menghentikan oprasi batubara atau mengundurkan rencana-rencana ekspansi mereka. Harga pada akhir Maret jatuh sampai $73 per ton, terendah sejak November 2009, ditengah-tengah ketiadaan suplai yang diperkirakan oleh UBS AG sama dengan 4% pasaran melalui laut tahun ini. Dirut ARMS Nick von Schirnding mengatakan ini adalah waktu terburuk untuk bisnis dan industri batubara secara keseluruhan. “Sekarang kami seimbang, tapi kalau harga batubara berterusan seperti ini, dan belum pernah mencapai $80 tahun ini, kami terpaksa mengambil tindakan selanjutnya.” Indonesia tidak bisa mengalami penutupan pertambangan secara besar-besaran dan pemerintah harus membantu industri pada masa-masa sulit sekarang ini. 2 l Coal Age Indonesia l May 2014

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ISSN: 1832-7966

Road to success

Cokal production within a year By John Miller, editor Coal Age Indonesia COKAL Limited is well advanced on the road to production at Bumi Barito Mineral Coking Coal Project in Central Kalimantan. The company expects production to begin in early 2015 at an initial annual rate of 375,000 tonnes while ramping up after about six months to the full designated capacity of 2 million tonnes per annum. The only hurdle to overcome in April before beginning the nine month construction phase was securing the production forestry permit for which Cokal expected final approval within weeks. A definitive feasibility study (DFS) has confirmed that BBM mine, associated facilities and transport systems can be developed as a low capital cost operation with moderate to mid-range operating costs. BBM is northwest of Puruk Cahu, the capital of Murung Raya Regency. The study approached the development as a 2 million tonne open cut mining operation and identified that BBM’s relatively low ash, Cokal’s chief geologist Yoga Suryanegara (left) and other team members examine core from low sulphur, low phosphorus coking coal the BBM drilling program. would command a high value as blending infrastructure is US$75 million, assuming that increase measured and indicated resources. feed in the premium coking coal market. The for- mining, barging and hauling equipment will be Cokal’s chairman and CEO Peter Lynch told mal risk analysis identified no issues which could provided by the respective contractors. Coal Age Indonesia, “I am absolutely pleased with not be managed by reasonable controls that would A recently released, JORC 2012 compliant esti- the DFS and its outcomes. We did a pre-feasibiliprevent effective construction and operations. mate for the eastern portion of BBM shows a 261 ty study (PFS) in October 2012 and then went into The total estimated development capital million tonne resource, comprising 10.5 million the detailed definitive study, enabling us to get required to deliver the production rate, including measured tonnes, 13.5 million indicated tonnes within plus or minus 10% of operating and capital developing a coal handling preparation plant, and 237 million inferred tonnes. Further infill costs. We also refined the capital project schedule haulage road and all necessary transport and site drilling is likely to define additional resources and in a bid to make the capital more efficient. The

Produksi Cokal dalam waktu setahun COKAL Limited telah cukup jauh dalam perjalanannya ke tahap produksi di Proyek Batrubara Mineral Bumi Barito di Kalimantan Tengah. Perusahaan mengharapkan produksi bermula awal 2015 dengan jumlah tahunan permulaan 375.000 ton yang akan ditingkatkan dalam waktu 6 bulan ke kapasitas penuhnya sebanyak 2 juta ton per tahun. Satu-satunya rintangan yang harus diseberangi pada bulan Maret sebelum memulai fase konstruksi selama 9 bulan kedepan ialah mendapatkan izin produksi kehutanan yang diharapkan Cokal didapat pada bulan April. Studi pengamatan definitif (definitive feasibility study – DFS) telah mengkonfirmasi bahwa tambang BBM, sarana terkait dan sistim pengangkutan dapat dibina sebagai operasi modal rendah ke rata-rata rendah biaya operasi. BBM terletak di barat laut Puruk Cahu, ibukota Kabupaten Murung Raya. Pengamatan menggunakan pendekatan pembinaan ini sebagai tambang terbuka 2 juta ton dan mencatat kadar abu yang rendah, sulfur ren-

dah, phosphor rendah batubara BBM ini akan menarik nilai yang tinggi sebagai pengisi campuran di pasaran batubara arang. Analisa risiko resmi tidak memperlihatkan hal-hal yang tidak dapat dikelola dengan pengendalian yang baik yang mengganggu konstruksi dan operasi. Modal pembangunan diperkirakan US$75 juta diperlukan untuk mencapai jumlah produksi, termasuk membangun sarana persiapan pengelolaan batubara, pengangkutan jalan dan semua infrastruktur, dengan asumsi penambangan, pengangkutan air dan pengangkutan darat disediakan oleh para kontraktor. Perkiraan batubara yang memenuhi JORC 2012 yang baru saja diterbitkan untuk bagian timur BBM menunukkkan 261 juta ton cadangan, terdiri dari 10,5 juta telah diukur, 13,5 juta ton terindikasi an 237 juta ton diharapkan. Pemboran dalam tambahan kemungkinan akan mendefinisicadangan tambahan dan menambah cadangan batubara diukur dan terindikasi. Ketua Komisaris dan Dirut Cokal Peter Lynch memberitahukan Coal Age Indonesia, “Saya san-

gat puas dengan DFS dan hasil-hasilnya. Kami laksanakan studi pra pengamatan (pre-feasibility study – PFS) di bulan Oktober 2012 dan kami teruskan dengan studi definitif erperinci, yang memungkinkan kami memperkirakan biaya modal dan operasi dengan akurasi ± 10%. Kami juga memperhalus jadwal proyek bagi mengefisiensikan modal. “DFS memperlihatkan biaya muka yang lebih rendah, jadi kami telah memutuskan untuk mengundurkan pengeluaran biaya modal sedikit untuk mendapatkan masukkan tunai (cashflow) lebih cepat dan membiayai pengembangan dalam 12-18 bulan setelah produksi bermula. “DFS memperkuat pemikiran kami akan biaya-biaya operasi dan modal, didukung terutama oleh brang-barang besar, melalui tawaran betul dari kontraktor dan penyedia-penyedia suplai.”

Langkah-langkah akhir Peter Lynch berkata bahwa segala izin-izin telah didapat kecuali langkah terakhir, yaitu izin May 2014 l Coal Age Indonesia l 3

Road to success DFS shows an even lower upfront capital cost so we have decided to delay a little of the capital spend so we can get into cashflow sooner and then fund enhancements in the following 12-18 months after production begins. The DFS reinforced our view on operating and capital costs, backed up, particularly with larger items, by actual quotations from contractors and suppliers.”

Final steps Peter Lynch says all permitting has been sec-

ured except the final step, the production forestry permit. “We commenced the application for this in February 2013 and it is now with the Minister. There were some minor issues, including changing coordinates on the survey plan. In Indonesia there are regency, provincial and national government levels, and there can be a lot of ‘too-ing and fro-ing’ between departments. “Once we have the permit we have essentially jumped all major hurdles, having already secured the production mining licence. After receiving the

The BBM permit area adjoins the Barito River in Central Kalimantan.

produksi kehutanan. “Kami memulai permohonan untuk ini di bulan Februari 2013 dan sekarang ada ditangan Menteri. Ada beberapa isu kecil, termasuk mengganti koordinat di rencana survey. Di Indonesia ada tahap-tahap pemerintahan kabupaten, propinsi dan pusat dan kemungkinan ada ulang-alik antar departemen. “Begitu kami dapatkan izin ini, berarti kami telah melompati semua rintangan-rintangan besar, karena telah mendapatkan izin produksi pertambangan. Setelah menerima izin terkahir ini, kami harus menandakan batas-batas tercantum dalam izin menggunakan tiang-tiang batu segi empatbeton.” Mengenai pembiayaan Peter Lynch mengatakan bahwa Cokal telah membincangkan dengan beberapa partai selama ini. “Setelah menerima PFS kami memulai sebuah proses ‘pernyataan keinginan tertutup’ menyangkut perusahaan-perusahaan yang kami ketahui dan percayakan – pabrik baja, perusahaan-perushaan perdagangan, sumber-sumber keuangan – yang kebanyakannya telah menghubungi kami langsung. Kami tidak membuka pintu begitu saja dan 4 l Coal Age Indonesia l May 2014

menanyakan ‘apakah ada yang tertarik’ – kami tujukan kepada mereka yang mengetahui proyek ini. Sekarang kami mempunyai DFS hubunganhubungan kami ini sedang memeriksa kembali angka-angka mereka menggunakan informasi pasti untuk dapat memperkirakan kedudukan pembiayaan terakhir. Mendapatkan izin produksi kehutanan adalah sama dengan pra-kondisi yang akan memuaskan mereka sebelum komit. “Kami sekarang telah memilih untuk menerima rencana pembiayaan hutang sebesar US$150 jutadari Platinum Partners yang menyediakan mula-mula US$80 juta s/d US$100 juta untuk menutupi biaya modal permulaanproyek BBM untuk mendesain kapasitas 2 juta ton. Pengeluaran selanjutnya didapat tergantung pada kenyataan hasil yang diserahkan. “ “Seandainya konstruksi bermula bulan April, kami akan dapat mengirim batubara pertama kali diatas sungai dalam kwartal 2015. Jadwal kemungkinan mengundur sedikit, namun kami belum lagi menyerah dalam hal ini. Kami mempunyai sedikit kemudahan walaupun ianya bergantung pada kapan kami menerima izin kehutanan.

final permit we have to peg the outline of the permit using square concrete posts.” In regards to financing Peter Lynch says Cokal has been in discussions with a number of parties for a long time. “After receiving the PFS we started a ‘closed expressions of interest’ process involving companies we knew and trusted – steel mills, trading houses, finance sources – many of who had approached us directly. We didn’t just open the gates and ask ‘is anyone interested’ – we targeted those familiar with the project. Now we have the DFS these contacts are rechecking their numbers using the definitive information to come up with final funding positions. Attainment of the production forestry permit is like a condition precedent they need to see satisfied before committing. “We have now chosen to accept a US$150 million debt funding proposal from Platinum Partners which provides an initial US$80 million to US$100 million to cover the initial capital cost of the BBM project to a design capacity of 2 million tonnes. Further drawdowns are accessible as project delivery performance is demonstrated”. “If construction starts in April, we can essentially put the first coal down the river in the first quarter of 2015. The schedule may be slipping a little but we are not giving up on it yet. We have a buffer in the schedule but it depends when we receive the forestry permit. “The production profile for the first six months sees us budgeting to produce 375,000 tonnes of product coal,

Didalam profil produksi untuk enam bulan pertama kami menganggarkan jumlah produksi sebanyak 375.000 ton batubara, menggunakan peningkatan produksi yang lembut. Setelah itu kami mengharapkan beroperasi pada taraf kapasitas per tahun penuh.”

Setelah BBM Cokal telah mengundurkan diri dari proyekproyek Indonesia yang lain untuk berfokus pada BBM. Begitu ia dibiayai dan memproduksi, prioritas selanjutnya adalah proyek TBAR didekatnya. “Kami sedang memohon izin eksplorasi kehutanan yang memungkinkan kami menggunakan alat-alat pembor dengan kapasitas tinggi bagi membuktikan sumber,” kata Peter Lynch. “Ia adalah prioritas selanjutnya oleh karena kalau kami temui sumber-sumber yang mempunyai mutu dan jumlah yang mencukupi, kami dapat meningkatkan produksi tahunan BBM atau menambah umur tambang yang akan memberikan hasil yang lebih banyak untuk pengembalian biaya infrastruktur. “Sebagian besar modal BBM akan ditanam

Road to success allowing for a soft ramp-up. “After that we expect to be operating at full annual capacity.”

Beyond BBM Cokal has backed off at its other Indonesian projects to focus on BBM. Once it is funded and in production, the next priority will be the adjoining Tambang Benua Alam Raya (TBAR) project. “We are obtaining the exploration forestry permit which will enable us to use high capacity drill rigs to prove up a resource,” Peter Lynch says. “It is the next priority because if we find resources of sufficient quality and quantity, we will be able to increase annual production at BBM or extend mine life with potential to give us greater return on the BBM infrastructure investment. Most BBM capital will be invested in the haul road, barge loading jetty, the joint venture company we are forming for a specialized barging system and the intermediate stockpile. The more coal we can put through that capital, the better off we are.” Beyond that, he says, it is about focusing on a largely undeveloped coking coal basin. “The North Barito Basin has about 10 billion tonnes ofresources compared to Queensland’s Bowen Basin with 35 billion. It is highly sought after coal that is complementary to some of the new coking coals from Australia and Mozambique. New coal from the developing Rangles formation of Central Queensland has lower vitrinite and higher phosphorus levels than coal previously mined in the Bowen Basin, while coal from Mozambique has high ash and a bit of phosphorus. North Barito Basin coal has very high vitrinite, almost no phosphorus and low sulphur, making it ideal for blending. “The basin only has two operating mines – Borneo Lumbung at an annual capacity of 3.5 million tonnes and MGM at 1.5 million tonnes but expanding to 2.5 million – and is like the Bowen Basin was in the late 1960s and early 1970s. We have been doing a lot of work to determine what the most promising parts of available projects are and how they complement what we are doing. Our focus is on the western side of the basin where we have four projects, including AAK and AAM. Our aim is to build a solid base where we have potential to grow in the next 10 years to get to 10 million tonnes of annual production.”

Working together Peter Lynch says it is a tough environment to bring a project on to the market with sentiment for coking coal at all-time lows and volatile prices, while the political cycle in Indonesia is unpredictable owing to a presidential election later this year.

dalam jalan pengangkutan berat, jeti bongkar muat tongkang, perusahaan joint venture yang sedang kami dirikan untuk sistim pengangkutan air special dan tumpukan pengantara. Lebih banyak batubara kami keluarkan dari modal maka lebih baik lah keadaan kami.” Diluar itu, katanya, adalah memfokuskan diri pada daerah batubara arang yang belum dibangun. “Daerah Barito Utara mempunyai lebih kurang 10 milyar ton cadangan ketimbang daerah Bowen di Queensland dengan 35 milyar. Ia juga batubara yang sangat diingini sebagai komplimenter batubara arang dari Australia dan Mozambique. Batubara baru dari formasi Rangles yang sedang dibangun di Queensland Tengah berciri vitrinit lebih rendah dan kadar phosphor yang lebih tinggi dari batubara dari daerah Bowen, sedangkan batubara Mozambique mengandung kadar abu

An outcrop of bright coking coal at Cokal’s BBM project, which is characterized by thick seams.

yang tinggi dan phosphor yang rendah. Batubara daerah Barito Utara mengandung vitrinit yang tinggi, hampir tidak berphosphor dan sulphur rendah, membuatnya ideal untuk pencampuran. “Daerah ini hanya mempunyai dua tambang yang beroperasi – Borneo Lumbung dengan kapasitas tahunan sebesar 3.5 juta ton dan MGM 1.5 juta ton namun diperbesar ke 2.5 juta ton – hampir sama dengan keadaan daerah Bowen pada akhir 1960han dan awal 1970. “Kami telah melaksanakan banyak aktivitas untuk mengetahui bagian-bagian dari proyekproyek yang ada dan bagaimana mengkomplimenter apa yang kami sedang kerjakan. Fokus kami adalah dibagian barat dimana kami mempunyai empat proyek, termasuk AAK dan AAM. Tujuan kami adalah membina dasar yang kuat dimana ada potensi untuk tumbuh dalam 10 tahun kedepan dalam rangka mencapai 10 juta

ton produksi tahunan.”

Kerja bersama Peter Lynch mengatakan ini adalah lingkungan yang sulit untuk membawa peoyrek ke pasaran dengan minat untuk batubara arang pada taraf yang paling rendah dan harga-harga tak menentu, sedangkan dalam siklus politik di Indonesia juga tak dapat diprediksi oleh karena pemilihan presiden baru dimasa mendatang tahun ini. “Rezim kini telah dikritik karena tidak banyak berbuat apa-apa tapi telah menangani korupsi dan telah mengkonsolidasi situasi dengan semua orang bekerja bersama-sama dan majukedepan, walupun perlahan-lahan, “Saya percaya ini telah menjadi persiapan untuk pertumbuhan yang signifikan setelah pemilihan presiden. Memang diketahui bahwa May 2014 l Coal Age Indonesia l 5

Road to success “The current regime has been criticized for not doing much but they have made inroads into tackling corruption and have consolidated the country by getting everyone working together and moving forward, albeit slowly. “I believe this has set the scene for significant growth following the presidential election. After all, Indonesia has the world’s fourth biggest population, a 5-6% growth rate, is resource rich, has a

highly educated and young demographic, and everyone wants to get ahead resulting in a lot of aspirational activity. “There is a lot of foreign investment interest but many are holding off and waiting for the election. Once this is over, and I think there will be a positive result, investment will start pouring in. “Where we sit, if we can get into production now, we will be at the start of the growth wave.

When Indonesia starts to become the flavour of the month every man and his dog will be there, so we have an early mover advantage. “There’s a positive feel amongst the people and Indonesia has a bright future. To me it’s a safer place to do business than Australia, the people want to learn so they can do better and the labour cost is incredibly cheap. In provincial areas the labour rate is about half that of inland China. Indonesia also has a competitive cost structure. As the economy picks up costs will increase but there is still a significant buffer to the Chinese structure. “Indonesians are all about pride, they love getting a chance to have a go and smaller companies like Cokal offer quality opportunities for them to play a significant role in the company’s development. They like having the autonomy we offer and want to see Cokal do better. They set out each day to prove that you have done the right thing by employing them.”

Indonesian growth

Cokal chairman Peter Lynch in front of an outcrop of coking coal at the BBM project. Cokal expects production at BBM to start in early 2015.

Indonesia mempunyai penduduk keempat terbesar, peningkatan penduduk sebesar 5-6%, kaya sumber alam, mempunyai demografi muda dan berpendidikan tinggi, dan semua ingin maju kedepan, sehingga menghasilkan banyak aktivitas beraspirasi tinggi. Minat investasi asing cukup banyak namun kebanyakan menunda keputusan menunggu pemilihan presiden. Setelah itu, saya kira akan ada hasil positif, investasi akan mulai berdatangan. “Dimana kita berada, kalau dapat berproduksi sekarang, kami akan menjadi tombak gelombang pertumbuhan. Nanti Indonesia menjadi favorit siapapun aka nada disana, jadi kami mempunyai keuntungan sebagai orang yang paling awal disana. Ada perasaan positif diantara penduduk dan Indonesia mempunyai masa depan yang cerah. Untuk saya lebih aman menlaksanakan bisnis disini daripada di Australia, orang-orangnya ingin belajar jadi mereka bisa mlaksanakan yang lebih baik sedangkan biaya buruh sangat murah. “Di daerah propinsi biaya buruh lebih kurang setengah dari di dataran Cina. Indonesia juga mempunyai struktur harga yang kompetitif. Kalau ekonomi membaik tentunya biaya akan 6 l Coal Age Indonesia l May 2014

“Many people talk about growth in China and India but forget about Indonesia. The worst ones at doing this are Australians, despite Indonesia being so close and Australia being well positioned to capitalize on growth there as the two societies are complementary,” he says. “Australia has a lot of wealth, a small population, expertise and has been through what Indonesia is experiencing now around 35 years ago. Indonesia is struggling with things like resource nationalism and downstream processing which is what Australia went through in the 1970s.

naik juga namun masih banyak perbedaan dengan struktur Cina. “Orang Indonesia adalah bangsa yang bangga, mereka meningini kesempatan untuk mencoba dan perusahaan-perusahaan kecil seperti Cokal dapat memberikannya sehingga mereka dapat memainkan peranan yang signifikan untuk pertumbuhan perusahaan. “Mereka suka akan otonomi yang kami berikan dan ingin melihat Cokal menghasilkan yang lebih baik. Mereka berusaha tiap hari untuk membuktikan bahwa kami telah bertindak benar dengan mempekerjakan mereka.”

35 tahun yang lalu. Indonesia menghadapi tantangan mengenai nasionalisme sumber alam dan pemerosesan lanjut yang dilalui Australia ditahun-tahun 1970han. “Kedua negara seharusnya membagi-bagi pengalaman dan para produksi Australia mempertimbangkan pindah ke Indonesia dimana mereka mempunyai kelangsungan hidup yang lebih baik. Dengan demikian Australia mempunyai industry suku cadang yang kuat untuk industri produksi Indonesia.

Pertumbuhan Indonesia

“Kalimantan Tengah tidak mempunyai sejarah pertambangan, lain dari Kalimantan Timur, dan Cokal memutuskan awal awal lagi berkecimpung dalam Tanggung Jawab Sosial Korporat (Corporate Social Responsibility – CSR).” Kata Peter Lynch, “karena segalanya relatif murah dan tidak makan ongkos banyak untuk perusahaanperusahaan pertambangan, tapi mempunyai dampak yang besar tergantung bagaimana ia dilaksanakannya. “Cokal telah membantu membangun sebuah sekolah SMP. Penduduk lebih kurang 12,000

“Banyak orang bicara mengenai pertumbuhan di Cina dan India tapi lupa akan Indonesia. Yang paling buruk adalah orang-orang Australia, walaupun Indonesia begitu dekat dan Australia berada disisi terbaik untuk mengambil keuntungan dari pertumbuhan disana karena kedua masyarakatnya berkomplimenter,” katanya. “Australia mempunyai banyak kekayaan, penduduk yang kecil, keahlian dan telah melalui apa yang tengah dialami Indonesia lebih kurang

Pemberdayaan diri

Road to success “The two countries should be sharing that experience and Australia’s manufacturers should consider moving to Indonesia where they have a better chance of surviving. Australia could then have a strong parts industry supplying Indonesia’s manufacturing.

Self-empowerment “In Central Kalimantan there is not a strong mining history, unlike East Kalimantan, and Cokal decided to get involved in significant CSR early on,” Peter Lynch says. “Because everything is relatively inexpensive it doesn’t cost much for mining companies but it can have a huge impact depending on how it is done. “Cokal has helped set up a junior high school. There is a population of about 12,000 within 60km of our site and previously the kids would get to sixth grade but then leave school as it was too far to junior high school – about three hours down the river and the same up the river at the end of the day. We sat down with the communities, asking them what would make a difference and the first answer was always education. “Rather than just becoming the funding beneficiary, we said if you provide the labour, we’ll pay for materials. The entire community got involved and built a junior high school in a matter of months while we paid for the wood, concrete, paint and other materials. They are proud of it because it’s theirs and we helped them achieve it. There was also a need for teachers and we didn’t want to become an employer of teachers, so we negotiated a bursary system with the provincial government. We essentially provide a bursary so the government can employ four additional teachers who are part of the provincial education system. We have committed to this for four years and hope by then we’ll have the budget mechanism to ensure it is ongoing. We are trying to help, not just by adopting a hand-out mentality but by selfempowering them. “We also helped locals set up a cooperative which supplies the food, meals, fuel and other supplies we need. It also helps with small building projects and provision of temporary camps around the site. They are essentially acting like a contractor – it’s their own business, they are paying tax to the government and employ local people.

sekitar 60 km dari tempat kami dan sebelum itu anak-anak tersebut dapat mencapai akhir SD dan keluar sekolah karena ke SMP sangat jauh – lebih kurang 3 jam perjalanan arah ke muara dan di akhir hari hal yang sama arah ke hulu. Kami berbincang dengan masyarakat, menanyakan mereka apa kira-kiranya dapat membuat perbedaan dan jawaban pertama dan utama selalu adalah pendidikan. “Untuk jangan hanya menjadi penyedia uang, kami katakan kalau anda dapat memnyediakan tenaga kerja, kami akan membiayai materi. Seluruh masyarakat turun tangan dan membangun sebuah sekolah SMP dalam waktu hanya beberapa bulan dengan kami membayar untuk kayu, beton, cat dan materi-materi lainnya. Mereka juga bangga bahwa itu milik mereka dan kami hanya membantu mencapainya. “Tentunya juga sekolah memerlukan guruguru dan kami tidak ingin menjadi majikan para

The proposed transport system along Barito River for BBM coal.

guru, jadi kami menegosiasikan sebuah sistim pembiayaan dengan pemerintah propinsi. Kami sediakan biaya untuk pemerintah mempekerjakan empat guru tambahan yang menjadi bagian dari sistim pendidikan propinsi. “Kami telah komit akan ini untuk empat tahun dan mengharapkan setelah itu mempunyai mekanisme anggaran belanja untuk memastikan bahwa hal ini akan berkesinambungan. Kami mencoba membantu bukan dengan mentalitas member melainkan memberdayakan mereka. “Kami juga membantu masyarakat setempat mendirikan koperasi yang menyediakan bahan makanan, makanan, bahan bakar dan barangbarang lain yang diperlukan. “Ianya juga membantu dalam proyek-proyek pembangunan dan persediaan kemah-kemah sementara di sekeliling tambang. “Mereka beraksi sebagai kontraktor – ini adalah usaha mereka sendiri, mereka membayar

pajak ke pemerintah dan mempekerjakan orangorang setempat. “Ini sama dengan model pemberdayaan yang dijalankan oleh Medusa Mining di Filipina. Ini bukan saja mengenai pendidikan pertambangan, tapi juga Pertanian yang membantu meningkatkan produktivitas dari tanam-tanaman. “Dengan demikian mereka tidak saja tergantung pada proyek pertambangan – ia bertambah kepada peningkatakan ekonomi yang belraku masa ini.”

Faedah-faedah Indonesia Ketimbang waktu merealisasikan proyek pertambangan Australia, jalan ke produksi untuk Cokal relatif pendek. Peter Lyunch mengatakan bahwa dalam masa 10 tahun kebelakang Australia telah mundur dalam hal ini. “Dulu dapat membawa proyek ke produksi dalam waktu dua atau tiga tahun, tapi sekarang lima May 2014 l Coal Age Indonesia l 7

Road to success

Barging is the preferred method of transport for coal from the BBM project with the Barito River to be used. “It is a similar self-empowerment model to that established by Medusa Mining in the Philippines. It is not just about mining education, but also agriculture which helps get better productivity from crops. In this way they don’t just rely on the mining project - it extends into betterment of the ongoing existing economy.”

Indonesian advantages Compared to Australia’s timeline for bringing mining projects on line, it has been a relatively short road towards production for Cokal. Peter Lynch says in the last 10 years Australia has gone backwards in this regard. “It was possible to get projects into production in two or three years but now it is a five to 10 year

slog. In Indonesia the system is bureaucratic because of the levels of government in various stages of autonomy but overall there is a strong desire to move forward and make things happen. Despite the bureaucracy, the underlying drive has ensured that the approvals system is of an international standard, including AMDAL for environmental approvals. “At least you know what you are dealing with whereas in Australia there is supposedly a system but it is subjective and politically tarnished. “Whenever a new project comes up, as soon as a group becomes vocal with their concerns, the company, which has often done a detailed technical review identifying all issues, is often forced to go into a time-consuming and costly supplemen-

tary process because local politicians don’t want to face up to some perception of negative sentiment. “It hasn’t always been easy in Indonesia owing to the bureaucracy with one level of government thinking the process works differently to what another government level believes. “Despite this, there’s ultimately a way through. Cokal has been aided by establishing a successful Indonesian team. We use some consultants but have a very strong team which fully understands the process. We even have government using us as an example to others. “Our BBM process for the AMDAL and mining approvals is used as a model for the province to progress further projects.”

LEFT: A sample of coking coal from Cokal’s BBM project in Central Kalimantan.

sampai sepuluh tahun jalan yang lamban. “Di Indonesia sistimnya memang birokratis karena banyaknya tahap pemerintahan dan dalam tahap-tahap otonomi ber beda, tapi secara keseluruhan ada keinginan untuk maju kedepan dan melaksanakan hasil. “Walaupun birokratis, keinginan ini telah menghasilkan sistim pengizinan yang bertraf internasional termasuk AMDAL untuk izin lingkungan. “Sedikitnya kita tahu apa yang kita hadapi 8 l Coal Age Indonesia l May 2014

sedangkan di Australia katanya ada sistim tapi ianya subjektif dan diwarnai oleh politik. Setiap ada proyek baru, kalau terbuka mengenai isu-isunya, sering dipaksa untuk menjalani proses-proses sekunder oleh karena para orang politik setempat tidak mau menghadapi persepsi of sentiment yang negative. “Tidak selalunya mudah di Indonesia oleh karena birokrasi pada satu tingkat pemerintahan berpikir prosesnya berjalan berlainan dari tingkat pemerintahan yang lain kehendaki. Walaupun

demikian akan selalu ada penyelesaiannya. Cokal telah dibantu dengan mendirikan sebuah tim Indonesia yang sukses. “Kami menggunakan beberapa konsultan tapi mempunyai tim yang kuat yang mengerti proses seluruhnya. “Malah ada pemerintahan yang menggunakan kami sebagain contoh kepada orang lain. Proses BBM kami untuk AMDAL dan izin-izin pertambangan digunakan sebagai contoh untuk propinsi memajukan progress proyek-proyek.”

Road to success Risk reward investment Peter Lynch says as an investment destination Indonesia is perceived as being high risk but it is risk that is rewarded: the geological potential of Indonesia is largely untapped which means juniors operating in Australia have to contend with more marginal projects; in terms of approvals it is quicker in Indonesia; labour rates are at least a tenth of the cost of Australia; and there is half the shipping distance to the main markets of China, Korea, Japan and India. “The significant differences between most

Indonesian and Australian coal projects are that infrastructure costs are a lot less and transport approvals much simpler, particularly for projects serviced by a river. “We don’t need to form a complicated consortium to negotiate further capacity on rail lines or ports, which are often controlled by a major. The cost to get the coal to an ocean-going vessel is much less, at about $2.54 per tonne for Cokal, and we don’t have to put capital into that process apart from the barging fleet. “All we have to do is sign a contract with the floating crane operators to load from barges to

vessels. This compares to costs of up to $13 per tonne to get Australian coal to vessels. As well as being much cheaper, easier and quicker, you don’t have the inter-relationship hassles often seen in rail and port deals. “We have good faith in Indonesia despite many people saying bad things. “We don’t listen to the chit-chat; we’re having a go and believe we’ll be rewarded because we have a good company set-up, giving us respect from the country, which will ultimately lead to positive project outcomes.” q www.cokal.com.au

Cokal Indonesia president director Garry Kielenstyn awards university scholarships in Murung Raya Regency as part of the company’s CSR program in Indonesia.

Investasi risiko berimbalan baik Katanya sebagai destinasi investasi Indonesia dilihat sebagai ber-risiko tinggi tapi ini risiko yang mempunyai imbalan: potensi geologis Indonesia kebanyakan belum digali yang berarti orang-orang junior di Australia terpaksa menerima mengerjakan proyek-proyek yang pinggiran; dalam hal pengizinan ini lebih cepat di Indonesia; biaya buruh hanya sepersepuluh biaya di Australia; dan setengah jarak ke pasaran-pasaran utama Cina, Korean, Jepang dan India. “Perbedaan yang menyolok antara kebanyakan

dari proyek-proyek batubara Indonesia dan Australia ialah biaya infrastruktur jauh kurangnya dan izin pengangkutan jauh lebih mudah, apalagi proyek-proyek yang menggunakan sungai. Kami tidak perlu mendirikan consortium yang berbelitbelit untuk menambahkan kapasitas melalui keretapi atau pelabuhan, yang sering dikendalikan oleh sebuah monopoli. Biaya pengangkutan ke kapal laut jauh lebih murah, lebih kurang $2.54 per ton untuk Cokal, dan kami tidak perlu memasukkan modal kedalam proses tersebut kecuali armada tongkang. Ini bisa dibandingkan dengan biaya yang hampir $13 per ton untuk memuat

batubara Australia ke kapal laut. Disamping jauh lebih murah, mudah dan cepat, kita juga tidak harus menghadapi masalah-masalah antar-hubungan yang sering kita lihat antara keretapi dan pelabuhan. “Kami mempunyai kepercayaan baik akan Indonesia walaupun banyak yang mengatakan hal-hal buruk. Kami tidak mau mendengar gosiop; kami mencoba dan percaya akan mendapat imbalan karena kami mempunyai pendirian perusahaan yang baik, mendapatkan rasa hormat dari negara, yang akhirnya akan menjuju ke hasil-hasil yang positif. May 2014 l Coal Age Indonesia l 9

Indonesia

Miners want more, government says less COAL production in Indonesia this year is set to grow beyond the 421 million tonnes produced last year, despite the Government downsizing its production target. The Indonesian Coal Mining Association expects 2014 production to reach as much as 450 million tonnes. The Indonesian Ministry of Energy and Mineral Resources in January said that it had changed its coal production outlook in an attempt to conserve the resource primarily for future domestic needs and also on the expectation that a lower output may result in higher prices for its coal exports. It has asked companies to cap 2014 production at 397 million tonnes and has allocated 73 million tonnes for the domestic market. PT Apple Coal’s chief development officer Ben Lawson says Indonesia’s coal production will definitely grow in 2014. “As a miner who has been through the boom years from 2008 to 2011, if you invest in infrastructure and you’ve got a plan to go with that infrastructure and your bank wants you to stick with that plan to pay back that infrastructure for your shareholders, or whatever the case may be, you have to increase production. You have to pay the loans back, and you have a mining plan to go with those loans, so it’s kind of a forced situation, coal miners have to increase production.”

Indonesian Coal Mining Association deputy chairman Herman Kasih told The Jakarta Post in December: “Coal miners are targeting higher production. There’s growing demand in the global market, including from Japan which is increasing coal purchases as it shuts down nuclear generated power.” PT Bumi Resources, Indonesia’s largest coal producer and majority shareholder of PT Kaltim Prima Coal and PT Arutmin Indonesia, expects production to grow about 15% from last year’s 74 million tonnes to an estimated output of 97.8 million tonnes. Adaro Energy, Indonesia’s second largest producer, expects production to grow about 7%, with an estimated output of 56 million tonnes. PT Berau Coal expects production to grow almost 12% from last year, with an estimated output of 25.7 million tonnes and PT Bukit Asam expects production to grow approximately 22%. At a Coal Club Indonesia networking event Ben Lawson indicated that India and China – currently Indonesia’s largest coal export destinations – will annually need a combined 350-plus million tonnes. He said other rapidly expanding economies of Thailand, Malaysia, Vietnam, Taiwan and South Korea would require a combined 100 million tonnes over the next five years. “Japan, traditionally one of Indonesia’s largest

coal markets, has closed all but two of its 54 nuclear power plants and will see a large increase in coal requirements to cover the shortfall,” he said. “This could potentially equate to an increase of around 60 million tonnes.” On the domestic front, Ben Lawson says Indonesia has seen an exponential increase in coal demand hand-in-hand with a massive increase in new coal-fired power production from State-owned electricity utility PLN. “A major increase will continue to be seen as PLN along with State-owned petrochemical and plantation companies, and the majority of Indonesia’s private sector conglomerates, require large increases in coal supplies to feed coal-fired power plants built, or planned, to replace costly diesel-fired plants.” Fitch Ratings says that the credit profiles of mining sub-contractors and miners highly reliant on increasing volumes to support high debt servicing will be most affected if the government strictly implements limits. It says companies have been seeking to increase production to partly compensate for substantially reduced dollar margins per tonne following a steep decline in international seaborne thermal coal prices, especially companies burdened with high debt levels and weak liquidity.

Warga tambang mau lebih, pemerintah bilang kurangi PRODUKSI batubara tahun ini diperkirakan melebihi 421 juta ton yang dicapai tahun lalu, walaupun pemerintah mengurangi target produksinya. Persatuan Pertambangan Batubara Indonesia mengharapkan produksi mencapai 450 juta ton pada tahun 2014. Kementerian Sumber Tenaga dan Tambang mengatakan bulan Januari bahwa ia telah mengganti wawasan produksi batubaranya untuk menghemat sumber ini terutama untuk keperluan domestik yang akan datang dan juga harapan penurunan jumlah produksi akan meningkatkan harga batubaranya untuk ekspor. Ia telah menginstruksikan perusahaan-perusahaan untuk membatasi produksi 2014 mereka pada 397 juta ton dan menentukan 73 juta ton untuk pasaran domestik. Ketua pengembangan PT Apple Coal, Ben Lawson mengatakan bahwa ia pasti produksi batubara Indonesia di tahun 2014 meningkat. Sebagai sorang pertambangan yang pernah mengalami tahun-tahun eksplosif dari 2008 sampai 2011, kalau kita menanam modal pada infrastruktur dan kita punya rencana dengannya dan bank mengingini kita meneruskan rencana tersebut bagi membayar kembali biaya infrastruktur kepada pemegang saham, apapun yang terjadi, kita terpaksa meningkatkan produksi. Kita harus membayar hutang, dan kita punya rencana pertambangan menyangkut hutang tersebut, mau tidak mau tambang batubara terpaksa meningkatkan produksi.” 10 l Coal Age Indonesia l May 2014

Wakil Ketua Persatuan Tambang Batubara Indonesia Herman Kasih berkata pada The Jakarta Post Desember: “.Tambang-tambang batubara bertujuan meningkatkan produksi. Pasaran dunia mengingini lebih banyak, termasuk Jepang yang meningkatkan pembeliannya dengan mereka meniadakan listrik tenaga nuklirnya.” Produsen batubara Indonesia terbesar yaitu PT Bumi Resources pemegang saham mayoritas di PT Kaltim Prima Coal dan PT Arutmin Indonesia mengharapkan produksi meningkat 15% ketimbang 74 juta ton tahun lalu ke 97,8 juta ton. Produsen terbesar kedua yaitu Adaro Energy, mengharapkan produksi meningkat dengan 7% menghasilkan 56 juta ton. PT Berau Coal mengharapkan kenaikan produksi dengan 12% berbanding tahun lalu ke 25,7 juta ton dan PT Bukit Asam mengharapkan kenaikan produksi dengan 22%. Pada sebuah acara di Klub Batubara Indonesia Ben Lawson mengindikasikan bahwa tujuantujuan terbesar batubara Indonesia pada masa ini, yaitu India dan Cina bersama, akan memerlukan lebih dari 350 juta ton per tahun. Negara-negara yang ekonominya berkembang pesat yaitu Thailand, Malaysia, Vietnam, Taiwan dan Korea Selatan bersama akan memerlukan 100 juta dalam lima tahun mendatang. “Salah satu pasaran terbesar batubara Indonesia yaitu Jepang telah menutup semua kecuali dua dari 54 pabrik listrik bertenaga nuk-

lirnya dan akan memerlukan peningkatan jumlah batubara yang besar bagi menutupi kekurangan.” katanya. “Ini berpotensi peningkatan lebih kurang 60 juta ton.” Ben Lawson mengatakan, peningkatan keperluan batubara domestik telah mengalami peningkatan yang eksponensial bersamaan dengan kenaikan produksi listrik bertenaga batubara-nya PLN. Kenaikan yang cukup besar akan terus kita lihat karena PLN bersama BUMN-BUMN petrokimia dan perkebunan serta mayoritas dari sektor conglomerat memerlukan tambahan persediaan batubara yang besar bagi memenuhi kebutuhan pembangkit-pembangkit tenaga listrik yang sudah ada dan yang sedang dibangun untuk menggantikan pembangkit tenaga listrik solar yang mahal. Fitch Ratings mengatakan bahwa profil kredit subkontraktor-subkontraktor pertambangan bergantung besar pada peningkatakan jumlah (produksi) yang diperlukan untuk membayar kembali hutang-hutang, akan terdampak seandainya pemerintah melaksanakan pembatasan secara ketat. Ia mengatakan bahwa banyak perusahaan mencoba meningkatkan produksi sebagai kompensasi turunnya pendapatan dari dolar per ton disebabkan jatuhnya harga internasional batubara, terutama perusahaan yang menyandang taraf hutang yang tinggi dan likuiditas rendah.

Indonesia

Adaro aims to lift production 7% ADARO Energy has allocated $200 million to $250 million for capital spending this year with the aim of boosting production by about 7%. The capex budget for Indonesia’s second-largest coal mining company is around double the amount spent in 2013. The company’s coal production in 2013 hit a record high of 52.27 million tonnes, up 11% from a year earlier. Adaro’s sales by volume increased 10% to 53.47 million tonnes. “Our focus in 2014 is to maintain reliability of supply to our customers, continue to improve operational efficiencies and preserve our solid balance sheet,” Adaro’s corporate secretary and head of investor relations Cameron Tough said in a statement. Jakarta-based Adaro was established in 2004 as a unit of the Saratoga Group, an investment firm controlled by Indonesian billionaires Edwin Soeryadijaya and Sandiaga Uno. The company said last November that it reduced its capital expenditure to $120 million last year from the original target of $423 million. Cameron Tough said that the company is targeting its EBITDA (earnings before interest, tax, depreciation and amortization) to hit between $750 million and $1 billion this year. It had $626 million in EBITDA in the January-September period of last year. Jakarta-based brokerage Trimegah Securities said in a note to clients that Adaro has about 1.1 billion tonnes of coal reserves with 12.3 billion tonnes of resources. It said that news of the company lifting production suggested it would post

Transferring Adaro coal from a barge to an ocean-going vessel. Memindahkan batubara Adaro dari tongkang ke sebuah kapal lautan. positive results and boost its stock price. Adaro also plans to invest in power plants as electricity demands in Indonesia rises. Meantime, as Adaro maintains its strategy of vertical integration in South Sumatra, it has sold its 35% stake in coal logistics company PT Servo Meda Sejahtera. The sale realized a total of US$25.13 million with PT Perusahaan Palembang Investama acquiring 216,300 shares with a value of US$15.08 million and PT Energi Karya Persada acquiring 144,200 shares with a value of $10.05 million. Adaro’s CEO Garibaldi Thohir said: “Our strategy of vertical integration remains, as we will

now focus on pit to power integration in South Sumatra.” Adaro still retains the rights to use the haulage road owned by Servo Meda, which was acquired in October 2011 for 200 billion rupiah (US$17.14 million). Last November, Adaro Energy posted thirdquarter revenue of $2.43 billion, down 12% from a year earlier. Trimegah Securities says rising production should help the company post an increase in earnings this year. A decline in global coal prices has affected many of the country’s coal miners including Adaro. Extreme weather conditions have also taken their toll on mining operations across the country.

Adaro tingkatkan produksi 7% ADARO Energy menyediakan antara $200 juta dan $250 juta sebagai modal peningkatakan produksinya7%. Anggaran belanja pengeluaran modal perusahaan tambang batubara Indonesia kedua terbesar ini sekarang dua kali lipat pengeluaran tahun 2013-nya. Produksi batubara perusahaan ini pada tahun 2013 mencapai jumlah tertinggi 52,27 juta ton, naik 11% dari tahun sebelumnya. Jumlah penjualan naik 10% ke 53,47 juta ton. “Tumpuan kami di tahun 2014 adalah memastikan suplai kepada pelanggan kami, meningkatkan efisiensi operasi dan memelihara balance sheet yang baik.” kata Cameron Tough Sekretaris Perusahaan dan Kepala Hubungan Investor dalam suatu pernyataan. Adaro yang berkedudukan di Jakarta didirikan pada tahun 2004 sebagai sebuah unit dari Grup Saratoga, sebuah perusahaan investasi yang dikendalikan oleh milyarder Edwin Soeradijaya dan Sandiaga Uno. November lalu perusahaan ini telah mengurangkan pengeluaran asetnya ke $120 juta tahun lalu dari rencana semulanya 12 l Coal Age Indonesia l May 2014

berjumlah $423 juta. Cameron Tough mengatakan bahwa perusahaannya sedang merencanakan EBITDA (pendapatan sebelum interest, pajak, depresiasi dan amortizasi) untuk mencapai antara $750 juta dan $1 milyar tahun ini. EBITDA-nya untuk periode Januari s/d September tahun lalu ialah $626 juta. Trimegah Securities sebuah perusahaan broker berkedudukan di Jakarta mengatakan kepada pelanggannya bahwa Adaro mempunyai lebih kurang 1,1 milyar ton inventaris batubara dengan 12,3 milyar ton cadangan. Dikatakan pula kabar bahwa perusahaan meningkatkan produksi adalah pertanda ia akan mengumumkan hasil yang positif. Ini juga akan meningkatkan harga sahamnya. Adaro juga berencana menanamkan modal di sector fabrik listrik bersamaan dengan meningkatnya keperluan listrik di Indonesia. Sesuai dengan strategi integrasi vertikalnya di Sumatera Selatan, Adaro menjual sahamnya yang 35% di perusahaan logistis batubara PT Servo Meda Sejahtera. Hasil penjualan yang US$25,13 juta itu direalisasikan dengan PT

Perusahaan Palembang Investama membeli 216.300 saham berjumlah US$15,08 juta dan PT Energi Karya Persada membeli 144.200 saham seharga $10.08 juta. Dirut Adaro Garibaldi Thohir berkata: “Strategi integrasi vertikal kami teruskan dengan sekarang menumpukan perhatian kepada pengintegrasian tambang dan listrik di Sumatera Selatan.” Adaro tetap berhak menggunakan jalan pengangkutan milik Servo Media yang dibeli Oktober 2011 seharga Rp 200 milyar (US$17.14 juta). November yang lalu Adaro Energy melaporkan penghasilan kwartal ketiga sejumlah $2,43 milyar, 12% kurang dari setahun yang lalu. Trimegah Securities mengatakan bahwa peningkatan produksi seharusnya membantu meningkatkan penghasilan tahun ini. Turunnya harga batubara dunia telah berdampak negatif pada perusahaan-perusahaan pertambangan batubara di Indonesia. Udara buruk telah pula mengganggu operasi pertambangan diseluruh negara.

Indonesia

Banpu implements cost reduction programs COST reduction programs combined with the solid performance of its power business is helping cushion Banpu from the impact of unfavourable coal prices. The unfavourable market directly affected Banpu’s revenue from its coal business in 2013, even though its coal-sales volume increased by 1.22 million tonnes to 42.8 million. Banpu’s chief executive Chanin Vongkusolkit said the company’s 2013 net profit of US$103 million was lower than the previous year but Banpu was not alone in this regard. He said in 2013 the coal industry across the world was overwhelmed by excess supply, leading to a downturn in prices. The average selling price (ASP) of Indonesian coal, which was most affected by this downturn, dropping 17% from the price in 2012. This resulted in a decrease of Banpu’s ASP to $72.41 per tonne, or 15% lower than the previous year. Banpu recorded total sales revenue of $3.35 billion last year, 11% lower than 2012. Banpu’s power business had a net profit of $65.67 million, an increase of $23.22 million, or 55%, on the previous year. Chanin Vongkusolkit said Banpu had implemented several measures in 2013 to lessen the impact from unfavourable external factors. They included boosting operational efficiency and reducing costs, adjusting its mine plan, improving coal handling and port management to minimize energy cost, streamlining coal flows from mines to ports, and better coordination of ship scheduling to reduce port demurrage. These measures are continuing this and have been expanded in a bid to further reduce costs. An in-pit crushing and conveying (IPCC) trial commenced in December 2013 at the company’s Indominco East Block. This will facilitate access to deeper coal reserves and Banpu says it will be more environmentally friendly with less dust, less noise and lower emissions. This plan will reduce overburden removal at the site and there will be power savings as a result of the use of power from the Indominco coal-fired power plant. Banpu is also examining the substitution of diesel with LNG or other alternative fuels. A study has been completed for trucks while this scheme is currently being trialled for coal transport from Indominco to Bontang port. A contractor partnership is under negotiation while Banpu is also considering the possible implementation of this substitution scheme at Trubaindo-Bharinto. The company is also looking at medium term electrification projects which

Banpu’s coal and power operations in Kalimantan. Operasi batubara dan listrik Banpu di Kalimantan. also have capacity to result in savings. Electric overland conveyors are being considered to reduce coal transport cost at Indominco and the adjacent operations, as well as at Trubaindo-Bharinto. Banpu believes this would enhance the efficiency of coal transport while reducing operating costs. It says it is proven technology that is widely used in Europe, USA and Australia.

Banpu melaksanakan program-program penghematan biaya PROGRAM-program penghematan biaya bersama performance yang baik dari bisnis listriknya telah membantu mengurangi dampak dari harga batubara yang tidak membantu. Pasaran yang negatif di tahun 2013 telah mempengaruhi penghasilan dari bisnis batubara-nya, walaupun jumlah penjualan batubaranya meningkat dengan 1,22 juta ton ke 42,8 juta. Dirut Banpu Chanin Vongkusolkit mengatakan bahwa keuntungan perusahaan sejumlah US$103 juta pada tahun 2013 ternyata kurang dari tahun sebelumnya, namun Banpu bukan sendiri mengalami hal ini. Katanya pula ditahun 2013 harga batubara menurun karena persediaan yang berlebihan. Harga rata-rata penjualan batubara Indonesia (ASP) yang sangat terdampak oleh hal ini mengalami penurunan dengan 17% dari harga di tahun 2012. Karenanya ASP Banpu turun dengan 15% ketimbang harga tahun sebelumnya. Banpu juga mengalami penurunan hasil penjualan sebanyak $3.35 Milyar yaitu 11% dibawah 2012. Namun bisnis listrik Banpu meraih keuntungan bersih berjumlah $65.67 juta, meningkat $23.22 juta atau 55% disbanding dengan tahun sebelumnya. Chanin Vongkusolkit mengatakan bahwa Banpu telah mengambil langkah-langkah untuk mengurangkan dampak dari faktor-faktor negatif eksternal. Ini termasuk meningkatkan efisiensi operasi dan mengurangkan biaya-biayanya, melaraskan pengaliran batubara dari tambang ke pelabuhan dan koordinasi jadwal kapal yang lebih baik bagi meningkatkan penggunaan pelabuhan.

Langkah-langkah ini akan membantu rencana tersebut dan telah di perluas untuk lebih menurunkan biaya. Percobaan ‘crushing’ dan ‘conveying’ di lumbung tambang (IPCC) bermula di bulan Desember 2013 di blok timur Indominco nya perusahaan. Ini akan memungkinkan masuk ke cadangan batubara yang lebih dalam, juga kata Banpu akan lebih sensitif-lingkungan dengan berkurangnya abu, berkurangnya kebisingan dan berkurangnya emisi. Rencana ini akan mengurangkan overburden dan sekalian penghematan listrik karena tenaga listrik dari pabrik listrik menggunakan batubaranya Indominco. Banpu juga sedang menyiasati pengganti bahan bakar solar dengan LNG atau bahan bakar lain. Penyiasatan penggunaan untuk truk telah selesai dan sekarang sedang dicoba untuk pengangkutan batubara dari Indominco ke pelabuhan Bontang. Kemitraan kontraktor sedang dibicarakan dan Banpu juga sedang memperkirakan kemungkinan melaksanakan cara penggantian ini di Trubaindo-Bharinto. Perusahaan juga sedang melihat pada proyek-proyek elektrifikasi dalam masa dekat yang juga dapat menghasilkan penghematan. Konveyor daratan menggunakan tenaga listrik sedang diteliti untuk mengurangkan biaya pengangkutan batubara di Indominco dan operasi-operasi sekitarnya serta di Trubaindo-Bharinto. Banpu percaya hal ini akan meningkatkan efisiensi pengangkutan batubara sementara menurunkan biaya-biaya operasi. Ini adalah Teknologi yang sudah terbukti dan digunakan secara luas di Eropah, Amerika Serikat dan Australia. May 2014 l Coal Age Indonesia l 13

Indonesia

Bukit Asam increasing port capacity response to the high cost of oil. He says that this is expected to boost coal exports from Indonesia as well as from Bukit Asam. Milawarma also says the opportunity is quite promising, considering that demand from Taiwan and Vietnam is still high despite last year’s oversupply. Bukit Asam hopes to see exports contribute to 60% of its sales this year, up from 55% in 2013. During the first nine months of 2013, exports to Taiwan made up 17% of the company’s total sales, India accounted for 14%, followed by China with 9%, Malaysia 8%, Japan 3% and Vietnam 2%. Bukit Asam has set a production target of 22.7 million tonnes this year, an increase of around 22% from the 2013 output of 17.5 million to 18 million tonnes. It also aims to market 3.5-4 million tonnes of third party coals, compared to 2.5 million tonnes last year. Milawarma says the company has prepared a capital expenditure budget of Rp 2.5-3 trillion in 2014, up from the 2013 figure of Rp 2.2 trillion. This The expansion at Tarahan Port will take annual coal capacity from 13 million to 25 million tonnes. includes the Tarahan Pengembangan Pelabuhan Tarahan akan meningkatkan kapasitas tahunan batubara dari 13 juta ke 25 juta ton. Port expansion work.

STATE-OWNED PT Bukit Asam is upgrading the capacity of Tarahan Port in South Sumatra through construction of new jetty that can accommodate a cape size vessel. The expansion project, which is expected to be completed in the second half of 2014, will increase the company’s annual capacity from 13 million tonnes to 25 million tonnes. The Tarahan Coal Terminal is at Bandar Lampung, which is about 410km by rail from Tanjung Enim coal mine, which is fully owned and operated by Bukit Asam. Once the port is ready for commercial operation, it will operate a newly developed jetty able to accept cape size vessels of up to 200,000 DWT, in addition to the existing jetty with a capacity of berthing Panamax vessels of up to 80,000 DWT.

The port expansion will be supported by an increased capacity of the coal stockpile to 860,000 tonnes from 560,000 tonnes. The stockpile also will be equipped with two new additional RCD (Rotary Car Dumpers) by July to support the company’s mining and logistics operations. Bukit Asam is aiming for a 25% increase in coal exports during 2014, taking advantage of rising demand in the international coal market, especially from Japan and emerging coal markets in the region. Bukit Asam president director Milawarma says the company expects demand from Japan to increase in line with the country’s plan to develop coal-fired power plants following the Fukushima nuclear plant disaster in 2011 and in

Bukit Asam meningkatkan kapasitas pelabuhan PT BUKIT Asam milik pemerintah sedang meningkatkan kapasitas Pelabuhan Tarahan di Sumatera Selatan dengan membangun jetty baru yang dapat menangani kapal berukuran besar. Proyek pengluasan yang diperkirakan selesai di pertengahan kedua tahun 2014 akan meningkatkan kapasitas perusahaan dari 13 juta ton ke 25 juta ton. Terminal Batubara Tarahan berada di Bandar Lampung, lebih kurang 410 km dengan keretapi dari tambang batubara Tanjung Enim, dimiliki penuh dan dikelola oleh Bukit Asam. Begitu pelabuhan siap untuk operasi komersil, kapal sampai seberat 200.000 DWT dapat bongkar muat di jetty baru, disamping kapasitas untuk kapal Panamax yang ada yang dapat mengelola kapal sampai 80.000 DWT. Pengembangan pelabuhan didukung oleh peningkatakan kapasitas stockpile batubara dari 560.000 ton ke 860.000 ton. Ia juga akan 14 l Coal Age Indonesia l May 2014

dilengkapi dengan dua RCD (Rotary Car Dumpers) baru di bulan Juli bagi mendukung operasi pertambangan dan logistis perusahaan. Bukit Asam merencanakan kenaikan ekspor batubara sebesar 25% di tahun 2014, dengan mengambil kesempatan dari kenaikan permintaan pasar batubara internasional, terutama dari Jepang dan pasaran-pasaran batubara baru di kawasan tersebut. Presdir Bukit Asam Milawarma mengharapkan permintaan dari Jepang meningkat bersamaan dengan rencananya membangun fabrik-fabrik tenaga listrik berbahan bakar batubara setelah kejadian nuklir Fukushima pada tahun 2011 dan juga atas tingginya harga minyak. Ia memperkirakan ini akan meningkatkan ekspor batubara dari Indonesia dan juga dari Bukit Asam. Ia berkata bahwa peluang ini sangat menggalakkan, apalagi permintaan dari Taiwan dan

Vietnam tetap tinggi walaupun adanya persediaan yang berlebihan tahun lalu. Bukit Asam mengharapkan ekspor akan menyumbang 60% dari penjualannya tahun ini, naik dari 55% pada tahun 2013. Selama 9 bulan pertama 2013 ekspor ke Taiwan mencapai 17% dari total penjualan perusahaan, India 14%, China 9%, Malaysia 8%, Jepang 3% dan Vietnam 2%. Tahun ini Bukit Asam telah menetapkan target produksinya 22.7 juta ton, naik 22% dari 2013 dan produksi dari 17.5 juta ke 18 juta ton. Ia juga berencana memasarkan 3.5 – 4 juta ton batubara pihak ketiga ketimbang 2.5 juta ton tahun lalu. Milawarma mengatakan bahwa perusahaannya telah menyediakan anggaran belanja modal sebesar Rp 2,5 – 3 triliun untuk tahun 2014, naik dari Rp 2,2 tiriliun di 2013. Ini termasuk biaya pengluasan Pelabuhan Tarahan.

Indonesia

Killara engages mining contractor for BEH KILLARA Resources has entered into a binding agreement with Indonesian mining contractor Berkah Ciwi Lestari Kaltim (BCLK), for the further development and coal production from its Borneo Emas Hitam (BEH) coal project in East Kalimantan. Production was expected to begin by the end of March. BCLK started deployed heavy equipment and personnel to the site in late December for an immediate focus on overburden removal to expose coal for extraction. During the second week of January BCLK, Killara and the local A coal stockpile at the BEH project of Killara Resources. community held a traditional cere- Stockpile batubara di proyek BEH Killara Resources. mony to mark the commencement of veloped area in Eastern Block have been sent to mining and followed with land clearing. BCLK is a subsidiary of PT Buana Celebes, PT Geoservices’ Balikpapan laboratory for analywhich has experience in nickel mining at Pomala, sis. A total of 78 samples from drilling and outSulawesi Tenggara and at coal projects in East crops have been submitted for analysis with Kalimantan as a mining contractor for Alamoudi results confirming a direct shipping thermal coal product with high CV and low ash, but with varyResources. BEH is divided into three blocks - Eastern, ing sulphur levels. Killara has completed the Eastern Block exploCentral and Western. Killara’s initial priority is Eastern Block based on outcrop and drilling data. ration and mining will start there. Mine designs and the mining sequence for the This area has three short-term production targets (pits 4, 6 and 8) which have been subject to land operation in pits 4, 6 and 8 are ready and BCLK will commence mining based on designs from compensation. An additional 28 core samples from the unde- Killara on compensated areas.

Management is engaged in discussions with coal buyers while a non-technical team is engaged in the IUP renewal process with a well advanced application with regional authorities. Killara also has an option to acquire a direct interest in a coal concession in Central Kalimantan owned by PT Pagun Taka (PT). This concession is in a prospective area known to host coal and Killara is planning to undertake extensive field work to determine its economic value for shareholders. A field reconnaissance program has been completed focusing on validating geological information provided by the vendor which included field mapping, laboratory analysis and associated reports. Killara identified coal from three geological formations at PT - Montalat, Berai and Warukin. The Montalat and Warukin formations are subject to mining in an adjoining concession and throughout Central Kalimantan. Field mapping identified 22 coal outcrops with true thickness averaging 0.61 and ranging up to 1.45 metres. Thirteen outcrops were sampled and results confirmed a direct shipping thermal coal with very low ash and low sulphur.

Killara gunakan kontraktor pertambangan untuk BEH KILLARA Resources telah menandatangani perjanjian dengan kontraktor pertambangan Indonesia Berkah Ciwi Lestari Kaltim (BCLK) untuk perkembangan selanjutnya dan produksi batubara dari proyek batubaranya Borneo Emas Hitam (BEH) di Kalimantan Timur. Diperkirakan produksi akan bermulai pada akhir Maret. BCLK mulai menurunkan alat-alat berat dan personil ke daerah tersebut pada akhir Desember dengan tujuan selekasnya membuang timbunan diatas batubara untuk ditambang. Pada minggu kedua Januari BCLK, Killara dan masyarakat setempat mengadakan acara tradisi permulaan pertambangan yang disusul oleh pembersihan tanah. BCLK adalah anak perusahaan PT Buana Celebes, yang berpengalaman di pertambangan nickel di Pomala, Sulawesi Tenggara dan proyek-proyek batubara di Kalimantan Timur sebagai kontraktor pertamban gan untuk Alamoudi Resources. BEH terdiri dari tiga blok – Timur, Tengah dan Barat. Prioritas utama Killara mula-mula adalah pada Blok Timur berdasarkan outcrop dan data penggalian. 16 l Coal Age Indonesia l May 2014

Blok ini mempunyai tiga produksi jangka pendek (lombong 4, 6 dan 8) yang memerlukan kompensasi tanah. 28 lagi sampel galian dari daerah yang belum dikembangkan di Blok Timur telah dikirim ke laboratorium PT Geoservices di Balikpapan untuk analisa. Sejumlah 78 sampel dari galian dan dari atas permukaan telah dikirim untuk analisa dengan hasil mengkonfirmasi adanya batubara yang bias dikapalkan yang mempunyai CV tinggi dan kadar abu rendah, tetapi dengan kadar sulfur yang bervariasi. Eksplorasi Killara di Blok Timur telah selesai dan penambangan akan dimulai disana. Desain tambang dan prosedur penambangan untuk operasi lombong 4, 6, and 8 telah siap dan BCLK akan memulai penambangan berdasarkan desain dari Killara pada blok yang sudah diberi kompensasi ini. Pihak manajemen sedang berdiskusi dengan pembeli-pembeli batubara sedangkan sebuah tim non-teknis sedang mengurus proses pembaruan IUP dengan permohonannya sudah jauh dimuka dalam kebijaksanaan pihak berwenang

setempat. Killara juga mempunyai opsi untuk membeli saham di konsensi batubara di Kalimatan Tengah yang dimiliki PT Pahun Taka (PT). Konsensi ini diketahui mengandungi batubara dan Killara berencana mengadakan kerja lapangan yang ekstensif bagi memastikan nilai ekonomis untuk para pemegang sahamnya. Sebuah program siasatan lapangan yang berfokus pada mengkonfirmasi informasi dari penjual termasuk peta kawasan, analisa laboratorium dan laporan-laporan lain telah selesai. Killara telah mengetahui adanya batubara dari tiga formasi geologis di PT – Montalat, Berai dan Warukin. Formasi Montalat dan Warukin bergantung pada penambangan di daerah sekitarnya dan juga di Kalimantan Tengah. Peta lapangan menunjukkan 22 timbunan batubara dengan tebal 0.61 sampai 1.45 meter. 13 timbunan telah disampel dan hasilnya mengkonfirmasi batubara panas yang dapat dikapalkan mengandungi kadar abu yang sangat rendah dan kadar sulfur yang rendah.

Indonesia

Orpheus Energy cash flow positive ORPHEUS Energy has achieved a significant milestone - becoming operationally cash flow positive after receiving payment for its sixth barge of coal loaded in December. It continues to mine and haul coal from ADK project in South Kalimantan to the SKJM barge loading port, which it manages. It is also making improvements to loading efficiency at SKJM with 5000 tonnes barges now able to be loaded daily. With steady-state mining, hauling, loading and trading now in place, Orpheus has established a sustainable foundation. The A fully loaded barge at SKJM port. Loading efficiency at the port has recently been improved with company is satisfied its mining and logis- 5000 tonne barges now loaded daily. tics operations are now performing consisTongkang penuh muatan di pelabuhan SKJM. Efisiensi bongkar-muat di pelabuhan tsb telah dittently, with a well-controlled management ingkatkan baru-baru ini memungkinkan memuat 5000 ton tiap hari. process in place to ensure sustainability of all available Orpheus ADK coal over the next 12 achieve cash flow positivity within two years of operations. The monthly production rate is anticipated to months at the rate of about 50,000 tonnes a month. listing is an outstanding achievement. “We are proud that we have been able to fulfil Additionally, as Orpheus’s trading operations increase to more than 50,000 tonnes during 2014 although production was reduced in January due accelerate, this will translate into a commensurate this stated objective by end 2013, with diversified to further poor weather and a boundary clarifica- increase in free cash flow generated. While no revenue streams and a platform for continued tion process with neighbouring mine PT Arutmin. near-term increase in the prevailing coal price is growth. “This is particularly encouraging given it was This prompted Orpheus to finalize a new mine assumed, there are existing opportunities for Orpheus’s net margin to be increased over the achieved despite an extremely challenging global plan to commence mining in a new area. During December the company mined around course of the next half year and beyond. These economic and poor coal price environment. “Our vertical integration strategy through con30,000 tonnes from ADK after normal mining and include: • Ongoing renegotiations on coal infrastructure trolling our infrastructure, coal production and trucking activities resumed on November 21 foltrading is performing well and positions the comlowing heavy unseasonal rains earlier in the quar- rates; • Selling coal on a FOB mother vessel basis pany to generate significant free cash flow without ter. Additionally the company’s trading division diluting shareholders. sold about 22,000 tonnes of coal from small local instead of FOB barge basis; “Our focus for 2014 is to continue to ramp-up • Depreciation of the Australian dollar against producers. The buyer of the coal is an Indonesian trading the US as Orpheus sales contracts are paid in $US. coal sales, reduce operational costs and generate Executive chairman Wayne Mitchell says, “To strong positive income for shareholders.” group that has committed to ongoing purchases of

Cash flow Orpheus Energy positif ORPHEUS Energy telah mencapai sebuah milestone yaitu menjadi cash-flow positif menyusul dibayarnya batubara kapalnya yang keenam yang dimuat bulan Desember yang lalu. Ia terus menambang dan mengangkut batubara dari proyek ADK di Kalimantan Selatan ke pelabuhan SKJM yang dapat membongkar muat 5000 ton setiap hari. Dengan adanya kestabilan dalam pertambangan, pengangkutan dan perdagangan, Orpheus telah membuat fondasi yang berkesinambungan. Perusahaan sekarang puas bahwa operasi penambangan dan logistiknya berjalan secara konsisten, dan proses manajemen terkendali baik bagi meyakinkan operasi yang berterusan. Diperkirakan produksi bulanan meningkat melebihi 50.000 ton sepanjang 2014, walaupun produksi di bulan Januari berkurang oleh karena cuaca buruk dan proses klarifikasi batas dengan tambang tentangga PT Arutmin. Ini memaksa Orpheus menyelesaikan rencana penambangan yang baru yang akan dilaksanakan di kawasan baru.

Bulan Desember perusahaan berhasil menambang sekitar 30.000 ton dari ADK setelah penambangan dan pengangkutan kembali beroperasi pada tanggal 21 Nopember menyusul hujan lebat diluar musim pada awal kwartal. Disamping itu perusahaan juga menjual sekitar 22.000 ton batubara dari produsen kecil setempat. Pembeli batubara ini adalah sebuah grup pengusaha Indonesia yang telah terus komit membeli batubara Orpheus ADK yang ada untuk 12 bulan kedepan dengan jumlah bulanan 50.000 ton. Sebagai tambahan, dengan bertambah cepatnya operasi dagang Orpheus, ini berarti pertambahan yang sebanding dalam cash flownya. Walaupun tidak ada kenaikan harga batubara diperkirakan, kesempatan meningkatkan pendapatan ternayata ada untuk setengah tahun kedepan dan setelah itu. Contoh-contoh ini termasuk: • Pengnegosiasian biaya insfrastruktur batubara • Memasarkan batubara berdasarkan FOB dari kapal induknya dan bukan FOB dari kapal pengantaranya

• Depresiasi dollar Australia ketimbang dollar US karena kontrak penjualan Orpheus dibayar dalam US$. Ketua Eksekutif Wayne Mitchell berkata, “Mencapai cash-flow positif dalam waktu dua tahun setelah di listing adalah suatu pencapaian yang luar biasa. Kami bangga dapat mencapai ini yang memenuhi objektif kami untuk akhir 2013, dengan jalur pendapatan yang bervariasi dan landasan untuk terus berkembang. Ini sangat menggalakkan terutama ini dicapai dalam masa keadaan eknomi global yang mencabar dan harga batubara yang buruk. “Strategi integrasi vertikal kami dengan mengendali infrastruktur, produksi batubara dan perdagangan telah berhasil baik dan menempatkan perusahaan untuk mencetuskan cash flow bebas tanpa mengurangkan pemegang saham. Fokus kami untuk 2014 adalah terus meningkatkan penjualan batubara, mengurangkan biaya-biaya operasi dan menghasilkan pendapatan positif untuk para pemegang saham.” May 2014 l Coal Age Indonesia l 17

Indonesia

PSA benefits from tight cost control DESPITE adverse market conditions during 2013, PT Toba Jaya and Coal Fe Resources have continued operations at PT Pancaran Surya Abadi (PSA) coal project in Kutai Lama Regency, East Kalimantan, owing to their tight control of costs. The conditions have forced many coal mines in Indonesia, particularly in Kutai Lama, to stop production because they were operating at a loss. Coal FE’s chairman Chan Foo Khee says the adverse conditions have hit particularly hard where mine owners have depended on third parties for hiring mining equipment for their operations. The tightly controlled costs at PSA have enabled operations to continue, albeit at a lower production. He said owing to the prolonged bearish market sentiments and the risks involved in pursuing some of the exploration projects being undertaken by the company in Indonesia, the Board had taken the decision last year not to renew the exploration licences at the Palapa and Andalas projects. “Despite the adverse conditions prevailing in the coal market, we continue to be encouraged by the fact that demand for the PSA type of lignite coal has remained relatively stable and our joint mine management partner Toba Jaya has been able contain the mine’s operating cost and maintain its competitiveness. “However, the reduced production, due to prevailing low coal prices, has inevitably impacted on the cash flow of the company.

“In this regard, the company will continue its austerity measures and careful credit management whilst working closely with Toba Jaya on increasing production as soon as possible. “There is willingness between the company and Toba Jaya to recommence negotiation on the proposed acquisition of Toba Jaya when market conditions stabilize. The completion will put Coal Fe in a much stronger footing in the coal industry in Indonesia. The parties will continue to monitor market conditions.” The PSA tenement is issued with the final mining, operation and production licence (Izin Usaha Penambangan Operasi Produksi) and encompasses an area of about 991 hectares. Phase 1 of the exploration program covered about 300 hectares and resulted in identification of a JORC-compliant resource of about 34.5 million tonnes with the remaining 691 hectares presently unexplored. Coal FE entered into a joint venture and mine management agreement with PT Toba Jaya, an established Indonesian mining contractor, in April 2009. Toba Jaya developed the mine infrastructure and commenced production in late 2010. In the December quarter coal sales of 36,294 tonnes were recorded with total 2013 production amounting to 248,982 tonnes, an increase of about 40% on the 2012 figures. These sales translate into a royalty of US$1.00 per tonne for Coal Fe.

ABOVE: Loading coal from a barge to an ocean-going vessel. Membongkar muat batubara dari kapal tongkang ke kapal lautan. RIGHT: Mining at the PT Pancaran Surya Abadi (PSA) coal project. Penambangan di proyek batubara Pancaran Surya Abadi (PSA).

PSA meraih keuntungan dari pengendalian yang ketat WALAUPUN kondisi pasaran 2013 kurang baik, PT Toba Jaya dan Coal Fe Resources tetap meneruskan operasi proyek batubara PT Pancaran Surya Abadi (PSA) di Kabupaten Kutai Lama, Kalimantan Timur, berkat pengendalian ketat biaya-biayanya. Kondisi-kondisi waktu ini telah menutup banyak operasi produksi terutama di Kutai Lama disebabkan kerugian. Ketua Komisaris Coal FE Chan Foo Khee mengatakan bahwa kondisi-kondisi buruk telah berdampak gawat terutama dimana empunya tambang bergantung pada pihak ketiga bagi menyewa alat-alat pertambangan untuk operasinya. Berkat pengontrolan biaya yang ketat PSA dapat terus beroperasi walaupun dengan produksi yang berkurang. Oleh karena keadaan pasaran kurang baik yang berkepanjangan dan risiko-risiko untuk meneruskan beberapa proyek-proyek eksplorasi yang sedang dikerjakan oleh perusahaan, Dewan Komisaris telah memutuskan tahun lalu untuk tidak memohon pembaharuan izin-izin eksplorasi di proyek-proyek Palapa dan Andalas. “Walaupun kondisi pasaran batubara kurang baik, kami terus merasa digalakkan oleh permintaan untuk batubara lignit PSA yang cukup stabil, dan mitra pengelolaan tambang bersama kami Toba Jaya berhasil membatasi biaya operasi tambang dan terus berhasil bersaing. “Bagaimanapun, produksi yang berkurang disebabkan harga-harga batubara yang rendah telah berdampak pada cash-flow perusahaan. Karenanya kami akan meneruskan langkah-langkah menghemat serta 18 l Coal Age Indonesia l May 2014

mengelola kredit dengan baik dan bekerjasama dekat dengan Toba Jaya untuk meningkatkan produksi selekas mungkin. “Keinginan tetap ada untuk memulai kembali negosiasi antara perusahaan dan Toba Jaya untuk pembelian Toba Jaya kalau kondisi pasar sudah stabil. “Dengan penyelesaiannya Coal Fe akan memperkuat kedudukannya dalam industri batubara di Indonesia. “Kedua pihak akan tetap memperhatikan kondisi-kondisi pasar.” Tenemen PSA dengan luas 991 hektar telah mendapat Izin Usaha Penambangan Operasi Produksi. Fase pertama program eksplorasi seluas 300 hektar diperkirakan mempunyai cadangan yang memenuhi JORC sebanyak 34,5 juta ton dengan 691 hektar masih belum dieksplorasi. Coal Fe dan Toba Jaya, sebuah kontraktor pertambangan Indonesia terkenal, memasuki joint venture dan kemitraan pengelolaan tambang pada bulan April 2009. Toba Jaya membangun infrastruktur tambang dan memulai produksi di akhir 2010. Pada kwartal Desember tercatat penjualan batubara sebanyak 36.294 ton dengan keseluruhan produksi pada tahun 2013 sebanyak 248.982 ton, meningkat dengan lebih kurang 40% ketimbang jumlah pada tahun 2012. Penjualan-penjualan ini menghasilkan royalti sebesar US$1,00 per ton untuk Coal Fe.

Indonesia

New feeder installed at Delta project THE installation and commissioning of a new Stammler Flat Back Feeder at the river loading facility of the Delta Coal Project in East Kalimantan is expected to provide greater efficiency for blending and loading the coal cargoes. The project is 33.3% owned by ASX-listed Altura Mining and 66.6% owned and operated by Delta Coal. The installation by Delta of the new feeder and conveyor extension compliments the previously installed identical unit at the river port facility. Production at Delta during the December quarter remained consistent with the previous quarter with monthly average coal production of 118,531 tonnes, compared to 126,645 tonnes during the September 2013. The current level of production is below the planned monthly average of 146,000 tonnes with delays in contractor supplied mining fleets and above average rainfall reducing coal output from the mining operation. During the December quarter mine operations experienced 51 rainfall affected days for 772mm, almost double the rainfall in the September quarter with 34 rainfall affected days for 391mm. The increased rain caused delays in uncovering coal in the pits and haulage of the raw coal to the process plant. Total Delta production for the second half of 2013 was 735,529 tonnes which represents a 29% increase over the first half of 2013 despite the increased influence of wet weather. Sales for the December quarter of 452,332 tonnes represent an increase of 42% over the

The new Stammler Flat Back Feeder at Delta Coal Project’s river loading facility. Feeder Stammler Flat Back baru di sarana bongkar-muat di sungai Proyek Batubara Delta. September quarter despite some softening in demand for coal during the quarter. During the quarter negotiations were completed with the mining contractors to reduce the current mining rates for waste removal and haulage. The successful negotiations resulted in a decrease in the base waste removal rate and applied from October 2013. These reductions were offset by a fall in the Indonesian Rupiah to the US Dollar, which caused an escalation in the contractor’s fuel costs which form a significant proportion of total costs. Meanwhile, Altura continues to progress the Government Feasibility Study and AMDAL (Environmental Impact Statement) processes

for the Kodio Multicom (KM) and Marangkayu Bara Makarti (MBM) tenements, the southernmost tenements in the Tabalong project in South Kalimantan. Altura expected that the GFS and AMDAL would be completed and lodged with relevant local authorities by the end of March. Approval will pave the way for KM and MBM to be upgraded from exploration to operation production and move them closer to approval to mine. The resource evaluation program continues. It is aimed at determining the potential quantity and coal quality type in the Tabalong holdings. Altura believes there is good potential to identify PCI and metallurgical coal in the area.

Feeder baru di Proyek Delta PENGADAN dan instalasi Stammler Flat Back Feeder baru di sarana bongkar-muat sungai Proyek Batubara Delta di Kalimantan Timur diharapkan meningkatkan efisiensi mencampur dan membongkar-muat batubara. Proyek yang 33.3% dimiliki Altura Mining dan terdaftar di ASX dimiliki 66.6% dan dikelola oleh Delta Coal. Instalasi feeder baru oleh Delta ini serta perpanjangan konveyor menggandengi penginstalasian alat yang sama di sarana pelabuhan sungai tersebut sebelumnya. Produksi Delta pada kwartal Desember sama dengan kwartal sebelumnya yaitu 118.531 ton rata-rata per bulan ketimbang 126.645 ton pada September 2013. Jumlah produksi pada waktu ini kurang dari recana per bulan yaitu 146.000 ton oleh karena terlambatnya suplai armada oleh kontraktor yang dibarengi dengan hujan yang melebihi jumlah rata-rata mengakibatkan pengurangan hasil operasi pertambangan.

Sepanjang kwartal Desember seperempat dari operasi pertambangan mengalami hujan selama 51 hari berjumlah 772 mm, hampir dua kali lipat dari kwartal September dengan hujan selama 34 hari berjumlah 391 mm. Bertambahnya turun hujan telah memperlambat penambangan batubara dan pengangkutan batubara mentah ke pusat proses. Jumlah produksi Delta untuk bagian kedua tahun 2013 ialah 735.529 ton suatu peningkatan sebanyak 29% ketimbang bagian pertama tahun itu walaupun dipengaruhi cuaca buruk. Penjualan sebanyak 452.332 ton di kwartal Desember ialah 42% diatas jumlah di kwartal September walaupun pesan untuk batubara menurun di kwartal tersebut. Pada kwartal yang sama negosiasi dengan kontraktor tambang untuk menurunkan biaya pengangkutan dan pembuangan overburden siap diselesaikan. Ini berhasil mengurangkan biaya pokokrnya mulai Oktober 2013. Penurunan-penurunan ini diiringi oleh jatuh-

nya Rp ketimbang dollar US yang meningkatkan ongkos bahan bakar dan menjadikannya bagian besar dari jumlah biaya. Sementara itu Altura terus melaksanakan fesibility study pemerintah (GFS) dan proses AMDAL (Pernyataan Dampak Lingkungan) untuk daerah Kodio Multicom (KM) dan Marangkayu Bara Makarta, daerah paling selatan dari royek Tabalong di Kalimantan Selatan. Diharapkan GFS dan AMDAL lengkap dan diserahkan kepada pihak-pihak berwenang setempat pada akhir Maret. Dengan adanya persetujuan akan hal-hal ini KM dan MBM dapat ditingkatkan dari taraf eksplorasi ke operasi produksi menuju ke izin menambang. Program evaluasi sumber sedang diteruskan. Tujuannya ialah untuk mengetahui jumlah dan mutu batubara di Tabalong. Altura percaya adanya cukup potensi untuk mengidentifikasi PCI dan metalurgis batubara di daerah tersebut. May 2014 l Coal Age Indonesia l 19

Indonesia

Jatenergy, Realm in Katingan agreement LEFT: The Katingan River at Tumbang Samba. Sungai Katingan di Tumbang Samba.

Jatenergy dan Realm dalam perjanjian Katingan JATENERGY has signed a cooperation agreement with Realm Resources to jointly maximize the value of adjoining coal resources in Central Kalimantan. The agreement is focused on two adjourning properties within the Katingan region known as Coal Soil Brik (CSB) and Katingan Ria (KR). The companies have identified potential mutual benefits that may arise from closer cooperation in regard to commercialization of the coal resource in the region and the potential to supply a proposed power station development and/or export markets. Jatenergy’s CSB project is immediately south of KR and contains extensions of the JORC coal resources defined by Realm and could, if combined, extend the size and/or life of a potential operation. CSB and KR are shaping as a simple, open-cut operation. The projects are near the town of Tumbang Samba. Results from KR show it will supply low ash and low sulphur coal ideally suited for modern coal power generation, both domestically and for export. Indicative product specifications are consistent with Indonesian 4200 kcal/kg (GAR) low sulphur (0.2%) coal. Both CSB and KR were planned to be open cut mines with coal hauled 40-45km to a stockpiling and barge loading facility on the Katingan River. Barges will then transport coal 435km from the stockpile area to the river mouth for transhipment into coal ships. Coal is planned to be sold unwashed, meaning there is no metallurgical treatment required to achieve a saleable product. Recent discussions have focused on the potential to supply coal to a 200MW power development near the town of Kasongan in Central Kalimantan. This has the potential to see the CSB and KR mine developed largely as a domestic coal supplier, thereby eliminating a significant proportion of the logistics costs and issues associated with river seasonality. Coal supply, which is required by 2016/17 for the power stations, could therefore be developed for both domestic and export markets. PT PLN (Persero), the Indonesian state-owned electricity corporation, issued a request for proposal in 2013 for construction and operation of two 100MW power stations near Kasongan in 2016/17. Realm states that KR is the most developed and best defined coal project in the region and this, together with the coal having the ideal specifications, places the project in good stead to be preferred supplier for the development. Realm is continuing to engage with several of the power station consortia bidders and PLN as the process is still under way. Jatenergy and Realm are also initiating discussions with other potential strategic partners and off-takers to commercialize the Katingan asset. The agreement between Jatenergy and Realm will only add to this process as networks and efforts are combined for mutual benefit. 20 l Coal Age Indonesia l May 2014

JATENERGY dan Realm Resources telah menandatangani perjanjian untuk bersama-sama memaksimalkan nilai masing-masing sarana batubara bersampingan di Kalimantan Tengah. Perjanjian ini berfokus pada dua kawasan bersampingan di daerah Katingan yang dikenal sebagai Coal Soil Brik (CSB) dan Katingan Ria (KR). Kedua perusahaan telah mengidentifikasi potensi khasiat-khasiat dating dari kerjasama dekat dalam hal pengkomersialisasian sarana batubara di daerah tersebut dan potensi sebagai penyalur batubara ke stasiun tenaga listrik yang direncanakan serta pasaran ekspor. Proyek CSB-nya Jatenergy berada langsung diselatan KR dan mengandungi ekestensi batubara JORC yang didefinisikan oleh Realm dan kalau dijadikan satu, akan memperpanjang umur potensi operasi. CSB dan KR akan berbentuk tambang terbuka. Proyek-proyek ini berada di kota Tumbang Samba. Hasil-hasil dari KR menunjukkan batubara dengan kadar abu dan sulfur yang rendah , ideal sebagai bahan bakar pembangkit tenaga listrik, dalam dan luar negeri. Spesifikasi indikatif hasil sesuai dengan syarat-syarat batubara Indonesia yaitu 4200 kcal/kg (GAR) dan kadar sulfur rendah (0,2%). Kedua-dua CSB dan KR merencanakan tambang terbuka dengan hasilnya diangkut 40-45 km ke tempat penumpukkan dan sarana bongkar muat tongkang di Sungai Katingan. Dari sini tongkang akan membawa batubara 435 km ke muara untuk dipindahkan ke kapal angkutan batubara. Direncanakan menjual batubara ini tanpa permurnian, yaitu tidak menjalani proses metalurgis untuk dapat dijual. Perbincangan belakangan ini berfokus pada potensi menyediakan batubara ke sebuah pembangkit tenaga listrik sebesar 200 MW dekat Kasongan di Kalimantan Tengah. Ini berpotensi menjadikan tambang CSB dan KR penyedia batubara untuk konsumsi domestic, karenanya mengurangkan sebagian besar biaya logistic dan hal-hal menyangkut perubahan-perubahan kondisi sungai. Persediaan batubara untuk pembangkit-pembangkit tenaga listrik diperlukan pada tahun-tahun 2016/17, dan dapat untuk pasaran domestic dan ekspor. PT PLN (Persero), perusahaan listrik negara, telah mengeluarkan permintaan untuk rencana 2013 untuk membangun dan pengoperasian dua pembangkit tenaga listrik sebesar 100MW dekat Kasongan pada tahun 2016/17. Realm mengatakan bahwa KR adalah proyek batubara terdefinisi yang terbaik di daerah tsb dan bahwa batubaranya mempunyai spesifikasi yang ideal, menempatkan proyek ini menjadi penyedia terpilih untuk pengembangan. Realm terus berbincang dengan bidders pembangkit-pembangkit tenaga listrik dan PLN karena prosesnya masih berterusan. Jatenergy dan Realm juga memulai diskusi dengan potensi mitra strategis dan off-takers untuk mengkomersialisasikan sarana Katingan. Persetujuan antara Jatenergy dan Realm akan membantu proses ini karena jaringan dan usaha bersatu untuk khasiat bersama.

Indonesia

Churchill clear to pursue damages against the Republic of Indonesia under the CHURCHILL Mining advises that the respective Bilateral Investment Treaties International Centre for Settlement of Indonesia entered into with the United Investment Disputes (ICSID) arbitral tribuKingdom and Australia.” nal, comprising Professor Gabrielle In summary, the jurisdictional challenges Kaufmann-Kohler (president), Michael by the Republic of Indonesia claimed: Hwang SC (arbitrator) and Professor Albert • The Republic of Indonesia had not conJan van den Berg (arbitrator), has rejected the sented to ICSID arbitration of the dispute Republic of Indonesia’s challenges to the with Churchill and its wholly-owned subTribunal’s jurisdiction. sidiary Planet Mining under the UKThe ruling enables Churchill to pursue Indonesia and Australia-Indonesia Bilateral claims for damages against the Indonesian Investment Treaties, and/or government relating to the expropriation of • Even if the Tribunal found that the the firm’s rights over the East Kutai coal Republic of Indonesia had consented to mine. ICSID arbitration as a general matter, the triSubsequent to the decision Indonesia indibunal would still lack jurisdiction because cated that it is set to file a challenge against Churchill and Planet’s investments fell outthe ruling. “We will file an objection,” said side the scope of protected investments under Investment Coordinating Board (BKPM) the respective Bilateral Investment Treaties. chairman Mahendra Siregar in Jakarta. “The In its ruling, the Tribunal dismissed the recent ruling is not in line with the existing Republic of Indonesia’s challenges and found law in Indonesia.” that the Tribunal has jurisdiction over the Indonesia’s Justice Ministry and the claims Churchill and Planet have submitted. Attorney General Office will work on the In its announcement of May 10, 2013, objection, he said without providing any Core samples from the East Kutai Coal Project. Churchill provided a preliminary estimate of timeframe to file the objection. Sampel-sampel inti dari Proyek Batubara Kutai Timur. its and Planet’s damages as a result of the Churchill, and its Australian subsidiary actions taken by the Republic of Indonesia of Planet Mining, are seeking damages of not resource of 2.730 billion tonnes and a value of not less than US$1.054 billion, excluding interest. less than US$1.05 billion, excluding interest, to about US$1.8 billion. Churchill and its lawyers, Quinn Emanuel settle the long-running dispute. The company Churchill’s chairman David Quinlivan says, began arbitration against the Indonesian govern- “We are pleased that the Tribunal has rejected the Urquhart & Sullivan, LLP are seeking directions ment in May 2012 at the ICSID in Washington. Republic of Indonesia’s jurisdictional challenges from the Tribunal on the schedule for submisThe East Kutai Coal Project is a world-class and the Tribunal decisions now allow Churchill sions and hearings on Churchill’s claims for thermal coal deposit with a JORC-compliant and Planet to pursue their claims for damages damages.

Churchill diizinkan mengusut kerugian-kerugian CHURCHILL Mining menyatakan bahwa Pusat Internasional Penyelesaian Pertikaian Investasi (ICSID) tribun penyelesaian pertikaian terdiri dari Profesor Gabrielle KaufmannKohler (Presiden), Michael Hwang SC (arbitrator) dan Profesor Albert Jan van den Berg (arbitrator), telah menolak tantangan Republik Indonesia terhadap keputusan Tribun. Keputusan tersebut memungkinkan Churchill untuk memohon ganti rugi terhadap pemerintah Indonesia mengenai hak-hak atas tambang batubara Kutai Timur. Menyusul keputusan tersebut Indonesia mengatakan akan memasukkan perlawanan atas keputusan itu. “Kami akan memasukkan objection” kata Ketua Komisi BKPM Mahendra Siregar di Jakarta. “Keputusan ini tidak sejalan dengan ketentuan hukum di Indonesia.” Kementerian Pengadilan dan Jaksa Agung Indonesia akan mempersiapkan objection tersebut, katanya tanpa memberikan waktu kapan akan memasukkan objection tersebut. Churchill, dan anak perusahaan Austrlianya Planet Mining, sedang meminta ganti rugi tidak

kurang dari US 1.05 Milyar, tidak termasuk interest, bagi menuyelesaikan pertikaian yang telah berjalan lama ini. Perusahaan melancarkan arbitrasi terhadap pemerintah Indonesia pada bulan May 2012 di ICSID di Washington. Proyek Batubara Kutai Timur mengandungi cadangan batubara panas dunia yang memenuhi syarat JORC sebanyak 2,730 Milyar ton dan bernilai lebih kurang US$ 1,8 Milyar. Ketua Komisaris Churchill David Quinlivan mengatakan, “Kami sangat gembira bahwa tribun menolak tantangan juris Republik Indonesia dan sekarang memungkinkan Churchill dan Planet mengusut klaim-klaimnya untuk ganti rugi terhadap Republik Indonesia dibawah Perjanjian Bilateral Investasi Indonesia dan masing-masing dengan Kerajaan Inggeris dan Australia.” Secara ringkas, tantangan hukum oleh Republik Indonesia mengklain bahwa: • Republik Indonesia tidak pernah menyetujui arbitrasi ICSID dalam pertikaian dengan Churchill dan Planet Mining dibawah Perjanjian Bilateral Investasi antara UK-

Indonesia dan Australia-Indonesia, and/atau • Seandainya dibuktikan bahwa Republik Indonesia telah menyetujui arbitrasi ICSID sebagai hal umum, tribun itu masih tidak punya penguatkuasaan oleh karena investasi Churchill dan Planet Mining ada diluar cakupan investasi-investasi yang termaktub dibawah masingmasing Perjanjian Bilateral Investasi. Dalam keputusannya, Tribun menolak sanggahan Republik Indonesia dan menyatakan bahwa Tribun tersebut mempunyai kuasa atas permohonan yang dimasukkan oleh Churchill dan Planet. Dalam pernyataannya tanggal 10 Mei 2013 tersebut, Churchill memberikan perkiraan ganti rugi untuknya dan Planet disebabkan oleh tindakan-tindakan Republik Indonesia tidak kurang dari US$1,054 Milyar, tidak termasuk bunganya. Churcill dan pengacaranya, Quinn Emanual Urquhart & Sullivan, LLP, memohon keterangan dari Tribun akan jadwal memasukkan klaim Churchill untuk ganti rugi dan waktu pengadilan bermula. May 2014 l Coal Age Indonesia l 21

Indonesia

Indus continues Block 9 discussions “These groups are looking for long term security of supply and there are not a lot of coal assets in the region and certainly not in Indonesia with the value proposition of Block 9 given its low strip ratio, accessibility to existing infrastructure, mine life and minimal capital expenditure commitment.” In early March the Muara Tebo Regency Department of Mines and Energy granted the Production/Operation Izin Usaha Pertambangan (IUP) on Block 9. Indus’ executive chairman Scott Douglas says, “This is a significant milestone for Indus. On Block 9 we have delineated a 94 million tonne, JORC-compliant coal resource, completed mine planning and mine studies, identified key infrastructure to commence mining operations and have completed all mining approvals for production. “It should be noted this has been completed within 14 months of acquiring the Jambi Coal Projects. It is a credit to the Indus team and again highlights the value of our Indonesian partner PT Param Energy. Our focus is to continue discussions with the groups interested in acquiring or co-funding Block 9 and upgrading the forestry exploration permit in the third quarter of 2014.” Indus advises that it has extended the term of the convertible bonds issue and has raised $3.67 million, before costs, through a bridge funding facility. The refinancing enables Indus to progress with upgrading the forestry licence for Block 9, continue land clearances and complete the resource definition on Block 9 to facilitate the monetization of Block 9 with groups interested in acquiring all or part of Block 9 or to become a funding partner. Indus is focused on monetizing the Jambi and MukoMuko coal projects over the next 12 months and continuing to build scale through further acquisitions with PT Param Energy, a company founded by Vinay Hariani and which is a vertically integrated coal mining business with 15 years of experience in coal projIndus Coal’s Block 9 coal project in Sumatra and associated infrastructure. ect identification, coal mining and international coal Proyek batubara Indus Blok 9 di Sumatera dan infrastruktur terkait. trading in Indonesia. INDUS Coal and its Indonesian partner PT Param Energy are continuing discussions with groups interested in acquiring or co-funding Block 9 of the Jambi Coal Projects in Sumatra. Indus has executed confidentiality agreements with several international resource and energy groups to facilitate their due diligence programs through the dataroom. Site visits have also been conducted at Block 9 and are ongoing. Indus’ executive director Vinay Hariani says, “A number of these companies are known to us and have transacted with PT Param Energy in the past. The recent approval of our Production Mining Lease and the growing certainty and confidence around the Indonesian and Indian elections is driving further demand for coal assets like Block 9.

Indus meneruskan pembicaraan Blok 9 INDUS Coal dan mitra Indonesianya PT Param Energy sedang meneruskan pembicaraan dengan grup-grup yang tertarik membeli atau ikut membiayai Blok 9 Proyek Batubara Jambi di Sumatera. Indus telah melaksanakan perjanjian tertutup dengan beberapa grup energi dan resource internasional bagi memfasilitas program-program pengamatan (due diligence) melalui dataroom. Kunjungan ketempat telah pula dilaksanakan di Blok 9 dan terus berlangsung. Direktur Eksekutif Indus Vinay Hariani berkata, “Beberapa dari perusahaan-perusahaan ini memang kami kenal dan pernah bertransaksi dengan PT Param Energy sebelumnya. Izin Produksi pertambangan baru-baru ini dan peningkatakan keyakinan serta kepercayaan pada pemilihan-umum Indonesia dan India mendorong permintaan untuk aset batubara seperti Blok 9. Grup-grup ini sedang mencari sekuritas persediaan (batubara) dan tidak banyak aset batubara di daerah ini dan terutama di Indonesia yang mempunyai nilai proposisi Blok 9, karena ratio stripnya yang rendah, akses ke infrastruktur yang sudah ada, umur tambang yang baik dan kecilnya keperluan biaya modal.” Di awal Maret Departemen Pertambangan dan Energi Kabupaten Muara Tebo mendeklarasikan Izin Usaha Pertambangan (IUP) untuk Blok 9. Ketua Komisi Ekesekutif Indus Scott Douglas mengatakan, “Ini adalah keberhasilan yang signifikan untuk Indus. Di Blok 9 kami telah menggariskan 94 juta ton batubara yang memenuhi spesifikasi JORC, menyele22 l Coal Age Indonesia l May 2014

saikan rencana tambang dan penelitian tambang, menentukan infrastruktur yang diperlukan bagi memulai operasi pertambangan dan telah menyelesaikan segala izin menambang untuk produksi. “Harus diingat bahwa segala ini diselesaikan dalam waktu 14 bulan sejak mendapatkan proyek-proyek Batubara Jambi. Tentunya pujian kepada tim Indus dan sekali lagi menggarisbawahi sumbangan mitra Indonesia kami PT Param Energy. Fokus kami adalah meneruskan pembicaraan dengan grupgrup yang berminat membeli atau ikut membiayai Blok 9 dan memugar izin eksplorasi hutan di kwartal tiga 2014.” Indus mengatakan bahwa ia telah memperpanjang waktu pengeluaran ‘convertible bonds’ dan telah mendapat $3.67 juta, diluar biaya-biaya, melalui sarana pinjaman. Ini memungkinkan Indus meneruskan peningkatakan izin kehutanan untuk Blok 9, meneruskan pembersihan lahan dan menyelesaikan definisi aset di Blook 9 dalam rangka menilai harga Blok 9 dengan grup-grup berminat membeli seluruh atau bagian dari Blok 9 menjadi mitra pembiayanya. Indus berfokus pada penilaian biaya proyek-proyek batubara Jambi dan Muko Muko dalam 12 bulan kedepan dan terus membangun skala melalui akuisisi dengan PT Param Energy, sebuah perusahaan yang didirikan oleh Vinay Hariani ialah sebuah usaha pertambangan batubara berintegrasi vertikal dengan 15 tahun pengalaman dalam proyek identifikasi batubara, pertambangan batubara dan jual-beli batubara internasional di Indonesia.

Indonesia briefs

Challenger Deep sells Barito project CHALLENGER Deep Resources Corp has entered into a binding Letter of Intent (LoI) for the sale of its Barito Coal Project in Central Kalimantan. Under the terms of the LoI the purchaser, a private Australian company, will purchase all of the outstanding shares of PT Bestindo Energy, a wholly-owned subsidiary of Challenger which holds all the corporation's rights to the project. The purchase price is US$2 million with $50,000 payable on signing of the LoI, $100,000 on signing the formal Conditional Share Purchase and Sale Agreement (CSP&SA), $150,000 within 60 days of signing the CSP&SA, $500,000 on preliminary forestry permit approval for the project and $1.2 million on final approval of the forestry permit and commencement of commercial production. Challenger will also be granted a royalty of US$2 per tonne on all coal produced from the project lands and from lands within a 2km area of interest surrounding the project lands in which the purchaser may acquire further coal rights. Effective immediately, the purchaser has assumed responsibility for all ongoing expenses of PT Bestindo Energy and the Barito project. As a consequence of its significant financial

interest in the project going forward, Challenger will provide such advice to the purchaser in its development efforts as may be appropriate. Challenger will continue its efforts to finance or to find a joint venture partner for its Tabang Coal Project in East Kalimantan and will continue to review business opportunities in both the resource and non-resource sectors.

Toba plans 20% production increase PT Toba Bara Sejahtra Tbk (Toba) produced 6.5 million tonnes of coal in 2013, an increase of 17% from the 5.6 million tonnes produced in 2012. The company expects production this year to increase by 20% to around 7.8 million tonnes. The average selling price in 2013 dropped by 7.5% to $70 per tonne from $72.50 in the previous year and Toba estimates that its selling price will drop again this year, to $63-67 per tonnes. In 2013, Toba realized capex of US$19-23 million, which was primarily allocated to land compensation, construction of new a CPP at IM, completion of 17km of haul road from TMU to ABN and construction of ABN’s second underpass. Toba generated cost savings of

around US$4-8 million from the total initiallyplanned capex of US$27 million slated for 2013. In 2014, Toba is targeting capex of US$15-24 million (including Perkebunan Kaltim Utama I), mainly allocated for land compensation at TMU, exploration at TMU, operational and infrastructure maintenance at ABN and IM, and a palm oil mill.

Tata to sell stake for $120 million Tata Power expected to complete the sale in its Indonesian subsidiary PT Mitratama Perkasa by the end of April, subject to obtaining requisite approvals. Tata agreed to sell a 30% stake in Mitratama Perkasa to Indonesian conglomerate Bakrie Group for $120 million. The stake in Mitratama Perkasa was held by another Tata Power subsidiary in Indonesia, PT Sumber Energi Andalan Tbk, which signed the deal with Bakrie Group. In a statement Tata Power said: “Prior to the sale, PT Mitratama Perkasa would be restructured to hold infrastructure assets in relation to PT Arutmin Indonesia, and Tata Power, through its subsidiaries, would continue to hold 30%

May 2014 l Coal Age Indonesia l 23

Indonesia briefs Direktur stake in PT Kaltim Prima Coal (KPC) related infrastructure assets.” KPC owns one of the largest thermal coal-producing mines in the world. It is part of the $500 million agreement Tata Power announced on January 31 regarding the sale of the 30% stake it held in mining company PT Arutmin Indonesia, and its associated infrastructure assets, to the Bakrie Group. Continuing losses at Mundra Ultra Mega Power Project (UMPP) in Gujarat, India, have created stress on Tata Power’s balance sheet. “Keeping the under-recovery challenges in Mundra UMPP operations and cash flow concerns in mind, we have signed an agreement to exit from PT Arutmin Indonesia to get additional cash flow and to reduce our consolidated debt,” Tata Power’s managing director Anil Sardana said.

Energy Earth to acquire three mines Energy Earth, a Thai-based, SET-listed coal miner and distributor, will acquire three mines in Kalimantan to support a goal of more than doubling coal sales to 20 million tonnes by 2016. The company currently operates a mine in Myanmar through a joint operating agreement with a local partner. This mine, for which Energy Earth is the operator and distributor of the coal, has reserves of 40 million tonnes. Energy Earth intends to issue debentures worth 5 billion Thai baht to buy a fifth mine in 2016. The company’s five-year plan through 2016 envisions five mines operating and coal sales more than doubling to 20 million tonnes a year, up from 8 million tonnes last year. In January this year, Energy Earth moved from the Market for Alternative Investment to the SET. It also intends to set up a new subsidiary based in Hong Kong during May called Energy Earth (Hong Kong) Company Ltd.

Waratah signs joint venture agreement ASX-listed Waratah Resources has executed a Heads of Agreement with Marylebone Capital Corporation, regarding an Indonesian coal joint venture. Waratah and Marylebone are conducting negotiations with several coal producers in Indonesia, and have signed a co-operative agreement to reflect this joint venture. Marylebone is an investment house specializing in resources and property, and has developed relationships with global coal and iron ore end users in China and India. In February Waratah, formerly Waratah Gold, secured firm commitments via private placement to sophisticated investors to raise $1.08 million. Its main focuses are the Youkou Iron Ore Project in Gabon, Central Africa, and the Okanabora direct shipping ore iron project in the Republic of Congo. 24 l Coal Age Indonesia l May 2014

Jorong to close mine in 2018 PT Jorong Barutama Greston plans to close a coal mining operation in South Kalimantan in 2018. The subsidiary of PT Indo Tambangraya Megah (ITMG) has signed a Memorandum of Understanding to renegotiate the contract with the Ministry of Energy and Mineral Resources. ITMG director Leksono Poeranto says Jorong has pocketed a working contract licence for coal mining and exploitation (PKP2B) of the second generation, which will expire in 2028. “However, the coal reserves will run out in three years, so the company has initiated a mine closure operation in our concession area.” Jorong manages 50% of the entire concession area of 9000 hectares. The company has been in production since December 10, 1999, and has produced about 40 million tonnes of coal with a calorific value of 5300-5800 kcal. The company has assigned Lambung Mangkurat University to assist with the closure.

PTT Plc plans to list Sakari Resources Thai energy firm PTT Plc plans to list the shares of its subsidiary coal business, Sakari Resources, on the Indonesia Stock Exchange. CEO Surong Bulakul says the plan will be realized in the next two years when global coal prices increase. PTT first entered Indonesia’s coal business in 2008 by acquiring a 94% stake in Sakari Resources, which operates mines at Sebuku and Jembayan in Kalimantan. Sakari’s listing was then removed from the Singapore Stock Exchange. “We have been considering listing Sakari on the Indonesia Stock Exchange but the low price of coal led us to postpone the listing,” Surong Bulakul says. To address the decline in coal prices, PTT plans to cut production costs, restructure administration such as human resources and logistics as well as increase the efficiency of production. It predicts global coal prices to increase to US$80 later this year, driven by a surge in demand from major sectors in China, India and Japan.

APAC Coal in investment dispute In June last year APAC Coal and majority shareholder Magnus Energy Group, along with Magnus’ wholly-owned subsidiary Antig Investments, issued a Notice of Intent to Resolve Investment Dispute through Consultations and Negotiations to the Government of the Republic of Indonesia. The purpose of this action is to seek recourse under the agreement between the Singapore and

Indonesia governments on the Promotion and Protection of Investments, and the agreement between the Australian and Indonesian governments concerning the Promotion and Protection of Investments. APAC is sourcing a litigation funder to fund the full cost of the International Centre for Settlement of Investment Disputes arbitration since it has exceeded the six month waiting period for the Indonesian authorities to respond to its Letter of Intent to Resolve Investment Dispute through Consultations and Negotiations under the Business Investment Treaty on the Promotion and Protection of Investments.

Mamahak production remains suspended Production at Kangaroo Resources’ Mamahak Coal Project remains suspended pending the results of ongoing drilling aimed at identifying additional mineable coal resources and reserves. During the first quarter of 2014 all remaining coal product was relocated to stockpiles at the Long Hubung port area on the Mahakam River but low river water levels prevented the barging of any coal during the quarter, as was the case in the previous quarter. Remaining coal product stockpiles of around 67,308 tonnes will be barged and sold as soon as river levels normalize and allow barging to recommence. Bedding coal at the port currently totals 4199 tonnes and this will also be barged and sold when conditions permit, subject to quality and markets. Site investigation and exploration activities continued during the quarter with three exploration drill rigs in operation at the MCM concession area along with one rig at the MEL concession. A total of 102 bore holes were drilled at MCM during the quarter for an aggregate total of 4721 metres and a further 39 holes equating to 2318 metres were completed at MEL. Drilling in MEL’s Western Area was completed at the end of March with 131 holes having been drilling in the area since June 2013. A new geological model is being developed for the MEL concession to enable an initial resource assessment to be made. Kangaroo’s renewal application for the forestry permit at the MCM mining areas has been submitted and is being processed by the Ministry of Forestry. A formal request has been prepared for submission to the Ministry to obtain additional permissions to enter the central areas currently not covered under existing forestry permits for the purposes of conducting further geological survey work, and identifying suitable access to the Eastern area for further drilling. A similar request has been made to enter the central areas in the MBE concession areas for survey work and identifying access for drilling.

Around the world

Uzgen Basin inferred resource up 16% TOTAL inferred resources at Celsius Coal’s Uzgen Basin Coking Coal Project in the Kyrgyz Republic have increased by 40 million tonnes, or around 16%, to 295 million tonnes. Most of the increase is from the Kokkia site where the inferred resource increased 140%, or 35 million tonnes, to a new total of 60 million tonnes. There was also a 5 million tonne increase to 235 million inferred tonnes at the Kargasha site. Open pit resources are now being estimated and an auger mining study is progressing. Celsius says there is also consistent quality data with continuing very low moisture, low ash, low phosphorus and moderate sulphur. The company’s technical director Alistair Muir says, “The aim of much of the drilling was first exploratory work in the Kokkia area of the project. We’re very happy with the 140% increase in inferred resources in this area and this builds upon the favourable coal quality data we have received for the drilling works to date, at both Kokkia and Kargasha.”

Liberty receives maiden estimate Liberty Resources has received a maiden independent coal seam resource estimate and an updated exploration target estimate report on its exploration tenement in Queensland’s Bowen Basin. The report estimates an inferred resource of 104.4 million tonnes of coal within the Vermont and Fort Coopers coal measures within 150 metres of surface. It was based on Liberty’s drilling in August 2013 as well as previous drilling and excludes the area covered by the pre-existing RTZ tenement. Current drilling is targeting the Moranbah coal measures and Goonyella coal seams. The company’s 2014 drilling campaigns are aimed at selecting resource areas with greatest economic potential, providing samples for coal quality assessment and generating further JORC-compliant resource estimates.

The report concluded that further testing is likely to confirm exploration target results could be within the range of hard coking–thermal coal. The 10.5% ash product after washing compares favourably with Queensland coking coals. An additional exploration target within the range of 350 to 465 million tonnes is estimated within the tenement.

Energy regulator approves Vista The Alberta Energy Regulator (AER) has approved Coalspur Mines’ Vista Coal Project in Alberta, Canada. In its decision, the AER panel stated that Vista “will result in a significant socio-economic net benefit to both the local region and the province”. The approval is a significant milestone in the regulatory process for the approval of Vista and places Coalspur in a position to work with the regulators to finalize detailed licences and permits over the coming months. “This is an exciting landmark in the development of Vista and we are pleased to have received approval from the AER,” says Coalspur’s president and CEO Gill Winckler. “Receipt of this approval represents an important step in Coalspur’s vision to be a leading export thermal coal producer. The certainty that the decision provides, positions the company well as it works to finalize the remaining funding for Vista over the coming months.” The AER approval includes various requirements or conditions relating to Vista’s coal processing plant, mine plan and end-pit lake, geotechnical investigations, fines management, surface water quality, wetlands, wildlife and noise mitigation.

No Objection Certificate for Oracle coal block Oracle Coalfields, the UK-based coal developer of a 1.4 billion tonne lignite resource in the south-eastern desert of Sindh Province announces that a No Objection Certificate was issued by the Environmental Protection Agency Government of Sindh on January 17 for the Environmental and

May 2014 l Coal Age Indonesia l 29

Around the world Social Impact Assessment for Block VI of the Thar Coalfield submitted in 2013 concerning its environmental plan. Following the MoU with SEPCO Electric Power Construction Corporation, which was announced on November 21, 2013, Oracle and SEPCO are working on a Joint Development Agreement which they hope will be concluded shortly. Oracle’s CEO Shahrukh Khan says, “We are delighted to announce this significant development. The issuance of the No Objection Certificate represents another major milestone in the development of our Thar Coalfield project. “The Board continues to advance towards the development of the project, and shareholders should expect to receive further progress updates in due course.”

Production begins at Kangala Production has commenced at Universal Coal’s Kangala mine, 65km from Johannesburg, South Africa. First delivery was made in March in line with first commercial production having begun in February. The delivery is part of an offtake agreement with South Africa’s leading power utility ESKOM for annual supply of 2 million tonnes. Remaining production will target the lucrative export markets, via an offtake agreement with South African coal producer Exxaro Resources. Kangala is the company’s first coal mine and the operation is now ramping up towards its annual nameplate capacity of 2.4 million tonnes, of which 2.1 million tonnes is saleable. Universal Coal’s CEO Tony Weber says, “This marks a significant milestone as we progress towards becoming a mid-tier coal producer. Kangala will provide steady and strong cash flow for the decade to come, laying the foundation for further growth in helping to fund the progress of our pipeline of quality coal assets.”

Dulanga coal production schedule NTPC Limited, India’s biggest power generator, hopes to start production from its allotted Dulanga coal block by March 2015. With a mineable reserve of 152 million tonnes, the block is in the Ib valley coalfields and linked to NTPC’s 1600MW super thermal power station being developed at Darlipalli in Sundargarh district. The cost of developing the block is estimated at 1556.65 crore and to date NTPC has spent 76.92 crore on the project. In-principle environment clearance was secured in March 2012 with final clearance expected after receipt of the Stage-I forest clearance. The development will occupy 464.15 acres of private land with notification under Section 11 of the Coal Bearing Areas CBA Act, 1957 issued. Land rates have been finalized and disbursement of compensation will commence after approval from NTPC’s board. The development of township, rehabilitation & resettlement colony and necessary infrastructure needs another 410.07 acres of land.

Arch sells Hazard subsidiary Arch Coal has sold its Hazard subsidiary to Blackhawk Mining for US$26.3 million in cash, prior to post-closing adjustments. The sale includes the Hazard thermal coal mining complex and related infrastructure as well as about 38 million tonnes of thermal coal reserves in eastern Kentucky, USA. As part of the sale, Arch has divested $15.6 million of reclamation liabilities to Blackhawk, and expects to be released from $43.8 million of reclamation surety bonding. In addition, Arch has the potential to receive future royalty payments of up to $35 million in aggregate over the next five years resulting from its retention of select coal reserves at Hazard. “The sale of our Hazard subsidiary demonstrates that we are continuing to streamline our mining portfolio and monetize assets that are not essential to our future growth plans,” says Arch’s president and CEO John W Eaves. “This transaction allows us to further sharpen our focus on strategic assets that have the highest return potential, such as our growing Appalachian metallurgical coal franchise and our low-cost Western thermal coal platform. At the same time, the proceeds from the sale further strengthen our already substantial cash and liquidity position.” 30 l Coal Age Indonesia l May 2014

Crown Mountain model updated Jameson Resources continues to advance the Crown Mountain Coking Coal Project in British Columbia, Canada, with work well under way on the pre-feasibility study. Final quality results confirm property-wide coking coal characteristics that are within the range of typical hard coking coal shipments from the Elk Valley Coalfield. Norwest Corporation has updated the geologic model with the results from the 2013 drilling program and re-estimated the Crown Mountain resource by incorporating results from the 2013 drilling program. Measured and indicated resources increased by 8.6 million tonnes, from 66.3 to 74.9 million tonnes. The inferred resource remains at 23.7 million tonnes as the Southern Extension was not explored in 2013. Coal quality test work on samples collected from the 2013 drilling program has been completed and with a CSR range of 67 to 76 the Crown Mountain coal is comparable to that shipped from nearby mines. Norwest believes the product will compare favourably with the best hard coking coals in Canada. Environmental assessment work continues as a fast-track program. Stream water quality sampling continued on a monthly basis and the required 2-year history was expected to be completed in April. Ground water monitoring is ongoing, the weather station is operating, a wildlife study has been completed, and overburden characterization is progressing.

Berkh Uul on fast-track Viking Ashanti has won control of takeover target Auminco Mines by gaining acceptances of 90.96% for the unlisted coal development company and intends to fast-track production at the Berkh Uul project in northern Mongolia. The takeover offer period has been extended to Friday, May 23. Unlisted private Australian company Auminco holds the Berkh Uul project that is next to a rail link that connects with Russian markets, and provides quick access to domestic power plants and industrial users at Darkhan and Ulaanbaatar. It has JORC resources of 38.3 million tonnes of high quality, open pittable unwashed bituminous coal. Successful production at Berkh Uul would provide significant cash flows to develop the remainder of the combined group's portfolio as well as seek out further production and near- term production opportunities. Auminco shareholders will emerge with a 47% stake in Viking, and play a major role in the evolution of Viking as a participant in the Mongolian thermal and coking coal markets. Auminco was established by founding shareholders and management of Coalworks Ltd which was sold to Whitehaven Coal in mid-2012. Development risk is considered lower than for most Mongolian coal companies as overall CAPEX for Berkh Uul is low by most standards; start-up mining rate will not be large, with flexibility to build over time with simple and proven mining and processing technology, thus reducing funding and execution risk. In addition to an expanding domestic market, demand from coal hungry Russia and China is forecast to drive growth in the Mongolian coal market at an exponential rate.

Joint venture plan for Panorama Atrum Coal has entered into joint venture discussions with Kuro Coal to develop its Panorama Anthracite Project in British Columbia, Canada. Kuro Coal is the spinout company of Atrum Coal and will be listed on the ASX via IPO. Atrum’s executive director Russell Moran says, “A joint venture at Panorama is a win-win for Atrum and Kuro. The deal creates co-development and co-marketing opportunities that will benefit both companies.” Panorama is about 20km west of Atrum’s flagship Groundhog Anthracite Project. It consists of two granted coal licences totalling 850 hectares of contiguous tenure that is the subject of the proposed joint venture. The Panorama area is the only other known outcrop of the Groundhog Coalfield and is believed to be prospective for high grade anthracite. The Atrum Board believes a joint venture rather than spin-out of Panorama is appropriate. This will enable Atrum to retain influence over the exploration and development of this potentially high grade and ultrahigh grade anthracite asset.

Supplier News

Loesche sets up Indonesian service hub By Detlef Bluemke

from the coal mining sector attended the seminar with plenty of interest shown. Apart from the well-known and world leading technology in the cement grinding sector, Loesche has also introduced the newly patented coal enhancement process, which attracted much interest, especially as many Indonesian miners are looking for a professional solution for coal upgrading. Subsequent to the seminar, the official opening ceremony of PT Loesche Indonesia took place, guided by the German ambassador, Dr Georg Witschel, Loesche Group representative Dr Thomas Loesche and the assigned managing director of PT Loesche Indonesia Detlef Bluemke. The open exchange of experiences and information was continued and enhanced during this ceremony. The inauguration day was rounded off with an evening dinner in the Le Meridien Hotel enabling the further exchange of commitments.

To learn more about PT Loesche Indonesia please contact:

LOESCHE Group has set up a full service hub - called PT Loesche Indonesia (LIND) - in Jakarta, Indonesia. The office has PT Loesche Indonesia been in full operation since World Trade Center 5 January 2014 with the service hub established in March. WTC 5/ Metropolitan Complex The service hub is focusing on Wisma Metropolitan l, 7th Floor plant modernization and spare part supply as well as on site supJl. Jend Sudirman Kav 29 port with all kinds of services for Jakarta 12920, lndonesia audits, maintenance, installation and commissioning activities in Phone, office +62 21 571 2232 and the entire Indonesian region. For more than 40 years +62 21 571 2233 Loesche has maintained business Fax +62 21 571 2266 relations in the Indonesian market and now the company is focusing on closer client relationWWW.LOESCHE.COM ships and quicker reaction times for the benefit of the local maring the portfolio of the Loesche Group as well as ket. As one of the first steps taken by PT Loesche the activities of PT Loesche Indonesia. Apart from high ranking members of Indonesia, a one-day seminar took place in the Le Meridien Hotel in Jakarta on March 27, introduc- Indonesian cement producers, a wide audience

May 20 l Coal Age Indonesia l 37

Supplier News

Voith TVVS couplings do the job INDONESIAN miner Bukit Asam is expanding its coal operations at Tanjung Enim Mine in Sumatra, Indonesia, and is continuing to rely on Voith TVVS fluid couplings. For 10 new belt conveyors at Tanjung Enim, Bukit Asam deploys 14 TVVS fluid couplings from 55-315 kW. In the past, the mine operator has always been pleased with the reliability of its already installed Voith fluid couplings which ensure smooth start-ups day after day and a long service life for all components, especially the belts. “We’re all very impressed with the performance of the TVVS constant-fill fluid couplings. They’re very easy to maintain - only oil changes are needed - and the reliability is just great,” says Bukit Asam’s manager of maintenance planning Kris Tjahajaning Tyas. The mine operates 24/7 and any equipment downtime means loss of production. In older sections of the mine they’ve been using TVVS on belt conveyors since 1997 without any unplanned downtime. “Proven reliability is why we absolutely wanted to have Voith fluid couplings in the new conveyor drives as well,” adds Bukit Asam’s senior manager of maintenance Tatra Muis. Voith says its fluid couplings are well suited for use in extreme environments and are completely insensitive to harsh conditions like dust, dirt and humidity. The fine coal dust in Tanjung Enim mine has no effect on performance. The couplings dampen torsional vibrations in the driveline and protect it against overload, extending the life of the entire system. Because torque is transmitted by a fluid, the power transmission of the fluid couplings is wear-free, reducing maintenance to a minimum. Bukit Asam’s maintenance managers are happy with the many benefits the fluid cou-

ABOVE: No unplanned downtime since 1997! Tanjung Enim Coal Mine relies on TVVS constant-fill fluid couplings from Voith. BELOW: Voith fluid couplings are well suited for use in extreme environments and are completely insensitive to harsh conditions. plings provide. They also appreciate the advice and after-sales support from the local Voith team, along with unmatched know-how on the entire drive system. The 13 existing belt conveyors in the Tanjung Enim mine still rely on TVVS fluid couplings (rated from 55-500 kW) installed more than 17 years ago. The mine has two coal handling facilities with the longest belt conveyor being 4284 metres-long and an hourly capacity of 1700 tonnes. The drive of this conveyor is equipped with three 315 kW motors and three fluid couplings, type 750 TVVS. In addition to the conveyor drives, the bucket wheel excavator drives in the mine are equipped with five 750 kW fluid couplings, Type T, that dampen vibrations and protect the driveline from damage also in case of

frequently occurring overload. Tanjung Enim Coal Mine is one of the largest coal reserves in Asia. It has been in operation for more than 90 years and in 2012 produced nearly 15.5 million tonnes of coal.

Cat’s solution for used Tier 4 product migration CATERPILLAR has announced its strategy for meeting the needs of customers selling and purchasing used Tier 4 Interim products for operation in lesser regulated countries, where prevailing fuel quality and fuel sulphur content vary widely. Based on extensive testing, analysis and field validation, Caterpillar has determined that Cat Tier 4 Interim engine systems between 130kW and 895kW will not require any modification to operate in lesser regulated countries. For Cat Tier 4 Interim engines less than 130kW, Caterpillar will offer authorized modification processes that remove after-treatment from machine and commercial engine configurations to enable operation in lesser regulated countries. Modification processes, which include decertification, will be made available to customers in lesser regulated countries exclusively through their local Cat dealer beginning in 2014. Caterpillar anticipates both the modified 40 l Coal Age Indonesia l May 2014

<130kW engine systems and unmodified 130895kW engine systems will meet used equipment customer expectations for operation in the vast majority of potential lesser regulated export destinations. “Tier 4 used equipment migration is a complex issue,” said Industrial Power Systems Division vice president Ramin Younessi. “Because Caterpillar serves customers in all markets, we develop products to meet the needs of customers in all types of regulatory environments. For example, all non-road equipment operated in the US, Canada, Europe and Japan must operate on ultra-low sulphur diesel fuel. “When equipment developed for certain markets, like our Tier 4 equipment, moves to different markets, it adds challenges for Caterpillar, our dealers and our customers. Challenges arise due to diverse emissions regulations, the need for dealer readiness training and the need to help cus-

tomers understand how to operate and maintain these next generation products. Most importantly, customers contemplating the purchase or modification of used Cat Tier 4 products need to understand and comply with their local regulatory requirements.” Since Caterpillar began introducing Tier 4 products in February 2011, the field population has grown rapidly to more thasn 82,000 products operating in North America, Europe, Japan and Australia. These products have amassed almost 42 million operating hours, with excellent reliability and fuel efficiency results - creating interest among used equipment purchasers. According to Ramin Younessi, a key consideration for Caterpillar in developing its strategy for Tier 4 migration was to help ensure customers maintain the resale value of their used equipment. This gives them options to sell in new markets, including less regulated countries.

Supplier News

Longwall automation goes global After success on home soil, Australian automated longwall technology has taken to the international stage in coal mines in the United States, as Tim Thwaites reported in the ‘resourceful’ magazine of Australia’s Comnmonwealth Scientific and Industrial Research Organization (CSIRO). CSIRO longwall automation technology can deliver productivity increases of up to 10% but it also provides scope for much more than increased productivity – it can also improve safety by reducing the level of hands-on interaction of miners with machinery in hazardous underground areas. “That’s why more than 20 of the 30 or so longwall systems in Australia are already operating with, or are about to embed, the CSIRO technology,” says Dr David Hainsworth, who leads the CSIRO’s mining science and engineering research program. A global equipment manufacturer has now taken the technology to the United States and the same company is now evaluating the technology for other global markets. In the longwall process – which accounts for about 90% of Australia’s underground coal proA typical longwall system for underground coal mining. duction – a shearing machine with large rotating cutting drums is driven back and forth across the Second, the position of the machinery has to be communicated to its concoal seam. With each pass a massive ‘slice’ of coal is ground off, falling onto trollers and subsequent adjustments back to the machine. CSIRO developed a conveyor system that transports it away from the face. a communication system based on the commercial implementation of its Clearly, alignment of the machine is critical to its performance and in the own WiFi ethernet. past the machinery had to be stopped and adjusted every so often. This risky Finally, ACARP demanded an open communication protocol to enable all job was carried out manually. the elements involved in automation to communicate with each other no In the late 1990s, CSIRO researchers came up with – and patented – an matter from which manufacturer they came. idea for automating the process, at the same time as the industry-backed Dr Hainsworth says the most important thing to emerge from the project funding body, the Australian Coal Association Research Program (ACARP), was the commercialization model. “The technology had to be delivered to independently decided that automation was a priority for the future. the industry as an integral part of longwall mining equipment, not just an “The resulting research program was a resounding success, not only in add-on, and it could not be exclusive to just one manufacturer – this was an terms of innovation, but also as a model of implementation,” says Dr ACARP requirement. Finally, as a research organization, CSIRO could not Hainsworth. “The industry, equipment manufacturers and researchers all support this technology directly in the field.” worked together. Having industry champions for the introduction of new Fortunately, the equipment manufacturers saw that the industry was comtechnologies is essential. mitted, and that they needed to buy into this technology, so they accepted a “The involvement of ACARP meant support from mining companies for non-exclusive licensing model. field testing of ideas and prototypes when needed.” The real key was CSIRO’s initiative to use part of its IP revenue to proAutomation requires the ability to determine the equipment’s position vide guaranteed technical assistance to each manufacturer early in the lifeaccurately in three dimensions, in order to plan and control its movements. time of the system. The manufacturers recognized that not only had they GPS technology cannot be used underground, so the researchers resorted to avoided development costs, but the system would be supported through its highly precise inertial navigation systems developed to guide ballistic mis- teething period and continually upgraded by the people who understood it siles and tanks during the pre-GPS days of the Cold War. best.

May 20 l Coal Age Indonesia l 41

Product News

Flexco’s quick solution for belt damage LAST year Adimitra Baratama Coal encountered a big problem - one of the belts at the busy operation was ripped and the damage was extensive enough to shut the entire conveyor down. Upon checking the supply of belting in inventory, Adimitra manager Wandy Gunawan and his maintenance team realized they only had about half the belting needed to get the conveyor running again. They contacted the belt manufacturer to get belting to the site as soon as possible but the order would take about two months to arrive and Wandy Gunawan did not want to lose valuable production time. Based on past experience, he contacted Flexco. “I knew that by presenting the challenge I was facing to the Flexco team, I would get a solution. “Flexco’s team not only discussed the problem over the phone, they also came out to evaluate the site and observe the rip.” “When we arrived, employees were removing the ripped belt,” Flexco sales manager Dany Koesoema said. “It was a good opportunity for me to show them the installation tools and explain procedures for punching the belt and installing fasteners on the used belts.” “They offered their advice and recommendations, and I discussed it with my team,” Wandy Gunawan said. “Their timely action and product demonstrations were very helpful.” The unscheduled downtime was already costing valuable production time and it was decided to use Flexco Bolt Solid Plate 190 fasteners to repair the 1000 metre rip. This fastening system provides a strong, sift-free splice with superior holding ability for use in tough material handling applications. It also allows for quick and easy onsite installation. Dany Koesoema says the design and plate compression on both the top and bottom sides of the belt is key to the strength. High tensile strength bolts compress top and bottom plates to distribute splice tension across the entire width of the fastener plate. Specially-formed teeth penetrate deep into the belt carcass for added strength without damaging the carcass fibres. Ideal for use in tough, abrasive applications like coal, the Bolt Solid Plate Fastening System can be easily installed with portable hand tools or power tools. Exclusive piloted bolts feature tapered tips that cradle the nuts securely in place, reducing installation time. The Flexco system can also be used to repair conveyor belt holes and edge tears or combined with three-bolt rip-repair fasteners to fix jagged, length-wise belt tears. “The Flexco team supervised our splicing contractors and shared valuable information and experiences with our mechanical supervisor during the install,” Wandy Gunawan said. “This was very valuable.” Only five days passed between the time the 42 l Coal Age Indonesia l May 2014

Flexco was able to repair a conveyor tear (above) at Adimitra Baratama Coal’s operations using Flexco Bolt Solid Plate 190 fasteners (below).

belt went down and the time it was running again. While consulting with Flexco regarding the repair, Wandy Gunawan was introduced to the advantages of mechanical belt fasteners as a standard splice. Unlike hot splicing, fasteners could be installed upon receipt by the onsite crew instead of waiting for a vulcanizing crew to arrive. As a result, Adimitra elected to install mechanical splices to join the belt in addition to the rip repair. “When they saw that they only needed about one hour for one splice and that it could be done by their own crew, they decided to join the belt with mechanical fasteners as well,” Koesoema said. “They also appreciated the fact that there is less belt waste when using fasteners.” Flexco SR™ Rivet Hinged fasteners were chosen to join the belt together. Ideal for rubber plied and PVC solid woven belting, the Flexco SR Rivet Hinged System delivers the performance, long life, and easy installation that maximize belt availability. Plates are secured to the

belt with a staggered pattern of rivets. The Flexco rivet design allows the rivets to pass between carcass fibres, without severing them, providing maximum holding ability and evenly-distributed splice tension across the width of the belt. Belts can be easily separated by removing the hinge pin. The Scalloped Edge™ design features a low profile, reducing the fastener’s exposure to cleaner blades, skirt rubbers and return idlers. The reduced wear and tear on the fasteners extends the life of the splice. Flexco SR fasteners are also available with power installation to reduce worker fatigue and ensure uniform splices. Installation of the fasteners in the 1900 metre belt took about two and a half days. “The conveyor is loading safely and properly with the Flexco splice and rip repair,” Wandy Gunawan said. “We consider the Flexco fasteners to be a lifesaver and have decided that they can be used on our belts in both normal and emergency conditions.”

Product News

Rahman prefers Atlas Copco DM45 rigs PT Rahman Abdijaya, a contract mining company at the Adaro coal mine near Tanjung in Kalimantan, is one of two companies using Atlas Copco’s DM45 rotary blasthole drill rig. Rahman has used other drills but operators say they prefer the easy operation of the DM45. The Adaro mine produced 48 million tonnes of coal in 2012 and Rahman produced 6.5 million tonnes of that. There are three DM45 rigs working at the mine. The coal seam sits on a slanting angle of 30 to 45 degrees and is about 7 metres thick with nine metres of overburden above it. As the overburden is pushed back from surface, the mine operates on a 7 metre-wide by 16 metre-high bench system. The coal body is mined to a depth of 10 metres and totals 146,645sqkm. Rahman uses multiple Atlas Copco DM45 rigs in a systematic drilling operation. On average a three-rig team drills 100 to 120 metres per pattern. The current burden pattern is 6 metres by 7 metres. The tooling Rahman prefers is the Atlas Copco 7⅞-inch tricone bit with aggressive conical buttons. Thirty-foot lengths of Atlas Copco 6¼ inch OD pipe complete the

drill string. The company blasts daily at midday. Because the rock is unconsolidated and includes clays and gravels, energy disbursement in the blast is critical. Drill Foreman Rio Hartono explained the blasting method as being a 50kg and 50kg deck loading. The 8-metre hole is charged with 100kg of liquid emulsion, 50 on top and 50 on the bottom, shot in two stages. Although the two levels are shot simultaneously - the bottom and top of the hole are separate non-electric charges - the double charge ensures good fragmentation throughout the bench. Rudi Hartono has been a drill operator for six years and has operated four different drills rigs, including blasthole and crawler-type drills. He likes the ease and simplicity of the DM45 over all the drills he’s operated from various manufacturers. He points out three things he says

make the DM45 easier to operate than the other drills he’s run over the years: • First are the controls. He says the controls are “hands-on simple” and make it difficult to make mistakes. • Secondly are the connections - the act of adding and removing drill pipe. Connections are fast and simple with the DM45. “The action is quick and easy. There is no wasted effort.” • Finally, the safety shutout is a favourite feature for Rudi Hartono. Other blasthole drills will not lock out tramming when the pipe isn’t all the way back at its start position. He has seen occasions in which drillers will not get the drill pipe out of the hole before tramming, resulting in damage and downtime. At Adaro mine the mining continues and with the Atlas Copco drill at the lead, it continues to be one of the world’s top coal producing sites.

Wenco system boosts KPUC productivity WENCO Fleet Management Systems (FMS) has been selected by PT Kayan Putra Utama Coal (KPUC) to install a fleet management system at its coal mine in Kalimantan. Wenco, working with its Indonesian distributor PT Hexindo Adiperkasa Tbk, has begun deployment of the first phase of the FMS for production monitoring and control of Hitachi excavators and haul trucks. Wenco’s regional director, Australia and Africa, Jayson Bebek spoke with Coal Age Indonesia about the expected efficiency improvements and Wenco’s ‘fleet management centre of excellence’. How will the Wenco Fleet Management System assist with productivity? It is typical for Wenco FMS users to realize 10% or more productivity improvement. Expressed in its simplest form, this would mean that for a mine with 100 trucks it would be like adding 10 extra trucks to the fleet or would allow them to park 10 trucks and achieve the same production. Some of this gain is made immediately upon the system going live, with intuitive applications and dashboards showing real-time information about the location and activities of the equipment, as well as various KPI statistics allowing dispatchers and supervisors to identify bottlenecks and opportunities, and make appropriate decisions to maximize production.

The critical point is that the information is real-time, so you can make a decision now to change the outcomes in the current shift, rather than looking at reports at the end of the day when it is too late to change the outcomes. When the system is first turned on we are usually able to identify very quickly some opportunities to gain a few more minutes of productive time per item of equipment, especially around meal breaks and shift change. Further productivity gains are recognized as more advanced features such as Automatic Dispatch are brought online. Automatic Dispatch utilizes advanced algorithms and realtime knowledge of fleet movements to dynamically assign trucks and shovels to maximize productivity, blend material and achieve targets. And finally, we store a comprehensive history of mine operations into our open SQL Server database. The database becomes an invaluable tool to perform trending and analysis to identify further opportunities as part of the ongoing continuous improvement process. Wenco advocates that data collected by the system belongs to the mine and it is our duty to make access to data as easy as possible. We therefore provide a suite of standard web-based reports and a report builder, but also provide the database schema so they can develop more complex reports

or extract data for 3rd party systems. How does the ‘fleet management centre of excellence’ support a mine? At Wenco we approach each customer with a view to partnering for the life of mine and providing a high level of personalized service. Together with our distributor, Hexindo we believe that the best way of achieving this is through establishment of a centre of excellence within Hexindo’s Balikpapan office. Here we plan to develop a group of Indonesian FMS support and training experts, who can support and advise customers in how to get the most from their investment. During the centre’s ramp-up we will use personnel from our other regional offices to mentor and develop the Balikpapan team. FMS and associated technologies are still not widely adopted in Indonesia, however, there is a growing interest in technology investments. Unfortunately, with relatively few mines using FMS there is a limited pool of experienced users in the region. By partnering with a wellestablished and resourced company such as Hexindo, we believe we can make a major contribution to the adoption of mining technology in Indonesia, and assist customers develop the skills of employees and get the most out of their equipment. May 2014 l Coal Age Indonesia l 43

Events

Coal calendar of events n Coaltrans West Coast, May 7-8, Vancouver, Canada. www.coaltrans.com n Coaltrans Petcoke Summit, May 9, Vancouver, Canada. www.coaltrans.com n Coaltrans Southern Africa, May 12-13, Cape Town, South Africa. www.coaltrans.com n Russian and CIS Coal Summit, May 14-16, Moscow, Russia. www.adamsmithconferences.com n Mines & Money Beijing, May 19-21, Beijing. www.minesandmoney.com n World XTL Summit, May 19-21, London, UK. www.thecwcgroup.com n MinTech 2014, May 21-23, Kazakhstan. www.kazexpo.kz/eng/ mintech/ n Coaltrans Asia, 20th anniversary event, June 1-4, Bali. www.coaltrans.com n China International Coal Equipment & Mining Equipment Exhibition. June 12-14, Beijing, China. www.ciceme.com/en/ n Coaltrans World Anthracite, Coke, Coking & PCI Summit, June 18-20, St Petersburg, Russia. www.coaltrans.com n Queensland Mining & Engineering Exhibition (QME), July 22-24, Mackay Showground, Mackay, Queensland. www.queenslandminingexpo.com.au n Coal Industry and Market Fundamentals, July 29-31, Brisbane, Queensland. www.informa.com.au n Mine Ventilation 2014, July 29-31, Brisbane, Qld. www.miningiq.com/events/ n Coaltrans Australia, 10th anniversary, August 11-12, Brisbane, Queensland. www.coaltrans.com n AusAsia MinTech 2014, August 26-28, Perth, Western Australia. www.miningiq.com/events/ n Coal Industry and Market Fundamentals, September 3-4, Sydney, New South Wales. www.informa.com.au n Coaltrans Latin America, September 11-12, Colombia. www.coaltrans.com n Coaltrans Coal Trading & Risk Management, September 16-18, Singapore. www.coaltrans.com n IMEX 2014, September 23-26, Las Vegas, USA. http://imex2014.com n Sumatra Miner, October 20-22, Palembang, Indonesia. http://sumatra-miner.com n Coal Handling & Storage, October 22-24, St Louis, USA. www.mining-media.com/events n Mining & Engineering Indonesia, October 29-31, Jakarta. www.miningandengineeringindo.com n Haulage & Loading Australia, November 46, Perth, Western Australia. www.miningtechnologyaustralia.com

44 l Coal Age Indonesia l May 2014

Upcoming Indonesian mining events Mining clubs anniversary

in Australia at [email protected].

THE two Indonesian mining clubs organized by Mining Media International, publishers of The ASIA Miner, Coal Age Indonesia and Engineering & Mining Journal, celebrated their first anniversary with a special joint networking function in Jakarta on April 16. Coal Club Indonesia and the Djakarta Mining Club were launched at a well-attended function in Jakarta on April 15, 2013. Since the launch both clubs have established themselves as important forums and networking events for Indonesia’s mining industry. The clubs generally meet bi-monthly and new members, sponsors and speakers are welcome. The next Coal Club Indonesia meeting will be on June 12 with subsequent 2014 meetings scheduled for September 4, October 22 and November 20. The next meeting of Djakarta Mining Club will be on May 22 with other meetings scheduled for August 14 and October 30. Foundation sponsor for both clubs is Caterpillar. Platinum sponsor for Djakarta Mining Club is Leighton and gold sponsors are Weir Minerals and Reed Exhibitions, organizers of Mining & Engineering (M&E) Indonesia. Along with Caterpillar, Orica is a foundation sponsor of Coal Club Indonesia while gold sponsors are Reed Exhibitions, Weir Minerals and the Australian International School. The clubs aim to provide a convivial networking outlet for companies, institutions and business people of all nationalities involved in or doing business in Indonesia, especially in the mining industry. For inquiries contact Dimas Abdillah in Indonesia at [email protected] or Lanita Idrus

Preparations are progressing well for the inaugural Sumatra Miner conference and exhibition which will be held at the Aryaduta Hotel in Palembang, South Sumatra, from October 22-24. The event is being organized by Mining Media International, publishers of The ASIA Miner, Coal Age Indonesia and Engineering & Mining Journal. The conference will examine the mining industry in Sumatra, focusing primarily on coal but also including other resources such as gold, silver and copper. It will also look at plans to provide more infrastructure in Sumatra to support the development of mining. Although Sumatra has been hit by the economic downturn which has hit the global mining industry hard, exacerbated by a number of policies introduced recently by the Indonesian Government, the island’s mining industry has a very bright future and the Sumatra Miner conference will provide demonstrate how and why this is the case. Sumatra’s coal industry is the second largest in Indonesia, behind Kalimantan, but there is tremendous potential for it to grow in the future and Sumatra Miner can play an important role in this process. The exhibition will provide a showcase for buyers and sellers to exchange information and the latest innovations available to the mining, energy and oil & gas industries. For conference, exhibition and sponsorship inquiries visit www.sumatra-miner.com or contact Dimas Abdillah in Indonesia at [email protected] or [email protected], or in Australia contact Lanita Idrus at [email protected].

Sumatra Miner conference

Advertising index Alluxindo Pratama Sukses ........................................................BC AusAsia MinTech 2014............................................................. IFC Australian International School Indonesia ..................................29 Balikpapan Expo 2014 ................................................................37 Coal Club Indonesia ...................................................................11 Coaltrans Asia ...........................................................................IBC Djakarta Mining Club ..................................................................11 Gewinn Gold Hotama .................................................................41 Haulage & Loading Australia 2014 .......................................38-39 IMEX 2014 .............................................................................31-36 Intertek ........................................................................................3 M&E Indonesia 2014 ..................................................................15 Sumatra Miner .......................................................................25-28