INTERNATIONAL SYMPOSIUM CLEAN COAL DAY IN JAPAN 2011 September 6 – 7, 2011

INDONESIAN COAL RESOURCES DEVELOPMENT AND FUTURE DIRECTION OF COAL EXPORT

Presented by:

BAMBANG GATOT ARIYONO DIRECTOR OF COAL ENTERPRISE SUPERVISION

MINISTRY OF ENERGY AND MINERAL RESOURCES OF THE REPUBLIC OF INDONESIA DIRECTORATE GENERAL OF MINERAL AND COAL

MAIN TOPICS

I. CURRENT CONDITION…………..…………..…4

II. COAL POTENCY…………………………….…….6

III. COAL PRODUCTION……………………………12

IV. COAL POLICY……………………………………..17

V. CONCLUDING REMARKS………………......20

CURRENT CONDITION I.

• Nowadays, coal resources of Indonesia is more than 105 billion tones and coal reserves is about 21 billion tones or equivalent to 80 billion Barrel Oil Equivalent (BOE).

• In the year 1998 Indonesian coal production was only 61.3 million tones, then increased spectacularly to 240 million tones during ten years period. Last year, the production of coal continued to climb up to 275 million tones.

• Approximately 75% of national coal production is exported to various countries, while domestic market needs 25% only. There are 50 Coal Contract of Work (CCoW) companies that are currently in production stage among 76 CCoWs that still active, other producers are coal Mining Holders (IUP) which its permits were issued by local government/regency.

• The New Mining Law No 4/2009 has emphasized the government commitment to optimize the benefit of mining activities for the country and community.

• At present, the government is performing a number of stages as the follow-up of the law implementation, such as; Minister regulation, socialization with stakeholders, renegotiation, etc.

I. CURRENT CONDITION

COAL POTENCY II.

52,44 M T

51,92 M T

0,014 M T

0,23 M T

0,002 M T 0,15 M T

TOTAL RESOURCES 105,187 BILLION TONS

TOTAL RESERVES 21,131 BILLION TONS

Source: Geological Agency, 2010

COAL RESOURCES AND RESERVES

QUALITY AND DISTRIBUTION OF INDONESIAN COAL

TOTAL RESOURCES 105.187 Billion Ton

TOTAL RESERVES 21.131 Billion Ton

Very High ( > 7100 kal/gr ) Medium ( 5100 - 6100 kal/gr ) High ( 6100 - 7100 kal/gr ) Low ( < 5100 kal/gr )

Source: Geological Agency, 2010

Quality Resources Million tons) Reserve (Million tons)

Class Calorific Value

(cal/gram) Total % Probable Proven Total %

Low < 5,100 21,227.63 20.18% 7,603.88 1,105.40 8,709.28 41.21%

Medium 5,100 - 6,100 69,726.02 66.29% 7,063.52 2,904.41 9,967.93 47.17%

High 6,100 - 7,100 13,220.61 12.57% 861.73 1,410.44 2,272.17 10.75%

Very High > 7,100 1,013.19 0.96% 73.29 109.18 182.47 0.87%

Total 105,187.44 100.00% 15,602.41 5,529.43 21,131.85 100.00%

COAL RESOURCE AND RESERVE BASED ON CALORIFIC VALUE

- Low Calorie < 5,100 cal/gram - Medium Calorie 5,100 – 6,100 cal/gram - High Calorie 6,100 – 7,100 cal/gram - Very High Calorie > 7,100 cal/gram

Source: Geological Agency, 2010

0.00

10,000.00

20,000.00

30,000.00

40,000.00

50,000.00

60,000.00

70,000.00

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

21,183.05 M ton ( 20.22%)

69,550.65 M ton ( 66.39%)

13,021.50 M ton (12.43%)

1,001.64 M ton (0.96%)

Total Resources 105,187,44 M ton

Source : Geological Agency of Indonesia, 2010

COAL RESOURCES BASED ON CALORIFIC VALUE

PROGRESS OF COAL RESOURCE & RESERVE

billi

on to

nes

Source: Geological Agency, 2010

2004 2005 2006 2007 2008 2009 2010

0

20

40

60

80

100

120

Reserve 7.00 7.01 9.48 18.71 20.96 21.13 21.131

Resource 60.51 61.37 65.4 93.4 104.76 104.94 105.187

2004 2005 2006 2007 2008 2009 2010

COAL PRODUCTION III.

STATUS OF COAL CONTRACT OF WORKS (AUGUST 2011)

Note : •Coal companies, including CCoW, PTBA (State Own Company), and IUP •Coal production from CCoW is 75-80% of total national production

0

50

100

150

200

250

300

350

2005 2006 2007 2008 2009 2010 2011

41 48 54 49 56

67 79

111

145

163

191 198 208

248

154

193 217

240 256

275

327

Juta

Ton

Domestik Ekspor Production

Realization Projection

REALIZATION OF COAL PRODUCTION, DOMESTIC, AND EXPORT ( 2005 – 2010 )

13

Domestic Export Production

mill

ion

tone

s

PROJECTION OF COAL DOMESTIC CONSUMPTION ٭ > (2011-2014)

0

20

40

60

80

100

120

mill

ion

tone

s

Briquette 0 0.6 0.9 1.3

Fertilizer 0.9 1.1 1.2 1.3

Paper Pulp 0.6 0.7 0.8 0.8

Textile 2 2.3 2.3 2.3

Metallurgy 0.4 0.5 0.5 0.5

Cement 8.9 9.4 10.1 11.2

Electricity 66.3 71.5 79.1 87.7

2011 2012 2013 2014

79 87

95

104

Coal domestic consumption is determined on the basis of coal user demand projection < ٭14

PROJECTION OF COAL PRODUCTION, DOMESTIC, AND EXPORT ٭ > (2011-2014)

0

50

100

150

200

250

300

350

400

mill

ion

tone

s

Domestic 79 87 95 104

Export 248 245 242 238

Production 327 332 337 342

2011 2012 2013 2014

Coal Production Growth is projected 1.5% annually < ٭15

COAL POLICY IV.

Provide certainty and transparency (Mining Law regulation and supporting regulations, sanction for violations of the provisions, etc.).

Implement priority fulfillment of coal for domestic needs.

Improving supervision on good mining practice.

Increasing investment and state revenues from coal enterprise.

Encourage the development of value-added products (i.e. processing, local content, local expenditure, upgrading brown coal, labor and Corporate Social Responsibility).

1

2

3

4

5

COAL POLICY

CHALENGES AND OPPORTUNITIES • Lack of investment for development of underground coal mining. Surface and shallow

reserve was depleted , to maintain level of production needs extension and development of coal production from underground reserve.

• Coal resources in Indonesia is mainly located in the island of Sumatra and Kalimantan. Meanwhile infrastructure for coal transportation is limited, during dry season and wet season river transportation facing a problem regarding very shallow and very high water level at the river, that not suitable for barge transportation. Needs integrated transportation system.

• Coal is not only treated as a commodity but also as source of energy. Therefore need a balance between production (selling) and domestic utilization as source of energy. There are some business opportunies in development of low rank coal as a part of application of value added of coal, such as: coal liquefaction, coal in-situ gasification, coal to synthetic gas, upgrading brown coal (UBC) and mine mouth power plant.

• Threat on sustainability of coal production due to lack of good mining practices applied in the site. Increasing concern of local society and public on safely, environmentally and socially responsible mining operation, need to be anticipated properly.

CONCLUDING REMARKS V.

CONCLUDING REMARKS • Indonesia will continue to take the dual role of coal: as source of state revenue and to

meet the coal domestic demand. • Coal resource in Indonesia is spread out over 17 provinces, of which South Sumatra,

East Kalimantan, and South Kalimantan are considered as the provinces with the biggest coal resources. The total amount of Indonesia coal resources is about 105,187 billion tons and reserves is about 21.131 billion tons.

• Indonesia’s coal production was 275 million tones last year, by assuming the production growth is 1.5 % per year, coal production will climb up from 327 million tones in the year of 2011 to 342 million tones in 2014.

• It is predicted that coal domestic consumption will rise very slowly from 79 million tones in 2011 to 104 million tones in 2014.

• Therefore, coal shipments abroad will be approximately maintained at the level of 240 million tones for the next four year.

• For the time being Indonesia still needs big investment to develop the potency on underground reserves, infrastructures for coal transportations, value added for low rank coal, and encourages all private investments.

JL. PROF. DR. SUPOMO, SH NO. 10 JAKARTA 12870 Telp: (021) 8314585 Faksimile : (021) 8280775 E-mail : dpmb@djmbp.esdm.go.id / www.djmbp.esdm.go.id