ICS

INDONESIAN COAL SOCIETY

PT TEKNOLOGI ENERGI NUSANTARA PT.

COAL UPGRADING IMPLEMENTATION IN INDONESIA

Taufik Sastrawinata
Secretary General of ICS President Director of PT. TEN

July 5-6, 2012, Beijing, China

Introduction

Government Energy Policy

Coal Map by Resources and Reserves

Coal Map by Calorific Value

Geological Agency 2011

Very High Calorific Value > 7.100 Kcal/kg High Calorific Value Medium Calorific Value Low Calorific Value 6.100 6 100 7,100 7 100 Kcal/kg 5.100 6.100 Kcal/kg < 5.100 Kcal/kg

TOTAL RESOURCES TOTAL RESERVES

161.34 Billion TON 28 28.17 17 Billion TON

Indonesian Coal Reserve per 1 January 2010

Coal Production and Export

OTHERS 20% MALAYSIA 6%

CHINA 25%

TAIWAN 9% KOREA 9%

JAPAN 14% INDIA 17%

Major Coal Mining in Indonesia

PRODUCTION

EXPORT
37.21
40 35 30 25 20 15 10 5 0

Nop2011 34.36 24.37 16.89 15.67

PT.ADARO PT.KALTIM PT.KIDECO INDONESIA PRIMACOAL JAYAAGUNG

PT.BERAU PT.ARUTMIN COAL INDONESIA

* Million Ton

Long Term Outlook Indonesian Coal Industry

Challenges

Coal Upgrading - Briquette

The Coal Upgrading pg g Briquette q ( (CUB ) will p provide a higher g heating g value by reducing high moisture by using by drying the coal and to keep the dried product by briquetting

High increase calorific values Best strength g and handling g No dust and much less fine particles No use of chemicals No change of chemicals characteristic Can be applied to all coals

Process of Coal Upgrading

1 Million Coal Briquetting, Inner Mongolia, China Fi i h d 2012 Finished

Major Equipment

Coal Upgrading Briquette

Before briquetted

After briquetted

surface

inside

Raw Coal and CUB Analysis y

Proximate P i t Analysis
(As Received) M i t Moisture Ash Volatile Matter Fixed Carbon Total Total Sulphur Heating Value (k l/k ) (kcal/kg) HGI Coal Upgrading-Briquette pg g q

Raw Coal
46 9 46.9 0.95 27.2 24.95 100 0 09 0.09

After briquette

After 30 days in open air

After 24 hour in water

After 48 hour in water

10 46 10.46 1.86 42.86 45 100 0 14 0.14 5636

10 5 10.5 -

12 58 12.58 -

15 56 15.56 -

3393 78 66.77

5,634 634 66.77

5,517 1 66.77

5,349 349 66.77

Coal Price

USD 190.95

Coal Price Update

June 20 (Bloomberg) -- Swap contracts for lower-quality coal from Indonesia, the worlds biggest exporter of the power-station fuel, dropped 3.9 percent, according to Ginga g Petroleum Singapore g p Pte. Prices for shipments p to China fell 1.1 p percent. The contract for sub-bituminous coal with a heating value of 4,900 kilocalories a kilogram for loading in July from Indonesia fell $2.50 to $61 a metric ton on a net as-received basis yesterday, the energy broker said in an e-mail today. The swap for the third quarter was 70 cents lower at $60.80. Coal with a calorific value of 5,500 kilocalories a kilogram for shipment to South China slipped $1 to $86 a ton on a net as-received basis, Ginga said. The swap for the third quarter slid 50 cents to $86.

References

Economic Analysis y

Based on 45 % moisture reduce to 10 % total moisture Investment cost ~ $ 65 Million for approx. 1 Million ton CUB per year Coal mining production cost ~ $ 20/ton X 1.54 = $ 30.8/ton Coal land and sea transportation p etc. ~ $ 5/ton CUB operational cost ~ $ 10/ton Production cost including coal ~ $ 45.8/ton CUB pricing g @ 5,600 kcal/kg g ( arb) ) ~$ 86/ton CUB sales = $ 86.0 Million per year Production cost, incl. coal $ 45.80 /ton = $ 45.80 Million per year Government royalty 7% ~ 0.07x $86M = $ 6.00 Million per year Gross margin ~ 86 - 45.80 - 6.00 = $ 33.60 Million per year Tax Revenue 25 % = $ 8.40 Million per year Net margin = $ 25.20 Million per year P b kP Payback Period i d < 2.6 2 6 years.

Economic Analysis: y case CCOW Generation I

Based on 45 % moisture reduce to 10 % total moisture Investment cost ~ $ 65 Million for approx. 1 Million ton CUB per year Coal mining production cost ~ $ 20/ton X 1.54 = $ 30.8/ton Coal land and sea transportation p etc. ~ $ 5/ton CUB operational cost ~ $ 10/ton Production cost including coal ~ $ 45.8/ton CUB pricing g @ 5,600 kcal/kg g ( arb) ) ~$ 86/ton CUB sales = $ 86.0 Million per year Production cost, incl. coal $ 45.80 /ton = $ 45.80 Million per year Government royalty 13.5% ~ 0.135x $86M= $ 11.61 Million per year Gross margin ~ 86 - 45.80 11.61 = $ 28.59 Million per year Tax Revenue 45 % = $ 12.87 Million per year Net margin = $ 15.72 Million per year P b kP Payback Period i d = 4.1 4 1 years.

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