2nd Annual Petcoke Conference

USING COAL & PETCOKE

The Indonesian Experience
Presented by

Frederick J. Murrell President Adaro Envirocoal Americas

For McCloskeys 2nd Annual Petcoke Conference

19 20 July 2004 Houston Texas

2nd Annual Petcoke Conference

A Few Observations

Indonesian coal has been blended on several occasions with petroleum coke.

Adaros experience has been with cement producers and electric power plants.
Adaro is comfortable that petcoke can be successfully blended with high volatile matter, low sulfur coal.

2nd Annual Petcoke Conference

A Few Observations

Local laws affecting petcoke use. Local laws affecting coal use. New fuel permit applications. Blending restrictions. Differences in hardness (HGI) of products.

Different response to rainfall.

2nd Annual Petcoke Conference

Indonesian Coal

2nd Annual Petcoke Conference

Major Mine Locations

THAILAND South China Sea
SABAH

Sulu Sea

ca lc ala M t Str

Banda Aceh

MALAYSIA
Kuala Lumpur

BRUNEI

Pac
Str a sar it

ait
Medan

SARAWAK

Berau

kas

SUMATRA
Pekan Baru

Singapore KPC Indominco

Bukit Baiduri ABK

Manado

Pontianak

Gunung Bayan Tanito Harum Multi Harapan

Ma

HELMAHE Maluku Sea

r ri K Ka

PTBA Padang

ma

Jambi

KALIMANTAN

Kideco

Balikpapan Kendilo

t ait Sr Str t ta

S ai taw nta Me Me

Palembang Bengkulu

Adaro Banjarmasin

SULAWESI

Arutmin
Sebuku

Seram Se SER

t it ri tra

PTBA Bandar Lampung Jakarta

Arutmin Jorong

Java Sea

Ban
Makassar

JAVA

Surabaya

BALI

SUMBAWA TIMOR

Indian Ocean

Denpasar LOMBOK

Timor S

2nd Annual Petcoke Conference

Coal Quality

The coal industry has focused on the exploration and mining of bituminous and sub-bituminous coal with the latter having sub-classifications which can be defined as :

C Quality 4200-5000 kcal/kg(adb) 30-40% TM(ar)

B Quality 5000-5800 kcal/kg(adb) 20-30% TM(ar) A Quality +5800 kcal/kg(adb) -25% TM(ar)

2nd Annual Petcoke Conference

Coal Quality of Selected Companies

Adaro Production(Mt 2003) Coal Rank Kcal/kg (adb) Moisture (ar %) Ash (adb %) Volatile Matter (adb %) Sulphur (adb %) HGI 22.5 Sub-bit"A" 5800 24 1 40 0.1 46 Kaltim Prima 16.5 Bit/Sub-bit "A" 6700/5900 12/17 5/5 39/40 0.6/0.3 47/46 Bukit Asam 9.9 Sub-bit "B" 5500 23 8 38 0.5 50 Arutmin 13.7 Bit/Sub-bit "C" 6500/4800 9/35 12/4 40/38 0.7/0.2 38/70 Kideco 14.0 Sub-bit "B" 5500 22 2 42 0.2 50

2nd Annual Petcoke Conference

Coal Quality

Adaros sub-bituminous grade C Wara and Warukin deposits contains more than one billion tonnes of low ash, low sulphur coal

2nd Annual Petcoke Conference

Company Operations

2nd Annual Petcoke Conference

Production By Company
Actual Major Producers Adaro Indonesia Kaltim Prima Coal Kideco Arutmin Bukit Asam Berau Indominco Mandiri Gunung Bayan Jorong Kitadin Sub-Total 2000 15.5 13.1 8.1 7.8 10.7 4.9 3.7 1.2 1.2 1.3 67.5 2001 17.7 15.5 10.4 9.6 10.2 6.7 4.4 2.2 2.6 1.7 81.0 2002 20.8 17.6 11.5 10.6 9.5 7.1 5.3 2.6 2.3 1.9 89.2 2003 22.5 16.5 14.0 13.7 9.9 7.6 6.5 4.5 3.0 3.0 101.2 2004 23.0 21.0 15.0 15.0 10.3 8.0 6.8 5.0 3.0 3.0 110.1 Forecast 2005 24.0 23.0 15.5 16.0 11.0 8.5 7.0 5.0 3.5 3.5 117.0 2006 26.0 25.0 16.0 16.0 11.0 9.0 7.0 5.0 4.0 4.0 123.0

Million Mt

2nd Annual Petcoke Conference

Production By Company
Actual Small-Medium Producers Anugerah BK Bukit Baiduri Sebuku Tanito Harum Multi Harapan Lanna Harita Antang Gunung Meratus Tanjung Alam Sumber Kurnia Baramarta Others Coops, New Mines 2000 0.0 2.0 1.5 1.0 1.2 0.0 0.3 0.3 0.0 0.0 2.4 2.5 2001 1.0 2.0 2.0 1.6 1.3 0.3 0.4 0.7 0.0 0.0 2.5 2.5 2002 1.7 2.0 2.1 1.8 1.0 1.0 0.5 0.7 0.8 0.6 2.3 5.0 Est 2003 2.7 2.5 2.0 2.0 1.6 1.3 0.8 0.8 0.8 0.8 2.0 5.3 2004 2.8 3.0 2.2 2.5 1.5 1.5 1.0 1.0 1.0 1.0 1.2 7.8 Forecast 2005 3.0 3.0 2.0 3.0 1.0 2.0 1.0 1.5 1.0 1.0 1.2 11.5 2006 3.0 3.0 2.0 3.0 1.0 2.5 1.0 2.0 1.0 1.0 1.4 14.0

Sub-Total

11.2

14.3

19.5

22.6

26.5

31.2

34.9

Million Mt

2nd Annual Petcoke Conference

Production Summary
Actual Summary Major Producers Small-Medium Producers 2000 67.5 11.2 2001 81.0 14.3 2002 89.2 19.5 2003 101.2 22.6 2004 110.1 26.5 Forecast 2005 117.0 31.2 2006 123.0 34.9

Total Production Production Growth

78.7 2.6

95.3 16.6

108.7 13.4

123.8 15.1

136.6 12.8

148.2 11.6

157.9 9.7

Million Metric Tonnes

2nd Annual Petcoke Conference

Infrastructure
Operator
Coal loading ports and capacities Kalimantan Kaltim Prima Kideco Jaya Agung Arutmin Dermaga Prakarsa Pratama Indonesia Bulk Terminal Indominco Mandiri PTBA PTBA General Port Additional ship loading capacity Self-loading vessels and direct barging Adaro Indonesia Floating Cranes Kideco Floating Cranes Berau Coal, Floating Platform Tanjung Bara Tanah Merah North Pulau Laut Balikpapan South Pulau Laut Bontang Sumatra Tarahan Teluk Bayur Pulau Baii Offshore/River 1991 dedicated 1993 dedicated 1994 dedicated 1995 common user 1997 common user - phase I 2005 common user - phase II 1999 dedicated 1989 dedicated 1991 common user 1990 Various 180,000 20,000 150,000 65,000 90,000 200,000 65,000 65,000 40,000 20,000 Geared 65,000 Unlimited Unlimited Panamax 20.0 12.0 10.0 3.0 10.0 6.0 10.0 2.0 1.0 40.0 10.0 3.0 5.0 20.0 12.0 12.0 5.0 10.0 12.0 6.0 15.0 3.0 3.0 40.0 15.0 5.0 5.0

Region and port Operational

Max vessel size

DWT

Actual capacity 2003

Mt/yr

Future capacity 2006

Mt/yr

South Kalimantan 3 cranes East Kalimantan 2 cranes East Kalimantan 2000

Total capacity

132.0

163.0

2nd Annual Petcoke Conference

Efficient Ship Loading

2nd Annual Petcoke Conference

Coal Supply- Overview

In 2003, Indonesia produced 123 million mt and exported just over 90 million mt. Second largest exporter of thermal coal.

Nearly 80% of production is ranked as sub-bituminous A and B coals with low ash, low sulphur and low nitrogen.
Some movement to lower rank coals for domestic use.

2nd Annual Petcoke Conference

Coal Supply- Pricing

Coal prices have increased rapidly during 2004. Indonesian coal is generally sold at lower prices despite global supply shortages and reputation as a reliable supplier. Indonesian sub-bituminous coal is used in Asia, Europe and the Americas for its environmental and economic benefits.

2nd Annual Petcoke Conference

Domestic Coal In Indonesia

Domestic consumption grew from 22.3 million mt in 2000 to 31.4 million mt in 2003 but will not increase substantially until after 2006. Between 2006 and 2020 an additional 50 million mt per year of new coal supply will be required to meet a forecasted 15,000 MW of new power generating demand that will be required to support industrial growth in Java & Bali.

2nd Annual Petcoke Conference

Exports and Domestic Sales

(1) (2)

2000 Indonesian Supply to Asia Indonesian Supply to Europe Indonesian Supply to USA 47.1 8.5 2.2

2001 54.8 9.6 2.4

2002 61.0 10.3 3.3

2003 76.0 10.5 3.6

2004 83.8 10.5 5.0

Indonesian Exports

57.8

66.8

74.6

90.1

99.3

Indonesia Domestic Supply

22.3

25.3

29.0

31.4

32.2

Total Indonesian Sales

(1) ESTIMATE (2) FORECAST

80.1

92.1

103.6

121.5

131.5

2nd Annual Petcoke Conference

USING COAL & PETCOKE

The Indonesian Experience
Presented by

Frederick J. Murrell President Adaro Envirocoal Americas

For McCloskeys 2nd Annual Petcoke Conference

19 20 July 2004 Houston Texas