Harry Asmar, Reswara - Low Rank Coal in the Future
 

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Harry Asmar, Reswara delivered the presentation at IMM’s 2014 Kalimantan Coal Conference. ...

Harry Asmar, Reswara delivered the presentation at IMM’s 2014 Kalimantan Coal Conference.

The IMM’s Kalimantan Coal Conference brings together 120+ senior executives, decision makers from government, mining, infrastructure, shipping and supply sectors to discuss new policies and strategies for tackling the current and emerging issues within the burgeoning Kalimantan coal sector.

For more information about the event, please visit: http://www.immevents.com/kalicoalconference13

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Harry Asmar, Reswara - Low Rank Coal in the Future Presentation Transcript

  • 1. LOW RANK COAL IN THE FUTURE
  • 2. Coal production; Sub-Holding for BEL and Mifa PT Cipta Kridatama (“CK”) Contract Mining 99.99% PT Sumberdaya Sewatama (“SS”) Power solutions 99.98% PT Cipta Krida Bahari (“CKB”) Integrated logistics 99.99% PT Sanggar Sarana Baja (“SSB”) Engineering services 99.96% Sub-Holding for thermal energy IPP PT Pradipa Aryasatya (“PAS”) 99.9% Sub-Holding for renewable energy IPP PT Nagata Bisma Shakti (“NBS”) 99.9%12.0% Coal logistics PT Baruna Dirga Dharma (“BDD”) 99.9% Shipping PT Alfa Trans Raya (“ATR”) 99.99% 23.12% 55% 21.88% 99.98% IPP PT Metaepsi Pejebe Power Generation (“Meppogen”) General trading PT Prima Wiguna Parama (“PWP”) PT Reswara Minergi Hartama (“Reswara”) Coal production PT Bara Energi Lestari (“BEL”) Coal production PT Mifa Bersaudara (“Mifa”) Coal production 99.99% 70.0%99.99%99.99% 99.99% 99.99% Coal production PT Tunas Inti Abadi (“TIA”) Port operator & management PT Pelabuhan Buana Reja (“PBR”) PT Media Djaya Bersama (“MDB”) Public RESWARA WITHIN TMT GROUP 2
  • 3. RESWARA WITHIN THE GROUP
  • 4. TIA MDB Total Coal Reserves (MT) 52 159 211 Coal Resources Measured 32 18 50 Indicated 39 289 328 Inferred 35 148 183 Total 106 455 561 Concession (Ha) 3,074 4,629 7,703 Total Resources: 561 Million Tons Total Reserves: 221 Million Tons * Based on Joint Ore Report Committee JORC Report RESWARA GROUP POTENTIAL 5
  • 5. RESWARA GROUP COAL RAMP-UP ADB GAR 2013 2014 2015 2016 TIA 5400-5600 3900-4100 5 5 6 6 MDB 3300-3517 3100-3400 1 6 10 15 Total (in million MT) 6 11 16 21 4 6 11 16 21 0 5 10 15 20 25 30 35 40 45 50 2013 2014 2015 2016 Title TIA MDB Total Production Volume
  • 6. TIA HAS A STABLE PRODUCTION AFTER 3 YEARS 3 0 100000 200000 300000 400000 500000 600000 700000 TIA SALES VOLUME TRADING SALES VOLUME Projection 2013
  • 7. TIA AT GLANCE 6
  • 8. TIA OPERATION • TIA was acquired in Dec 2007, commenced commercial production in Aug 2009 and coal sales in Oct 2009 • Coal mining is contracted to ABM subsidiary, CK • 25 km from pit to port at Bunati • 9-12 km from port to anchorage point at Bunati • 8,000 ton barge loading capacity at jetty • 120,000 tons temporary pile facility at the mining pit • Logistic advantages: Close to the Ocean 7
  • 9. Barge Loading Conveyor with 1500mtph capacity TIA OPERATION 8
  • 10. MDB AT GLANCE 9
  • 11. MDB INFRASTRUCTURE PLANMDB INFRASTRUCTURE PLAN A A B C D E F ± A Support facilities; camp, workshop, and office. B Coal processing plant; crusher and stockpile. C Main haul road. D Overland conveyor. E Barge loading and coal rehandling facilities. F Transhipment facilities FBOS (Fixed Berth Offshore Shiploader). CC DD FF 10
  • 12. MDB OPERATION & CONSTRUCTION 11
  • 13. Cambodia India China Thailand OUR REGIONAL MARKETOUR REGIONAL MARKET 12
  • 14. LOW AND MEDIUM RANK COAL BUSINESS IN THE FUTURE LOW AND MEDIUM RANK COAL BUSINESS IN THE FUTURE 12
  • 15. I. Coal Supply and Demand Overview for current and the future II. Barrier to entry for New Player III. Uncertainty of Coal Business IV. Future of Low and Medium Coal Business ContentContent
  • 16. Domestic Coal Consumption 2012
  • 17. Indonesian Coal Outlook
  • 18. Coal is still the best choice as source of energy to produce electricity
  • 19. New Coal Fired Power Plant 2013 PLN ̴ 3200 MW will need continuous supply in the future
  • 20. Global Coal Supply and Demand
  • 21. Coal Supply to China
  • 22. Coal Supply and Demand in India Coal Import composition to IndiaCurrent Coal Supply and Demand in India
  • 23. Coal Supply and Demand in India Indian Coal Supply and Demand Outlook Indian Power Capacity Addition : 12th Plan In MW
  • 24. Coal Market Summary  Coal Industry is still interesting due to demand growth in domestic market and global market.  China’s Coal demand decrease in the future and will affected to Indonesia due to Indonesia’s big portion supplies to China  Growth of Coal fired Power Plant in India increase significantly in the next 5 year will make more demand of coal in the future  Over Supply of Coal around the world will make the prices very tight in the future  Trend of Coal fired plant with using low rank coal in the future will make a low rank coal business still interesting in the future, but not the price.  High coal demand for power plant will need more investment to build a new economical coal mining to cover the supplies
  • 25. I. Coal Supply and Demand Overview for current and the future II. Barrier to entry for New Player III. Uncertainty of Coal Business IV. Future of Low and Medium Coal Business ContentContent
  • 26. Investor need to comply minimum 7 stages in developing a new mine 5. Construction & Development 2. Evaluation & Mine Planning 3. Feasibility Study 4. AMDAL, Detail Planning, & Financing 1. Land Acquisition 2. Permitting 3. Mining Development 4. Infrastructure Development 5. HR & Organization 6. Market Development 7. Social Acceptance through CSR & Community Development 1. Land Acquisition 2. Permitting 3. Mining Development 4. Infrastructure Development 5. HR & Organization 6. Market Development 7. Social Acceptance through CSR & Community Development 6. Operation Preparation & Production 1. Operation Management System 2. EHS Management System 3. Cost Control Management System 4. Sustainability 1. Operation Management System 2. EHS Management System 3. Cost Control Management System 4. Sustainability 7. Rehabilitation and Mine Closure 1. Prospecting & Exploration 7 PRIMARY STAGES IN DEVELOPING A NEW MINE
  • 27. Technical Challenge • Exploration and work condition at remote area • Technical expertise (geologist, mine engineering, operation and maintenance, contract & procurement, logistic, and administration) • Manufacturing, Processing, equipment and Plant • Safety, Health, and Environmental system management, monitoring and control • Technical Reporting and compliances to world class standard Non-Technical & Social Challenge • Legal & Permitting • Financing • Land Acquisition and Compensation • Local Community • Government and Regulation From two major type of challenges above, Non Technical and Social challenge took a biggest part nowadays. • People, System, and Process Common Challenges In Developing New Mine
  • 28. New Mine Legal & Permitting Land Government & regulation Financing Local Community  Many Rules and Regulation should be complied (there are 64 Rule & Regulations that mining company must comply to)  Dispute in Land ownership and unfair pricing  Unique Community issues in every single area  High Risk in Developing New Mine will make more difficult to have funding from Financial Institution  Uncertainty and inconsistent in Regulation implementation after decentralization Primary Challenges In Developing New Mine
  • 29. I. Coal Supply and Demand Overview for current and the future II. Barrier to entry for New Player III. Uncertainty of Coal Business IV. Future of Low and Medium Coal Business ContentContent
  • 30. Low Rank Coal Industry Current Condition 2.7 4.3 6.1 6.7 10.4 13.8 18.5 27.2 26.1 3.8% 5.1% 6.0% 5.8% 7.6% 11.8% 11.7% 13.4% 13.8% 0% 2% 4% 6% 8% 10% 12% 14% 16% 0 5 10 15 20 25 30 2004 2005 2006 2007 2008 2009 2010 2011 2012 Expor Batubara (US$ Billion) % Total Expor
  • 31. 12 31 Juni 2013 1 4 Mei 2013 2 Juni 2013 Mei 2013 3 5 Feb 2013 6 Feb 2013 Low Rank Coal Industry Current Condition
  • 32. 32 Coal Price Decrease in 2012 Reassess production planDecreasing Margin of the company Respons Low Rank Coal Industry Current Condition
  • 33. Increasing of Royalty and export tax implemented Increasing of Royalty and export tax implemented Coal margin decrease Coal margin decrease Adjust S/R and propose discount rate to contractor ContractorContractorEquipment, spare part, wages -> increase Decreasing production Discount Rate Is the project still visible or not? Stop operations Hold the project • Standby Equipment • Revenue decrease • Employee termination Pressure to contractor Fuel Price, Explosive -> Increase Other pressure to IUP Low Rank Coal Industry Current Condition
  • 34. Low Rank Coal Industry Current Condition
  • 35. I. Coal Supply and Demand Overview for current and the future II. Barrier to entry for New Player III. Uncertainty of Coal Business IV. Future of Low and Medium Coal Business ContentContent
  • 36. Coal UtilizationCoal Utilization COAL Direct Usage Conversion Upgrading Power Plant Industries Liquefaction Gasification Kokas Active Carbon High Rank Coal Oil Fuel Gas Fuel Electricity
  • 37. Investor will need much support from government and community  Coal Business will be still interesting in the future subject to:  Global Economic Growth  Successful of Upgrading Technology  Successful of Coal Conversion technology  Commitment of Government to develop coal fired power plant in Indonesia  Challenges to Develop new mine  Uncertainty of Regulation (implementation of export tax and changing of royalty rate)  Inconsistency regulation between central government, provincial government, and local government)  Support from government for clarity of law requirement and land compensation
  • 38. Thank you