Mining

Coal Mining Segment

The Company’s thermal coal mining operations are carried out through its subsidiaries. The Company’s subsidiaries have been operating 1 (one) Special Mining Business License for the Continuation of Contract/Agreement Operation (IUPK-KOP) through AI (consisting of Tutupan and Wara mines) and 4 (four) mining business permits (IUPs), consisting of SCM, LSA, and PCS (under BCC), and MIP. The Company also has two potential coal mines, i.e. PC with 38,040 hectares in Mahakam Ulu and Barito Utara, and RC with 36,490 hectares in Mahakam Ulu and Murung Raya, both located in East Kalimantan and Central Kalimantan provinces. In conducting mining operations, AI, BC, and MIP strictly adhere to the principles of Good Mining Practice as stipulated by the Decree of the Minister of Energy and Mineral Resources number 1827 K/30/MEM/2018 on the Implementation Guideline of Good Mining Techniques.

This segment produces sub-bituminous coal of medium-rank calorific values with the advantages of very low ash and sulfur contents, which produces relatively low-level nitrogen oxide during combustion. The Group’s main coal products have been well recognized globally under its trademark Envirocoal.

The Group supplies coal for industrial consumptions in the domestic and international markets both directly to the customers and through brokers. The group’s main customers are generally from the power generation industry, in addition to other industries such as metal refinery and cement industries, and are spread in 14 countries – Indonesia, China, Malaysia, India, South Korea, the Philippines, Hong Kong, Japan, Taiwan, Thailand, Bangladesh, Vietnam, Singapore and New Zealand

The map below presents the mining concession areas held by the Group:

The following explanation presents the summary of the Group’s coal mines:

 

AI’s mines

AI produces thermal coal of medium calorific values with low pollutant contents, widely consumed for coal-fired power plants and industrial consumptions, such as the metal refinery and cement industries in Indonesia and several importing countries. AI’s mines are located in Tabalong and Balangan, South Kalimantan, operated under Special Mining Business License for the Continuation of Contract/Agreement Operation (IUPK-KOP) of around 23,942 hectares. 

The map below presents the locations and positions of AI’s IUPK-KOP areas:

AI commenced commercial production in 1992. Its total reserves were 642 million tonnes and its total resources were 3,397 million tonnes at the end of June 2024. The coal reserves within AI’s concession areas consist of thermal sub-bituminous coal of medium-rank calorific values, ranging from 4,000 kcal/kg to 5,000 kcal/kg GAR, with ultra low sulfur and ash contents. Out of these characteristics, AI’s products are trademarked Envirocoal, which have been developed into several different categories to meet customers’ requirements. 

YTD June 30th, 2024, AI had produced 25.69 million tonnes and removed 106.62 million bcm overburden, or 5% higher than 102 million bcm in the year ago period, resulting in 4.15x strip ratio. The following is the summary of AI’s coal production and sales for the six months’ period which ended on June 30th, 2024, and for the year which ended on December 31st, 2021, 2022, and 2023:

Remaks

Unit

30 June

December 31st

2024

2023

2022

2021

Production Volume

Million Tonnes

25,69

48,60

49,12

43,15

Net Sales Volume

Million Tonnes

29,56

57,35

55,60

47,55

Sales Volume

AS$

2.140.348.259

4.925.619.824

6.746.412.348

3.236.390.163

 

Balangan Coal Companies’ (BCC’s) mines

BCC consists of SCM, LSA, and PCS. The Company holds 75% ownership in each of the companies, which individually holds an IUP of 2,500 ha, bringing the total area of BCC to 7,500 ha. These three IUPs are an essential part of the group’s coal mining portfolio by providing additional sources of sub-bituminous thermal coal. 

The map below presents the locations and positions of BCC’s IUP OP areas:

These concessions contain coal with calorific values ranging from 4,200 kcal/kg to 4,400 kcal/kg (GAR) and has characteristics similar to AI’s Envirocoal products, i.e. low ash and very low sulfur contents, or less than 0.1%. BCC has total reserves of 123 million tonnes and total resources of 344 million tonnes as at the end of June 2024. As an important part of the Group’s portfolio, BCC continuously improves the quality and capacity of its infrastructure, from the hauling road, stockpile, offices and warehouses, to mine water treatment. 

YTD June 30th, 2024, BCC’s concessions had produced 4.46 million tonnes of coal with total overburden removal of 19.48 million bcm, or 34% higher than 14.53 million bcm in the year ago period, bringing strip ratio to 4.38x. The following table presents the summary of BCC’s coal production and sales for the six months period ending on June 30th, 2024, and for the year ending on December 31st, 2021, 2022, and 2023:

Remaks

Unit

30 June

December 31st

2024

2023

2022

2021

BC

 

 

 

 

 

Production volume

Million tonnes

4,46

8,02

7,11

5,24

Net sales volume

Million tonnes

4,27

8,07

7,01

5,28

Sales volume

AS$

250.766.826

528.493.193

616.591.944

317.469.370

 

 

 

 

 

 

SCM

 

 

 

 

 

Production volume

Million tonnes

2,46

3,95

3,30

2,27

Net sales volume

Million tonnes

2,41

3,95

3,29

2,28

Sales volume

AS$

137.295.646

259.703.610

272.849.327

140.732.610

 

 

 

 

 

 

LSA

 

 

 

 

 

Production volume

Million tonnes

1,98

4,07

3,81

2,97

Net sales volume

Million tonnes

1,86

4,12

3,72

3,00

Sales volume

AS$

113.471.180

268.789.583

343.742.617

176.736.760

 

 

 

 

 

 

PCS

 

 

 

 

 

Production volume

Million tonnes

0,02

-

-

-

Net sales volume

Million tonnes

-

-

-

-

Sales volume

AS$

-

-

-

-

MIP’s mine

MIP was acquired by the Company in 2011 for 75% ownership. MIP holds IUP for a concession of 2,000 hectares in Lahat, South Sumatra, which consists of sub-bituminous thermal coal of medium-rank calorific values with relatively low ash and sulfur contents, making it suitable for coal-fired power plants.

The map below presents the location and position of MIP’s IUP OP:

MIP commenced commercial production in 2019 and has developed its position in the domestic as well as export markets. MIP had coal reserves of 152 million tonnes and coal resources of 361 million tonnes at the end of June 2024, with average in-situ calorific value of 4,300 kcal/kg (GAR).

YTD June 30th, 2024, MIP had produced 2.61 million tonnes of coal with total overburden removal of 5.12 million bcm, or 10% lower than 5.66 million bcm in the year ago period, bringing strip ratio to 1.96x. The table below presents the summary of MIP’s coal production and sales for the six months period ending on June 30th, 2024, and the year ending on December 31st, 2021, 2022, and 2023:

Remaks

Unit

30 June

December 31st

2024

2023

2022

2021

Production volume

Million tonnes

2,61

4,15

3,28

2,00

Net sales volume

Million tonnes

2,86

4,01

2,63

1,81

Sales volume

AS$

159.484.805

251.457.208

212.638.482

87.518.968

The following description presents the summary of coal mining of the companies within the Group in the development pipeline:

  • Pari Coal (PC): This subsidiary holds the third-generation CCoW consisting of a concession area of 24,971 hectares in East Kalimantan, which contains medium-rank sub-bituminous thermal coal with low ash content. At the time of this Prospectus, PC is in detailed engineering study stage of the Production Operations and initial preparation of hauling road and coal loading port constructions on the Mahakam River. PC’s coal resources totaled 183 million tonnes at the end of September 2022 and reserves totaled 24 million tonnes at the end of November 2022 with an average in-situ calorific value of 4,300 kcal/kg (GAR). PC is currently conducting further exploration to increase coal resources and reserves in its area. PC plans to update the resource and reserve estimates after the further exploration is completed.
  • Ratah Coal (RC): This subsidiary is located in East Kalimantan and holds a CCoW in the exploration stage with a total area of 36,490 hectare. RC is obtaining the license for exploration activities in the forest area.

 

Concession Areas

The Company’s subsidiaries have mining assets consisting of 1 (one) IUPK-KOP area and 4 (four) IUP areas with total mining concession area of 33,442 hectares which have been operational to conduct mining activities:

Subsidiary

Area (Ha)

Location

Coal Type

Period

Status

AI

23.942

Tabalong dan Balangan, Kalimantan Selatan

Subbituminus

2022 – 2032

IUPK – KOP

SCM

2.500

Balangan, Kalimantan Selatan

Subbituminus

2009 – 2029

IUP – OP

LSA

2.500

Balangan, Kalimantan Selatan

Subbituminus

2014 – 2034

IUP – OP

PCS

2.500

Balangan, Kalimantan Selatan

Subbituminus

2009 – 2029

IUP – OP

MIP

2.000

Lahat, Sumatera Selatan

Subbituminus

2010 – 2030

IUP – OP

In addition, through its subsidiaries, the Company has 2 (two) CCoW areas totaling up to 61,461 hectares, which are not yet operational and still need further exploration.

Subsidiary

Area (Ha)

Location

Coal Type

Period

Status

PC

24.971

Mahakam Ulu, Kalimantan Timur

Subbituminus

2024 – 2054

PKP2B – OP

RC

36.490

Kutai Barat, Kalimantan Timur dan Murung Raya Kalimantan Tengah

Metalurgi

2023 – 2024

PKP2B - Eksplorasi

 

Reserves

Based on JORC Reserve Report of June 2024 prepared by PT Quantus Consultants Indonesia (QCI), the coal reserve estimates based on JORC Code 2012 for AI, BCC, and MIP concessions are as follows:

Company / Project

Company / Location

Reserves (Mt)

Quality

Proven

Probable

Total Reserves

Moisture

(% ar)

Ash

(% adb)

Caloric Value
(% ar)

AI

Tutupan Utara

258,3

74,8

333,1

27,0

1,9

4.820

Tutupan Selatan

59,4

2,2

61,6

27,4

2,1

5.000

Wara I

78,9

168,4

247,3

39,1

3,4

3.995

Balangan Coal

PT Semesta Centramas

14,2

19,9

34,1

34,3

2,0

4.231

PT Paramitha Cipta Sarana

19,0

2,0

21,0

33,2

3,4

4.358

PT Laskar Semesta Alam

48,1

19,8

67,9

32,1

1,9

4.520

MIP

Sumatera Selatan

57,6

94,7

152,3

34,0

7,3

4.282

PC has prepared the estimates of Reserve Report based on KCMI Code 2017 in November 2022, compiled by PT Yekada Multi Energi (YME). The estimates of coal reserve based on KCMI Code 2017 for PC concession are as follows:

Company / Project

Company / Location

Reserves (Mt)

Quality

Proven

Probable

Total Reserves

Moisture (% ar)

Ash (% adb)

Caloric Value
(% ar)

PC

Blok Nyerubungan

22,6

0,9

23,5

33,0

4,0

4.300

 

Product

AAI’s subsidiaries produce sub-bituminous coal trademarked ‘Envirocoal’ due to its low contents of sulfur, ash, and other contaminants. Several main variables of sub-bituminous coal are calorific value and rank. In particular, AI’s Envirocoal is among the coal with lowest sulfur and ash contents in the international coal markets. The greener characteristic differentiates the coal produced by AAI’s subsidiaries from the competitors’ products. 

  1. Envirocoal Produced by Subsidiaries on Kalimantan

    •  Ash content of 2% - 3% (adb)

      Coal with low ash content can generate energy more efficiently and reduce maintenance cost as it generates lower slagging level on the boiler. Therefore, the coal of the Company’s subsidiaries, which is recognized among coal products with the lowest ash content in the global market, offers customers with considerable cost efficiency. Ash disposal, due to both volume and chemical contents, has been a problem in several countries, such as Japan, which finds it challenging to handle combustion ash residue due to limited land availability. With regard to ash chemical contents, many countries in the world focus on trace element content on combustion ash residue. 

    • Nitrogen content of 0,9% - 1,0% (daf)

      Envirocoal has been listed among coal products with the lowest nitrogen content in the global market. In the combustion process, nitrogen reacts with oxygen to form NOx. The low nitrogen content automatically reduces pollutant forming. Besides, the low nitrogen content allows the customers to reduce the costs associated with the disposal of nitrogen oxide from the gas released from the discharging pipe, or even eliminate it, thus producing more energy. According to McCloskey, Envirocoal’s nitrogen content is among the lowest in the world, only comparable to the Powder River Basin coal from the US.

    • Sulfur content of 0,1 – 0,25% (adb)

      The regulation on sulfur oxide emission requires the customers to install desulfurizer on gas discharging pipe or reduce sulfur content in coal mix. The low sulfur content allows the customers to meet the required standard and reduce capital expenditure, in addition to reducing operational costs. 

  2. Coal Produced by a Subsidiary (MIP) on Sumatera 

      

    • Ash content of 5% (adb), with very low chemical value of Ferric Oxide (Fe2O3)

      MIP’s coal has an ash content of around 5% adb. While its ash content is a little higher than Envirocoal’s. MIP’s coal has good ash chemical value, with Ferric Oxide (Fe2O3) of only 6%. This condition generates positive implication in combustion because the use of coal with low Ferric Oxide content can help to avoid slagging and fouling on the boiler. 

    • Nitrogen content of 0,9% - 1,0% (daf)

      The nitrogen content of MIP’s coal is low, equivalent to Envirocoal’s from Kalimantan, hence MIP’s coal can be labeled environmentally friendly coal producing low level of NOx.

    • High ash fusion temperature with initial deformation temperature of 1,330oC

      Ash fusion temperature is the temperature that represents the fusion characteristics of unorganic residual (ash) after coal combustion. Low ash fusion temperature value will cause ash fusion at the operating temperature of the boiler, with the risk of producing slagging and fouling on the discharging pipe walls. Ash fusion temperature starts from Initial Deformation Temperature, Softening Temperature, Hemispherical Temperature and Fluid Temperature. Initial Deformation Temperature is the temperature when ash starts to soften and change its form. MIP’s coal has Initial Deformation Temperature of 1,330oC, which is quite high. This means ash will start to soften and change at very high temperature higher than the operating temperature, ensuring efficiency and preventing slagging and fouling of the boiler and discharging pipe. 

 

Resources 

From time to time, the subsidiaries use the service of independent consultants to prepare estimates and valuations on the resources of 5 (five) operational mines: AI, SCM, LSA, PCS, and MIP, and 1 (one) non operational concession (PC).

Based on JORC Resource Report of June 2024 prepared by PT Quantus Consultants Indonesia (QCI), the coal resource estimates based on JORC Code 2012 for AI, BCC, and MIP concessions are as follows:

Company / Project

Company / Location

Resources (Mt)

Quality

Measured

Indicated

Inferred

Total Resources

Moisture

(% ar)

Ash

(% adb)

Caloric Value
(% ar)

AI

Tutupan Utara

843,7

201,0

63,2

1.107,9

27,4

2,0

4.838

Tutupan Selatan

532,2

124,8

33,7

690,7

29,1

2,6

4.848

Paringin Utara

176,7

24,0

10,2

210,9

28,4

2,8

4.891

Wara I

736,7

234,6

89,9

1.060,6

38,8

3,7

4.004

Wara II

310,8

13,0

2,7

326,5

42,7

3,7

3.614

Balangan Coal

PT Semesta Centramas

59,7

14,8

6,2

80,7

32,9

2,7

4.352

PT Paramitha Cipta Sarana

43,3

8,7

5,7

57,7

32,1

3,9

4.335

PT Laskar Semesta Alam

98,1

75,0

32,8

205,9

30,4

2,3

4.571

MIP

Sumatera Selatan

329,6

29,1

2,3

361,1

34,2

6,3

4.317

AAI’s subsidiary which is not yet operational (PC) has prepared the estimates of Resource Report based on KCMI Code 2017 in September 2022, compiled by PT Yekada Multi Energi (YME). The estimates of coal resource based on KCMI Code 2017 for PC concession are as follows:

Company / Project

Company / Location

Resources (Mt)

Quality

Measured

Indicated

Inferred

Total Resources

Moisture

(% ar)

Ash

(% adb)

Caloric Value
(% ar)

PC

Blok Nyerubungan

161,3

18,3

3,2

182,7

33,0

4,0

4.300