INDONESIA LOWER RANK COAL RESOURCES DEVELOPMENT

POLICY

GEOLOGICAL AGENCYMINISTRY OF ENERGY AND MINERAL RESOURCES

2006

2

Outline Outline

Status of Energy Resources Status of Energy Resources

Current and Targeted Primary Energy MixCurrent and Targeted Primary Energy Mix

Coal Resources and ReservesCoal Resources and Reserves

National Energy PolicyNational Energy Policy

National Coal PolicyNational Coal Policy

Lower Rank Coal Utilization & ResearchLower Rank Coal Utilization & Research

3

FOSSIL ENERGY RESOURCES RESERVES PRODUCTION R/P (YEARS)

Oil 86.9 billion bbl 8.6

185.8

19,3

Wind 9,287 MW 0.5 MW

387 million bbl 22

Gas 384.7 TSCF 2.95 TSCF 62

Coal 57.8 billion Ton 132 Million Ton 146

NON FOSSIL ENERGY

RESOURCES EQUIVALENT UTILIZATION INSTALLED CAPACITY

Hydro 845 Million BOE 75,670 MW 6,851,000 MWh 4,200 MW

Biomass 49,810 MW 302.4 MW

Solar 4.8 kWh/m2/day 5 MW

Geothermal 219 Million BOE 27,000 MW 2,593,500 MWh 807 MW

Mini/Micro hydro 458.75 MW 458.75 MW 54 MW

Uranium 24.112 Tons* 3 GW

ENERGY RESOURCES IN INDONESIA(January 2005)

*) only in Kalan region, West Kalimantan

MAIN TERTIARY COAL BASINS OF INDONESIA

Coal Bearing Formations in IndonesiaCoal Bearing Formations in Indonesia

6

INDONESIAN TERTIARY COALPALEOGENEPALEOGENE NEOGENENEOGENE

Formed within the intermountain and Formed within the intermountain and continental margin basins in continental margin basins in transgressivetransgressiveenvironment.environment.

Formed in back deep, deltaic and continental Formed in back deep, deltaic and continental margin basins in margin basins in regeressiveregeressive environmentenvironment

Relatively thinner, continuousRelatively thinner, continuous Varies in thickness but in general much Varies in thickness but in general much thicker than those of thicker than those of PaleogenePaleogene coal.coal.

Relatively higher in ash and Relatively higher in ash and sulphursulphur contentcontent Low ash and Low ash and sulphursulphur contentcontent

Low moisture and high calorific value.Low moisture and high calorific value. Mostly subMostly sub--bituminous coals and bituminous coals and ligniteslignites, , high moisture content and low calorific value.high moisture content and low calorific value.

Export commodity coalsExport commodity coals Domestic consumption and energy resources Domestic consumption and energy resources for power stationsfor power stations

1.1. Resources and ReservesResources and Reserves

2.2. QualityQuality

COAL RESOURCES, RESERVES AND QUALITY

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Indonesian National Standard for Classificationon Coal Resources and Reserves

Adopted from UN International FrameworkCalassification for Reserves/Resources – Solid Fuel Commodities

Indonesian National Standard for Classificationon Coal Resources and Reserves(Amandemen 1-SNI 13 -5014 -1998)

Adopted from UN International FrameworkClassification for Reserves/Resources – Solid Fuel Commodities

Indonesian National Standard for Classificationon Coal Resources and Reserves

Adopted from UN International FrameworkCalassification for Reserves/Resources – Solid Fuel Commodities

Indonesian National Standard for Classificationon Coal Resources and Reserves(Amendment 1-SNI 13 -5014 -1998)

Adopted from UN International FrameworkClassification for Reserves/Resources – Solid Fuel Commodities

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RESOURCE

HYPOTETIC

INFERRED

INDICATED

MEASURED

COALIN PLACE

RESERVES

FEASIBILITYSTUDY

PROVEN MARKETABLEPROVEN

RESERVES

GEO

LOG

ICA

L A

SSU

RA

NC

E

FEASIBILITYRESOURCES

ECONOMIC, MINING, UTILISATION, MARKETING, SOCIAL AND OTHER ASPECTS

10

BASED ON CALORIFIC VALUE (Cal/gram, adb)

[Government Regulation No. 13, Year 2000 and No. 45/ 2004]

Low Calorie : < 5100

Medium Calorie : 5100 – 6100

High Calorie : 6100 - 7100

Very High Calorie : > 7100

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INDONESIAN COAL RESOURCES AND RESERVESINDONESIAN COAL RESOURCES AND RESERVES(CGR, by December 2005)(CGR, by December 2005)

QUALITYQUALITYNoNo ISLANDISLAND

CALORYCALORY CRITERIACRITERIA

1. JAWA Low - Medium < 6100 19,24 0,00

High - Very High >6100 2,97 0,00

2. SUMATERA Low - Medium < 6100 26.872,5 2.636,62

High - Very High >6100 1.780,66 134,11

3. KALIMANTAN Low - Medium < 6100 25.375,69 2.769,01

High - Very High > 6100 6.844,44 1.219,1

4. SULAWESI Low - Medium < 6100 218,42 0,06

5. MALUKU Low < 5100 2,13 0,00

6. PAPUA Low - Medium < 6100 120,35 0,00

High - Very High >6100 30,91 0,00

TOTAL 61.273,99 6.758,90

High - Very High >6100 14,68 0,00

RESOURCES RESOURCES

( M Ton)( M Ton)RESERVESRESERVES

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Coal Resources and ReservesCoal Resources and Reserves2004 and 20052004 and 2005

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

2004 2005

R eso urces

R eserves

Mill

ion

Ton

s

13

INDONESIAN COAL RESOURCES AND RESERVESINDONESIAN COAL RESOURCES AND RESERVES

0.00

2,770.73

3,988.11

0.06 0.00 0.00

0.00

500.00

1,000.00

1,500.00

2,000.00

2,500.00

3,000.00

3,500.00

4,000.00

M T

anne

s

1

RESERVES

JawaSumatraKalimantanSulawesiMalukuPapua

14.2

28653.2

32220.1

233.1 2.1 151.3

0.0

5000.0

10000.0

15000.0

20000.0

25000.0

30000.0

35000.0

M T

onne

s

1

RECOURCES

JawaSumatraKalimantanSulawesiMalukuPapua

RESOURCES

14

COAL RESOURCES CATEGORY OF INDONESIACOAL RESOURCES CATEGORY OF INDONESIA

6%

56%21%

17% HypotheticInferredIndicatedMeasured

15

INDONESIAN COAL RESOURCES INDONESIAN COAL RESOURCES ( Based on calorific value )( Based on calorific value )

1% 24%13%

62%

Low CaloryMedium CaloryHigh CaloryVery High Calory

16

INDONESIAN COAL RESOURCES AND RESERVES INDONESIAN COAL RESOURCES AND RESERVES (CGR, by December 2005)(CGR, by December 2005)[ Amendment I[ Amendment I--SNI 13SNI 13--5041450414--1998 ]1998 ]

Low Calory <5100 0 0.82 0 0 0.82 01 Medium Calory 5100 - 6100 5.47 4.87 0 0 10.34 0

High Calory 6100 - 7100 0 2.97 0 0 2.97 05.470 8.660 0 0 14.130 0

Low Calory <5100 326.55 8829.35 2306.77 1720.75 13183.42 2426.00Medium Calory 5100 - 6100 408.96 3491.59 9225.61 562.91 13682.38 210.62

2 High Calory 6100 - 7100 33.70 959.56 442.00 303.71 1738.97 120.11Very High Calory > 7100 0 27.32 0 14.37 41.69 14.00

769.21 13307.82 11974.38 2601.74 28646.46 2770.73Low Calory <5100 0 1056.72 13.76 690.82 1761.30 536.33

Medium Calory 5100 - 6100 2285.84 15720.23 428.05 5180.28 23658.46 2232.683 High Calory 6100 - 7100 659.19 3588.58 224.89 1740.90 6268.06 1109.18

Very High Calory > 7100 90.11 430.08 5.80 104.90 630.88 109.923035.13 20795.60 672.50 7716.90 32318.71 3988.11

Low Calory <5100 0 1.98 0 0 1.98 04 Medium Calory 5100 - 6100 0 131.03 32.31 53.10 216.44 0.06

High Calory 6100 - 7100 0 13.90 0.78 0 14.68 00 146.91 33.09 53.10 233.10 0.06

5 Maluku Low Calory <5100 0 2.13 0 0 2.13 00 2.13 0 0 2.13 0

Medium Calory 5100 - 6100 89.40 30.95 0 0 120.35 06 High Calory 6100 - 7100 0 5.38 0 0 5.38 0

Very High Calory > 7100 0 25.53 0 0 25.53 089.40 61.86 0 0 151.26 0

10,371.74

Resources ( M Tonnes )

Criteria (Cal/gr, adb)Class

Reserves ( M Tonnes )MeasuredIndicatedInferredHypothetic Total

61,365.86 6,758.90

Total

TOTAL 3,899.22 34,320.97 12,679.98

Kalimantan

Sulawesi

Papua

Total

Total

Jawa

Sumatera

No. ProvinceQuality

Total

Total

Total

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KALIMANTAN AND SUMATERA COAL RESOURCESKALIMANTAN AND SUMATERA COAL RESOURCES( Based on Calorific Value )( Based on Calorific Value )

13,183.4

1,761.3

13,689.1

23,614.4

1,739.0

6,213.6

41.7 630.9

0.0

5,000.0

10,000.0

15,000.0

20,000.0

25,000.0

M T

onne

s

Low Calory MediumCalory

High Calory Very HighCalory

SumatraKalimantan

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Total Moisture of Indonesian CoalTotal Moisture of Indonesian Coal

62.5

57.5

52.5

47.5

42.5

37.5

32.5

27.5

22.5

17.5

12.5

7.5

2.5

30

20

10

0

(%)

TOTAL MOISTURE (%)N=240

I. 10% II. 45%

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Low Rank Coal in Low Rank Coal in KalimantanKalimantan

Arutmin (Mulia, Asam2, Arutmin (Mulia, Asam2, SaronggaSarongga))AdaroAdaroKidekoKideko JayaJaya AgungAgungMeruwaiMeruwai CoalCoalMantiminMantimin CoalCoalDelmaDelma Mining CorpMining CorpBaraBara PramuliaPramulia AbadiAbadiMulti Multi TambangTambang JayaJayaEtc.Etc.Total Resources of Total Resources of 4.,121.68 Mil. Tons4.,121.68 Mil. Tons

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LOW RANK COALIN SUMATRA

PT. BA (Arahan, Banko,

Muara Tiga Besar, Suban Jerji, Banjarsari)

•Pendopo Energy Batubara•Mifa Bersaudara

•Astaka Dodol•Benakat Energy

•Hulubalang Inti Bumi•Trimatra Coal Perkasa

•Etc.

• Total Resources of

9,103.86 Mil Tons

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GENERAL COAL PROPERTIES OF GENERAL COAL PROPERTIES OF INDONESIAINDONESIA

Total Moisture Total Moisture : 10 : 10 –– 45 %45 %Volatile Matter Volatile Matter : 25 : 25 –– 45 %45 %Fixed Carbon Fixed Carbon : 30 : 30 –– 50 %50 %Ash Ash : < 10 %: < 10 %Total Sulfur Total Sulfur : < 2 %: < 2 %Maceral : Maceral :

Vitrinite > 80 %Vitrinite > 80 %Inertinite < 3 %Inertinite < 3 %Liptinite 3 Liptinite 3 –– 30 %30 %

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National Energy PolicyNational Energy PolicySUPPLY SIDE :SUPPLY SIDE :

Increase energy supply capabilityIncrease energy supply capabilityOptimiseOptimise energy productionenergy productionEnergy conservationEnergy conservation

DEMAND SIDE :DEMAND SIDE :Energy EfficiencyEnergy EfficiencyDiversification of energy use including increasing share of reneDiversification of energy use including increasing share of renewable energywable energy

PROMOTE ENERGY PRICE TO MEET ITS ECONOMIC VALUE*)PROMOTE ENERGY PRICE TO MEET ITS ECONOMIC VALUE*)ENVIRONMENTAL POTECTION:ENVIRONMENTAL POTECTION:

Macro level : sustainable developmentMacro level : sustainable developmentMicro level : internalization of externality Micro level : internalization of externality

*) subsidy will be provided for those low-income people

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Current and Targeted Primary National Energy Mix

Oil still dominates Indonesia’s energy mix, but the role of coal and gas and NREswill be increased (Presidential Decree No 5/2006)

PRIMARY ENERGY MIX 2004

54.4%

Gas

26.5%

Coal

14.1%Hydro3.4%Geothermal

1.4%Other NRE

0.2%

Coal Liquefaction2% Geothermal

5% Biofuel5%

Other NREs5%

Oil20%

Coal33%

Gas30%

Presidential Decree No 5/2006 on National Energy Policy

PRIMARY ENERGY MIX 2025

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Strategic Role of Coal Strategic Role of Coal

• Important source of national and local revenues• Primary energy resources for electricity and industry• Convertible to oil and gas form (coal liquefaction, coal

gasification)• Absorb considerable number of manpower• Agent of development for local region

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National Coal PolicyNational Coal Policy

Management Policy

Supply Policy Utilization Policy Development Policy

• Diversification • Price• Lignite• Coal Briquette• Coal Bed Methane

• R & D• Training• Organization• Data/Information• Coal Technology Center

• UUD 45 (Basic Constitution of 1945)

• Regional Autonomy Policy • National Energy Policy

• Investment Climate• Intensification of Exploration

& Production• Conservation• Environment

NATIONAL COAL POLICY

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Coal Resources Coal Resources DevelopmentDevelopment PolicyPolicy

Objective Objective : Repositioning coal as a strategic : Repositioning coal as a strategic commodity and therefore shall be managed by taking commodity and therefore shall be managed by taking into account its benefit as a national source of into account its benefit as a national source of energy, export commodity and a prime mover of energy, export commodity and a prime mover of economy, community and regional developmenteconomy, community and regional developmentImplementation in upstream sectorImplementation in upstream sector ::Building data bank and inventory system of Coal Resources Building data bank and inventory system of Coal Resources and promoting coal exploration and exploitationand promoting coal exploration and exploitation

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Activities ofActivities of Centre of Geo Resources (CGR), Centre of Geo Resources (CGR), Geological Agency Geological Agency

(www. (www. dim.esdm.go.iddim.esdm.go.id) :) :

•• Target: Inferred ResourcesTarget: Inferred Resources•• Inventory in Inventory in BasinalBasinal Framework and Regency/Provincial BasisFramework and Regency/Provincial Basis•• Coal Resources and Quality Data BankCoal Resources and Quality Data Bank•• Publishing regularly the Status of Coal ResourcesPublishing regularly the Status of Coal Resources•• Publishing GIS data of the resources of coal in Indonesia throPublishing GIS data of the resources of coal in Indonesia through webugh web•• Coordinator in Coordinator in AseanAsean Database for Mineral and Coal (ASOMM)Database for Mineral and Coal (ASOMM)•• Developing standard in Classification of Coal Resources and ReseDeveloping standard in Classification of Coal Resources and Reservesrves•• Developing Reporting Standard for Coal Resources and Reserves Developing Reporting Standard for Coal Resources and Reserves

EstimationEstimation•• Proposing Standard competency for Coal GeologistProposing Standard competency for Coal Geologist•• R&D on Coal R&D on Coal CharacterisationCharacterisation

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Exploration Activities by Exploration Activities by CGRCGR

Reconnaissance Survey : Reconnaissance Survey : Remote and Marginal AreasRemote and Marginal AreasGeological MappingGeological MappingCoal seam MappingCoal seam MappingHypothetical Resources targetHypothetical Resources target

Prospecting : Prospecting : Systematically in a basinal areasSystematically in a basinal areasScout DrillingScout DrillingInferred Resources TargetInferred Resources Target

29

Lower Rank Coal Lower Rank Coal UtilisationUtilisation & Research& Research

Remote Lower Rank Coal Field Remote Lower Rank Coal Field Coal Coal CharacterisationCharacterisation R&DR&DLiquifactionLiquifaction, , infrastrutureinfrastruture facilities, facilities, moisture reduction, moisture reduction, InsituInsitu Coal Gasification,Coal Gasification,Low rank Coal for CBM Low rank Coal for CBM ProspectionProspection –– Microbial Methane PropagationMicrobial Methane Propagation

Close to Shore lower Rank Coal FieldClose to Shore lower Rank Coal FieldMoisture ReductionMoisture ReductionCoal Coal CharacterisationCharacterisation R&DR&D

Close to Consumer Lower Rank Coal FieldClose to Consumer Lower Rank Coal FieldCoal Coal CharacterisationCharacterisation R&DR&DMine Mouth Power Plant Mine Mouth Power Plant –– Boiler heat Boiler heat efficencyefficency

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CURRENT STATUSCURRENT STATUSCGR Explored Areas CGR Explored Areas

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