This is marketing research on the Coal Mining Industry in Indonesia and can include information on the background, market structure, definitions, competitors, trends and developments of coal mining and is related to other topics such as energy, anthracite, lignite, bituminous and oil and gas.

Table of Contents

1 Background 
2 Industry Performance 
3 Recent Trends 
4 Coal Exports 
5 Major Players 
6 Industry outlook 
7 Sources

Background

Based on definition from Central Bureau of Statistic, coal mining industry is “the mining and quarrying of coal ore extract, and the breaking up, washing, and sifting of coal. It includes also the transformation of coal from lignite to become briquettes or other substances, which cannot be separated administratively from mining”. The primary activities of firms in this industry are the mining of anthracite, lignite, bituminous coal and sub bituminous coal.

The demand determinants to this industry are including power plants, metal rolling and smelting. Another major downstream activity is cement manufacturing, which is largely influenced by the construction industry. Government measures in terms of environment protection also influence coal-mining production.

Indonesia has significant coal resources. Based on the Directorate of Coal, Ministry of Energy and Mineral has identified by 38,767 million tonnes (mt) of coal deposits, of which by 11,484 mt are classified as measured resources and 27,283 mt as indicated inferred and hypothetical resources. Of the total deposits, about 5,362 mt are classified as commercially exploitable deposits.

Coal deposits in Sumatra are located largely in the area surrounding Tanjung Enim, South Sumatra. State-owned Coal Company Perusahaan Tambang Batubara Bukit Asam mines these deposits.

Industry Performance

Indonesia's coal deposits consist of lignite, bituminous coal, sub-bituminous coal and anthracite coal. It is estimated that lignite coal accounted for 58.63 percent, sub-bituminous coal 26.63 percent, bituminous coal 14.38 percent with the balance anthracite.

Coal mining production has increased steadily from 73.7 million metric tons in 1999 to 103.3 million metric tons in 2002. In 2001 production output jumped to 92.5 million metric tons from 77 million metric tons the previous year. This is an increase of 20 percent.

Indonesia's 2001 coal exports rose 11.6 percent. Domestic demand also rose 31 percent for the same period, with the State Electricity Utility (PLN) as Indonesia's largest consumer of coal.

Recent Trends

In 2002 the mining industry in Indonesia faced uncertainty over legal and tax issues. However, industry turnover still increased strongly by 28 percent due to rising coal exports and strong domestic demand. Only state owned company PT. Bukit Asam showed a decline of production by 7.1 percent from 10.2 million metric tons the previous year to 9.4 metric tons in 2002.

Coal production reached 103 million metric tons in 2002, an increase of 11.2 percent from the previous year. All major players, with the exception of PT. Bukit Asam, increased production in that year. PT. Bukit Asam's decrease in production was due to its rail transportation problem from its mines in South Sumatra.

In 2002, coal exports reached 72.5 million metric tons, increasing by 8.9 percent from 66.5 million metric tons in the previous year. Approximately half of the increase resulted from a long-term contract agreement with the Philippine National Power Corporation and the Philippine National Oil Corporation for the supply of an additional 3 million metric tons of coal per year.

Although PT. Adaro Indonesia (Adaro) is Indonesia's largest coal producer with 20.8 million metric tons, PT. Kaltim Prima Coal (KPC) is the largest exporter. KPC ships 16.6 million metric tons making up 22.9 percent of total exports, compared to Adaro's 12.7 million metric tons making up 17.5 percent. Other exporters are: PT. Arutmin (13.5 percent), and PT. Kideco Jaya Agung (9.2 percent).

In 2003, total coal production reached 114.6 million mt, an increase of nearly 11 percent from the previous year. Major producers were PT. Bukit Asam (8.7 percent), PT. Adaro Indonesia (19.6 percent), PT. Kaltim Prima Coal (14.1 percent), PT. Kideco (12.3 percent), PT. Arutmin (11.9 percent), PT. Berau Coal (6.4 percent), PT. Indominco Mandiri (5.5 percent). Other players include local cooperative mining firms, which obtained concessions at regional government levels. These firms produce around 8.2 million mt or 7.2 percent of total production.

China's decrease in coal exports together with Japan's rising demand for coal and rising international coal prices have caused Indonesia's coal production to increase. In 2003 the price of coal rose nearly 60 percent from US$ 22.75 per mt to US$ 36.00 per mt. As a result, Indonesia's coal industry turnover increased 4.7 percent compared to the previous year.

Indonesia's coal exports rose by 12.5 percent or 13 million mt to 85.7 million mt in 2003. This increase is relatively small compared to China's export reduction by approximately 100 million mt in the same year. During 2003, PLN state electric company was the single largest consumer of coal, absorbing 35 percent of total domestic demand. Other large consumers are cement factories, absorbing an estimated 15 percent.

In October 2003, Australia's Rio Tinto and BP sold their ownership in PT. Kaltim Prima Coal to a local firm PT. Bumi Resources for US$ 500 million. While some foreign investors leave the industry, others are eager to enter. A local firm, PT Indika Inti Corpindo, with backing by power giant China Huadian Group, seeks to acquire major stakes in East Kalimantan companies Berau Coal and Kideco Jaya Agung. Indika may buy 60 percent of Berau Coal from United Tractors for US$ 45 million and a 36 percent stake of Kideco for an undisclosed amount. The two companies account for 19 percent of Indonesia's coal production. In Central Kalimantan, China Xinshidai Holding Ltd will reportedly manage a local coalmine in Lahei.

Meanwhile, China's state-owned mining company China Mining Corporation has been in on-again, off-again talks with Indonesia's state-owned PT Bukit Asam to explore the large Ombilin coal mine in South Sumatra.

Another issue that continues to hurt the coal mining industry is the government's tax policy on coal. A government regulation in 2000 changed coal from a taxable to a non-taxable commodity. The regulation prohibits coal producers from charging value-added tax (VAT) to end-users even though producers must pay VAT for imported capital goods and services. This effectively adds 8-10 percent to these companies' production costs.

Indonesia's Supreme Court has the authority to annul the regulation. However, in April 2004, the Court merely issued an opinion that the regulation be annulled, an act which had no legal force.

The net effect of these policies, as well as continued delays in producing a new and transparent mining law, has resulted in a steady drop in investment. Coal investment (foreign and domestic) plunged from US$ 778 million in 1997 to US$ 135 million in 2001. According to the Energy Ministry, coal investment did rise between 2002 and 2003, from US$ 61 million to US$ 90 million, primarily to capitalize on higher coal prices.

In 2004, coal production reached 132 million metric tons, an increase of nearly 16 percent over the previous year. It later increased again to 145 million metric ton in 2005. Rising coal demand and high coal prices, averaging more than US$ 50/MT in 2004, drove the production increase. Most major coal producers enjoyed higher output, except for state-owned PT Bukit Asam (PTBA), the production of which dropped over thirteen percent due to railway transportation disruptions from its South Sumatra mine.

The major players in the coal industry faired relatively the same with the 2003 condition.

Coal Exports

Coal exports also increased by 129 million metric tons in 2005 and accounted for around 90 percent of production. The country's largest coal exporter, PT. Bumi Resources (shareholder of KPC and Arutmin) experienced a surge in exports to 36.2 MT, an increase of 39 percent from 2004. Regional exports within Asia reached 69.9 MT, almost 75 percent of total exports. Japan and Taiwan remain the largest consumers of Indonesian coal and bought over 38 percent of exports, followed by South Korea, Hong Kong and Malaysia. Exports to Japan and South Korea increased over 2.5 million MT last year, as both countries reportedly aim to reduce their reliance on coal imports from China. Coal exports to China doubled between 2003 and 2004 in response to China's growing energy demand. (The U.S. receives about 2.3 percent of Indonesian coal exports).

During 2005, coal prices soared due a surge in Chinese consumption. Concerning the domestic market, an increase in global fuel prices as well as domestic demand resulted has led to an increase in coal prices. As coal prices increase, coal exports increase as producers attempt to take financial advantage of the situation. Coal production reached 139 million metric ton in 2005, an increase of 5.3 percent from the previous year.

In turn, during 2006 exports of coal were estimated to increase although producers had to focus on domestic demand as well. Production of coal reached around 200 million metric tons. Exports of coal were estimated to amount 183.9 million metric tons during 2006. PT. Bumi Resourced through PT Kaltim Prima Coal and PT Arutmin produced around 53.5 million metric tons in 2006 or an increased from 45 million metric tons from the previous year. From this amount, around 95 percent is exported. During 2006, coal prices increased to US$ 40.8 per ton or an increased from US$ 40.12 per tons in 2005.

Major countries of destination were Japan (30.5 percent), Taiwan (20 percent) and South Korea (15 percent). Bituminous Coal makes up 96 percent of all coal commodities exports. Major exporters of coal were PT. Kaltim Prima Coal (18.7 percent), PT. Adaro Indonesia (17.7 percent), PT. Arutmin (16 percent), and PT. Kideco Jaya Agung (10.4 percent).

Coal exports consisted of 86 percent of Bituminous coal. Exports mainly went to Japan, Taiwan, Korea and India.

The major imported commodity was "Other bituminous coal", accounting for about 70 percent of total imports. Countries of origin were Vietnam, China, Singapore, Thailand, Japan and Australia

During 2007, both production and exports of coal increased as operators took advantage of soaring coal prices. Production was estimated to increase by around 11 percent compared to 2005. In 2007 India's Tata Power purchased 30% equity stakes or around US$ 1.3 billion in two major Indonesian coal producers, PT Kaltim Prima Coal, and PT Arutmin Indonesia, all of which are owned by the Indonesian energy firm Bumi Resources. PT. Bumi Resources was paid a total of US$ 685 million for the two coal mining firms in 2001 and 2003. The current deal values those assets at US$ 4.3 billion. As part of the deal, Tata Power would also buy 10 million tons of coal from Kaltim Prima Coal for two proposed power projects, totaling 7,000 MW, it plans to build in India by 2012.

Major Players

Seven major companies produced 66.9 million metric tons or 72.2 percent of total production in 2001, whilst the same seven companies produced 54.1 million metric tons in 2000.

In 2001, PT. Adaro replaced PT. Kaltim Prima Coal as Indonesia's largest coal producer. In the same year, PT. Batubara Bukit Asam, a state owned company, produced 10.2 million metric tons, decreasing 5 percent from its 2000 production of 10.7 million metric tons. This was due to depleted reserves in one of its mining operations in Sumatra.

Tambang Batubara Bukit Asam Tbk, PT (Persero)

Tambang Batubara Bukit Asam Tbk. (Persero) is a BUMN company established on 02/03/1981. On 23-Dec-02 it first issued 346,500,000 total listed shares on the stock exchange. The company is a producer, and their business activity include: coal mining. Authorised capital for the company is Rp. 4,000,000,000,000 and its paid up capital is Rp. 1,065,750,000,000. The company's shareholders are: Indonesian Government (83.74%), and Public (16.26%). With its head office in Tanjung Enim, Tambang Batubara Bukit Asam Tbk. (Persero) employs around 3,965 staff in 2005

Financial Analysis

In 2005 total revenue for Tambang Batubara Bukit Asam Tbk. (Persero) was estimated to be Rp.2,998,686 million. This is a 14.7 per cent increase from the previous year where revenue was estimated to be Rp.2,614,472 million.

The company achieved an estimated gross profit of Rp.1,158,491 million and an estimated gross profit Rp.1,041,403 million in 2005 and 2004 respectively. This is an increase of 11.24 per cent. The estimated gross profit before tax as a ratio of turnover for Tambang Batubara Bukit Asam Tbk. (Persero) was 38.63 per cent while the average gross profit before tax as a ratio of turnover for the industry is estimated to be 37.83 per cent. As such the company's gross profitability ratio to turnover was better than the industry's average.

Cost of goods in 2005 increased by an estimated 16.98 per cent to Rp.1,840,195 million compared to Rp.1,573,069 million the previous year.

With operating expense estimated to have increased from Rp.538,056 million in 2001 to Rp.597,493 million in 2005, profit before tax for Tambang Batubara Bukit Asam Tbk. (Persero) was estimated to reached Rp.577,038 million and Rp.653,245 million in 2004 and 2005 respectively.

Additional Information

Established in 1981, state-owned PT. Tambang Batubara Bukit Asam (PERSERO), Tbk. (PTBA) is the countrys 4th largest coal producers and the largest supplier of coal to the domestic electricity industry.

Possessing ±19% of Indonesias coal reserves or 7.1 billion tons - majority located within a 20 kilometers radius from existing, operating mines - PTBA has sufficient mine-able reserves (to last more than 10 years at its current production rate without having to open new mines.

With license to explore and exploit from the government of up to 119,943 hectares in Tanjung Enim and 15,450 hectares in Ombilin, PTBA is currently in possession of mineable reserves totaling 5.664 billion tons in Tanjung Enim, 1.34 billion tons in Cerenti and 102.18 million ton in Ombilin.

PTBA is currently exploiting 2 mine areas located in Tanjung Enim using the open-pit mining methods, in Ombilin using underground mining methods and 1 exploration in Cerenti.

Outputs from these mines are sold domestically and internationally under these 4 grades classifications: - Suralaya Coal - Lumut Coal - Anthracite Coal - Ombilin Coal

Approximately 85% of these processed coals are transported to designated ports by a well-established railroad infrastructure provided by state-owned PT. Kereta Api Indonesia.

Transportation to Suralaya power plant and other customers are conducted through wholly-owned ports located in Tarahan, Kertapati and Teluk Bayur.

Tarahan port is supported by highly dedicated individuals of prime qualifications, PTBA is embarking on professionalism improvement at all work levels through relevant training and education programs.

Through the application of advanced mining technology, PTBA has shifted from dependence on mighty muscles to appreciation of brighter brains - a synergy of professional manpower and advanced technology - that has created a harmonious combination hence ensuring the continuous growth of the company into one that is internationally acclaimed.

Branch Office Ombilin Sawahlunto, Sumatera Barat

Padang Jl. Tanjung Periuk No. 1, Teluk Bayur Sumatera Barat

Tanjung Karang Jl. Raya Bakaheuni Km. 15 Tarahan, Bandar Lampung

Kertapati Jl. Stasiun Kereta Api, Palembang Sumatera Selatan

Arutmin Indonesia, PT

Arutmin Indonesia is a PMA company established on 31/10/1981. The company is a producer, and their business activity include: coal mining. With its head office in JakartaArutmin Indonesia is affiliated with BHP Billiton Ltd.(Australia). Arutmin Indonesia employs around 53 staff in 2005

Additional Information

PT Arutmin Indonesia is an Indonesian registered company jointly owned by Bumi Resources Tbk (80%) and PT Bakrie & Brothers Tbk (20%). In 1981, PT Arutmin Indonesia entered into an agreement with the Indonesian government for the exploration and development of the Kalimantan block 6 area, located in the South Kalimantan Province. In ten years PT. Arutmin Indonesia rose from a trial mine to a globally competitive thermal coal producer shipping six million tonnes of salable product annually to Indonesian and export markets.

PT. Arutmin Indonesias extensive lease area contains substantial resources of both bituminous and sub-bituminous coal sufficient to maintain production levels over the next ten years. With their high reactivity and excellent combustion characteristics, PT. Arutmin Indonesias coal are ideally suited for consumption in both power stations and industrial plants.

Commencement of PT. Arutmin Indonesias capesize loading terminal NPLCT in 1994, further raised the competitiveness and reliability of these coals. This facility provides PT. Arutmin Indonesia with the capability to ship up to 10 MT per year to the international market.

PT. Arutmin Indonesia is committed to quality management of all activities to ensure customers needs are met in an effort to promote the companys business opportunities, hence striving to achieve the goals by implementing :

• Flexibility in coal supply to meet customer requirements,

• The highest possible levels of safety, and contractual adherence and productivity,

• Satisfaction for employees in their duty execution and continuous improvement in process activities and in maximizing the benefits from the skills of all employees. Started operations in the coal mining industry in 1981 as part of a joint venture with PT Tambang Batubara Bukit Asam. The company produces coal to supply the export market and the domestic market. Around 40 percent of production is for consumption by electric generators in Hong Kong, Japan, Taiwan, Malaysia, and the People's Republic of China.

Other export markets include the cement industry and steel industry in Japan, Taiwan, Malaysia and other countries. Approximately 10 percent of production by this company is consumed by the cement industry in Indonesia. This company is a joint venture between Australian company BHP Minerals Exploration Inc. and PT Bakrie and Brother from Indonesia. BHP Minerals Exploration Inc has 80 percent of capital and PT Bakrie Brother has 20 percent of total capital.

PT Arutmin Indonesia as a Foreign Coal Contractor explores and develops resources in Kota Baru, Tanah Laut and Banjar Regencies, South Kalimantan. Total coal reserves of these concession areas were about 480 million tons.

Production commenced in 1988, accounting for 104 thousand tons and targeted production is 8 million ton per annum by year 2000.

In 2003, the production reached 13.6 million metric ton or 11.9 percent of total production in Indonesia.

Kideco Jaya Agung, PT

Kideco Jaya Agung is a PMA company established on 7/9/1982. The company is a producer, and their business activity include: coal mining. With its head office in JakartaKideco Jaya Agung is affiliated with Samian Co Ltd.(South Korea). Kideco Jaya Agung employs around 28 staff in 2005

Additional Information

PT Kideco Jaya Agung is a joint venture between Japanese and domestic establishments. Mostly, its activity is in the exploration stage. The mining area located in Central kalimantan is at the exploitation stage.

In 2003, the company produced 14 million metric ton of coal.

Kaltim Prima Coal, PT

Kaltim Prima Coal is a PMA company established on 09/03/1982. The company is a producer, and their business activity include: coal mining. With its head office in Jakarta, Kaltim Prima Coal employs around 203 staff in 2005

Additional Information

PT Kaltim Prima Coal (KPC) is a company owned by the British Petroleum Group (United Kingdom) and CRA Ltd (Australia), started operations in 1988.. Production in 1994 reached 9.9 million tonnes or 32 percent of total coal production in Indonesia. The total production of PT Kaltim Prima Coal is for export and this company has dominated the total export of coal in Indonesia, accounting for around 33 percent.

In 1995, the production of coal accounted for 10.3 million tons or an increase by 2.8 percent from 1994. The production in 1996 of PT Prima Coal amounted to 12.7 million tons, which was increased by 24.4 percent of 1995. During the same year accounted for 89.6 percent of production oriented for exports, which reached 11.4 million tons.

During 1996, coal was exported from PT Prima Coal Tanjung Bara port to destinations in Europe, USA, Japan, Hong Kong and other Asian countries. In 1997, the production of coal is forecast to increase from 6.3 percent from 1995, reached 13.5 million tons. DIS estimates, the production in 1997 accounted for Rp. 1.3 million or around 20.6 percent of market share in the coal mining industry.

Coal Production of PT Kaltim Prima Coal from 1990 to 2003

Year Production	      Production (Tons)	Percentage Change
1990	                 634,618	                0
1991	               2,498,135	            293.6
1992	               6,818,357	            172.9
1993	               8,871,870	             30.1
1994	               9,932,108	             12.0
1995	              10,208,209	              2.8
1996	              12,699,187	             24.4
1997	              13,500,000	              6.3
1998	              14,691,000	              8.8
1999	              13,974,000	             -4.9
2000	                       -	                -
2001	              15,528,000	                -
2002	              17,577,000	                -
2003	              16,203,000	                -

PT Kaltim Prima Coal (KPC) has targeted production to increase its annual output to 15 million tons, an increase of 15 percent from previous years. The company intends to increase production following growing demand for the product by major consumers such as Japan, Taiwan, USA and several European countries.

KPC intends to extend its exploration after the discovery of new coal reserves in Bengalan and Melawan, Kutai district in East Kalimantan. The Bengalan reserve is estimated to contain 159 million tons of coal deposit. In addition the coal production from Sanggata is high-quality coal. Total coal reserves are estimated to reach 474 million tons, which could be exploited for around 30 years.

Coal Reserves of PT Kaltim Prima Coal
 
Reserves	Total (Million Tons)
Measured	447
Indicated	0
Inferred	0
Total	        447

Berau Coal, PT

Berau Coal is a national company established on 05/1983. The company is a producer, and their business activity include: coal mining. Authorised capital for the company is USD 17,250,000 and its paid up capital is USD 17,250,000. The company's shareholders are: United Tractor. (60%), Nisshio Iwai (20%), and Pandu Dian Pertiwi. (20%). With its head office in JakartaBerau Coal is affiliated with Nissho Iwai Corporation(Japan). Berau Coal employs around 38 staff in 2005

Adaro Indonesia, PT

Adaro Indonesia with NPWP: 1.060.136.7-052 is a Joint Venture company established on 11/11/1982. The company is a producer, and their business activity include: coal mining. Authorised capital for the company is Rp. 4,709,250,000 and its paid up capital is Rp. 3,417,570,000. With its head office in Jakarta, Adaro Indonesia employs around 43 staff in 2005

Additional Information

PT. Indonesia operates under a Coal Cooperation Agreement with the Government of Indonesia which gives it the right to mine coal within its agreement area in the Tanjung district of South Kalimantan Province until the year 2022 with rights to extend by mutual agreement.

There are four deposits within the Agreement Area which contain total coal resources of approximately 2.0 billion tones of open cut coal characterized by extremely thick seams of up to 50 meters with relatively low overburden.

The coal is exceptionally clean with 0.1% sulphur, 1.0% ash and low nitrogen and has been trademarked internationally as .

Production commenced in 1991 and has increased steadily since that time with sales to both export and domestic markets reaching 23 million tonnes in 2003 making Indonesia's largest coal producer.

New Hope Corporation - Australia 50% Asminco Bara Utama, PT (Swabara Group) - Indonesia 40% Edison Mission Energy Corp. - USA 10% Enadimsa from Spain established this company in 1982. In 1990 its stockholders changed, when Indonesia Coal Pty Ltd (Australia) purchased 50 percent, Enasa (Spain) 20 percent, PT. Tirtamas Majutama (Indonesia) 15 percent, and PT. Asminco Bara Utama 15 percent. The market segments for this company are orientated towards exports and the domestic market.

Adaro Indonesia is Foreign-Owned Coal Contractor J2/Ji.DU/52,16 November 1983) licensed to explore and develop coal resource in Block VII, Tanjung District, Tabalong, South Kalimantan.

First production of this industry commenced in August 1991. The production of coal in 1993 amounted to 1.4 million tons, which was increased to 44.7 percent. PT Adaro Indonesia in 1996 exported 78.1 percent of total Indonesian coal production, 8.6 million tons of coal production and 6.7 million tons of export coal value.

Production of coal by PT Adaro Indonesia in 1999 has recorded around 13.6 million tons and for 2000 production of coal is estimated to be 15.6 million tons.

Production of Coal by PT Adaro Indonesia Year Production (Metric Tons) Percentage Change 1992 934,659 N/C 1993 1,352,777 44.7 1994 2,414,340 78.5 1995 5,589,530 131.5 1996 8,635,115 54.5 1997 9,408,000 9.0 1998 10,930,000 16.2 1999 13,601,000 24.4 2000 15,641,150 15.0 2001 17,708,000 - 2002 20,890,000 - 2003 22,523,000 -

Bumi Resources Tbk, PT (Jakarta Office)

Bumi Resources Tbk. [Jakarta Office] with NPWP: 01.122.101.7-054.000 is a PMDN company established on 26/06/1973. On 30-Jul-90 it first issued 10,000,000 total listed shares on the stock exchange. Authorised capital for the company is Rp. 10,000,000,000,000 and its paid up capital is Rp. 9,700,000,000,000. The company's shareholders are: Long Haul Holding Ltd (67.27%), Kustodian Sentral Efek Indonesia (15.48%), Minarak Labuan (14.88%), and Bakrie Capital Indonesia (2.12%). With its head office in Jakarta, Bumi Resources Tbk. [Jakarta Office] employs around 590 staff in 2005

Financial Analysis

In 2005 total revenue for Bumi Resources Tbk. [Jakarta Office] was estimated to be Rp.15,291,455 million. This is a 59.42 per cent decrease from the previous year where revenue was estimated to be Rp.9,591,789 million.

The company achieved an estimated gross profit of Rp.3,678,267 million and an estimated gross profit Rp.3,783,432 million in 2005 and 2004 respectively. This is a decrease of 2.78 per cent. The estimated gross profit before tax as a ratio of turnover for Bumi Resources Tbk. [Jakarta Office] was 24.05 per cent while the average gross profit before tax as a ratio of turnover for the industry is estimated to be 37.83 per cent. As such the company's gross profitability ratio to turnover was less than the industry's average.

Cost of goods in 2005 decreased by an estimated 99.94 per cent to Rp.11,613,188 million compared to Rp.5,808,357 million the previous year.

With operating expense estimated to have decreased from Rp.914,016 million in 2001 to Rp.1,658,381 million in 2005, profit before tax for Bumi Resources Tbk. [Jakarta Office] was estimated to reached Rp.1,969,835 million and Rp.1,142,838 million in 2004 and 2005 respectively.

Additional Information

PT Bumi Resources Tbk. is the new name of PT Bumi Modern Tbk. PT Bumi Modern Tbk was a domestic Investment Company (PMDN) engaging in hotel and tourism industries. The company was established in 1973, by virtue of the decree from the Minister of Justice of the Republic of Indonesia dated December 12, 1973. The Company became a public company through Initial Public Offering in 1990 by virtue of the decree from the Minister of Finance of the Republic of Indonesia No. SI-117/SHM/MK.10/1990 and the company fully listed its shares in Jakarta and Surabaya Stock Exchange.

In 1997, PT Bakrie Capital Indonesia took over all the companys shares held by Asuransi Jiwa Bersama Bumiputera 1912 (AJB Bumiputera 1912) amounting to 26,328,600 shares, or equal to 58.51% of the total shares issued by the company. The transfer of such shares was conducted on June 20, 1997 through Tender Offer in an amount of 25% of the total issued shares, while the remaining shares was transferred through block sale on August 29, 1997, in an amount of 33.51% of the total issued shares. Following transfer of the number of shares mentioned above, the majority shareholding of the company is transferred to PT Bakrie Capital Indonesia.

Industry outlook

Demand for electricity and cement is expected to increase during the outlook period. This is due to the establishment of new housing, office and construction in line with the increase of economic activity. This increase will drive demand for coal for electricity as an energy source. For the next five years, domestic demands for coal is estimated to increase, hence share of export to total production will decrease due to fulfill the domestic market. Since the end of 2005, Ministry Regulation No. 96/PMK.02/2005 subjects coal to 5 percent export tax. This regulation aims to secure domestic coal supply and increase state revenue.

The Government forecasts that over the next five-year period, coal consumption of power plants and cement factories will increase by about 25.6 percent and 13.2 percent. Over the period from 2008 to 2012, world coal consumption is forecast to grow with an average annual growth rate of 1.96 percent and total consumption in the year 2008 will reach 6,1963 million tons. Demand for coal from some countries such as China will increase about 3.86 percent per annum. Japan, Taiwan, India and South Korea will remain as primary coal importers from Indonesia

Coal-fired power plants were the single largest consumers, accounting for 22.9 million MT or 63 percent of total demand. Cement plants were the second largest consumers, comprising 15 percent of domestic demand. Additional demand for coal will come from planned coal-fired power projects in West and Central Java. Tanjung Jati B (1,600 MW), Cilegon (740 MW) and Cilacap (600MW) began operations in 2006. This is part of a larger government strategy to increase the proportion of coal in the country's energy mix. The GOI hopes to raise the share of coal for power generation from 18 percent to 38 percent by 2020. To help accomplish this, it would create disincentives for coal exporters by imposing export duties and obliging new industries to use coal.

Increasing demand is a challenge for Indonesian coal producers to increase production and efficiency.

To increase coal investment, Indonesia needs a comprehensive new mining law, clear regulations and investment-friendly policies that promotes the clean and rational development of this natural resource.

Sources

Central Bureau of Statistics

Government of Indonesia - Most Recent Sources