Coal Investment in Indonesia

The worlds largest thermal coal exporter

Why Indonesia?
There is an abundance of coal available in Indonesia (100+ billion tons) Proven industry with existing and growing infrastructures. Half of Indonesias new billionaires on Forbes made their fortune on coal Double digit growth in coal production Relatively low investment needed as opposed to other countries Proximity to China, India, Japan and Asia (India is on a 100,000 megawatts power plant installation and has recently take over China as Indonesias biggest coal importer). India imported 43million tons of Coal from Indonesia in 2010 as opposed to 42 million tons for China Strong and surging local consumption. Currently at 70 million tons a year, and it has to double in 5 years to eradicate the 50% current power shortage. Open pit mining with low stripping ratio and out crops as opposed to high stripping ration of other countries, or costly and dangerous underground mining. Wide variety of quality and kcal of coal is available from brown to coking coal New regulations from government, including IUP license makes the industry more regulated in a positive sense

Why Coal?
It is the most widely used energy source for power plants (42% of the worlds electricity is from coal) There is much more demand than supply and more and more coal fired power plants are being constructed. After Japans nuclear disaster, many nuclear plant projects are aborted. It is easy to extract (in Indonesia) It is easy to process (crush and ship)

Investing in Coal
There are many ways to enter the coal industry in Indonesia Acquisition of mines Paper trading Trading Contractors Logistics and Shipping Added value processing Etc

Investing in Coal
Acquiring new mines requires a high understanding of local conditions and due diligence. Trading requires little capital but has a very high failure rate. In most cases, traders are target of fraud. They will usually meet with many middle men who often cant produce the coal A joint venture with a mine in production is the best entry point. This method allows a great control throughout the whole production process and has a high margin of return

Joint Venture to Operate

Finding the right managing and operating partners Finding the right mine/location