CARSURIN

Quality with Integrity

October 2015

carsurin coal & minerals insider

 CARSURIN
Quality with Integrity

CARSURIN Launches
India Representative Presence

In response to the demand from our clientele, PT CARSURIN

is pleased to announce that we have launched an operative
representation in India to be able to effectively reach out
and provide direct support to our trusted clients across
India.

Progressively, over 47 years, CARSURIN has grown to be-

come the leading private independent inspection, testing
and verification company in Indonesia with 20 branch
offices and 11 ISO/KAN- accredited laboratories providing
multi-disciplinary & multi-commodity third party inspection,
analytical, technical consultancy and technology solution
services to a broad range of industries across the Indonesian
archipelago.

Our track record with accredited laboratories, extensive

local knowledge, in depth understanding of technical and
non-technical issues, and strict compliance to standards will
enable us to extend our reputation for Quality with Integrity
to our presence in India.

We have engaged professional veteran, Kailas Chati, as CAR-

SURIN’s India Country Representative, who brings 50 years
of hands-on professional experience & reputation in the
independent inspection sector, and possesses a thorough
understanding of the market and the needs of our diverse
clientele.
 October 2015

IN THE FIELD BY CARSURIN

Sumatra
• PT Kereta Api Logistics (PT Kalog), a subsidiary of PT Kereta Api Indonesia (Persero), is focusing on the development
of loading/unloading of coal in South Sumatra. This is in line with the increase in coal production in South Sumatra.
Besides, the business contributes the greatest margin and revenue amongst other business lines of PT Kalog.
(Liputan6)
• The current slow mining sector has negative impact on charter aircraft leasing industry. This is because the biggest
consumer of charter aircraft industry is the mining and plantation. (Liputan6)
• A total of 12 Draft Government Regulation (RPP) has been signed from sectoral ministers in charge, while 3 RPPs are
still pending because there are still some problems to solve. In the new RPP, the application for operation extension
can be filed at least 10 years and no later than 2 years prior to the expiration of the contract. The new RPP brings
certainty for investors to improve the activities of exploration into production, or the expansion of production at the
IUP, KK, and PKP2B company. (Tribun News)
• Ministry of Energy and Mineral Resources (ESDM) says there are about 2,000 outstanding non-tax state revenues
(PNBP) in the mining sector, which will be discussed with the Corruption Eradication Commission (KPK). The arrears
are related to royalties, the tax contribution and sales of mining products. (Tribun News)
• Mount Pongkor performance in Bogor, West Java, as a primary gold mine source of PT Antam (Persero) Tbk is
predicted to run out in 2019. Before it occurs, Antam sought other sources of production. The main target include
Mount Papandayan, Garut, West Java, a region in Jambi, and even in Myanmar. (Energi Today)

Kalimantan
• Coal miner PT Bayan Resources Tbk obtained sales contracts from the Philippines coal-fired power company, SMC
Consolidated Power Corporation (SMPC). Bayan will supply approximately 1.95 million metric tons of coal over the
next 6 years starting from 2017. (Energi Today)
• Data from the Ministry of Energy and Mineral Resources said coal reserves in Indonesia is 103.187 billion tons. The
reserves are spread throughout Indonesia, especially in Kalimantan for 52.32 billion tons and Sumatra for 52.48 billion
tons. The majority of coal reserves in Indonesia has a medium rank, 22% of low rank and about 12% of high rank.
(Energi Today)
• A total of approximately 125 coal mining companies in East Kalimantan has closed their operation. Apindo estimated
that 200 companies could close until the end of the year if the situation does not improve. (Tribun News)
• Aiming for divestment (distribution relief of shares) for mining companies for defined categories, all foreign mining
companies must split its shares by 51 percent in October 2015. This is in line with Government Regulation (PP)
No. 77/2014 on the Implementation of Mineral and Coal Mining Activities. The purpose of this is to improve the
government’s authority in foreign mining companies as it has a majority stake. (Liputan6).

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coal
news

October 2015

Coal Price Guide (HBA) - October 2015

Source: http://www.minerba.esdm.go.id/

HBA

US$ 57,39 per ton

PTBA prepares Rp 650b for
buybacks
- 1 September 2015 -

The Jakarta Post, Jakarta - State-run coal producer PT
Bukit Asam Tbk (PTBA) says it has prepared Rp 650 billion
(US$46.15 million) to carry out a stock buyback program in
stages, from Sept. 2 to Dec. 1.
PTBA corporate secretary Joko Pramono said in Jakarta on
Tuesday that the huge amount of funds would be used to buy
101,333,363 B-series shares, or 4.4 percent of the total capital
placed.
from Rp 12,375 at the beginning of this year. The stock price
decline did not reflect the company’s work performance,” he
said as quoted by Antara.
Joko explained that one of the purposes of the company’s
corporate action was to give adequate facilities to achieve
an efficient capital structure and to enable the company to
reduce its overall capital costs and increase its “earning per
share” and “return on equity” in a sustainable way.

Joko said the corporate action was conducted following
declines in the Jakarta Composite Index (JCI) and the
Indonesian Stock Market (IDX), which stood at 4,446.20
points on Aug. 28, down by 17.63 percent from 5,396.85 on
March 30.
“The PTBA stock price stood at Rp 5,950 per share at the IDX
closing trading session on Aug. 28, or down by 51.92 percent
Joko said the PTBA’s buyback program was aimed at giving
the company greater flexibility in managing its long-term
capital.
“The PTBA will not carry out stock buyback transactions if
they are negative in nature toward the company’s liquidity
and capital and/or its status as a publicly listed company,”
he said.

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coal
news
October 2015
Adaro scales down
production target
- 2 September 2015 -
The Jakarta Post, Jakarta - Major coal producer Adaro Energy
has announced that it has lowered its production target from
56-58 million tons previously to 54-56 million tons to mitigate
oversupply that led to plunging commodity prices and cut
the company’s profit by 31 percent on a yearly basis.
According to its first-half financial statement, the company
posted a 17 percent decline in its revenue from US$1.69
billion it registered in 2014 to $1.4 billion this year. Its net
profit was cut deeper, down by around 31 percent from
$167.51 million in the first six months of last year to $119.08
million in the corresponding period this year.
The publicly listed company said in a published statement
that the dwindling financial performance was due to difficult
coal market conditions buffeted by slower demand growth
and abundant supply. The company’s sales volume and
production decreased by 6 percent and 7 percent to 26.6
million tons and 25.9 million tons, respectively.
The company said that it had decided to trim its initial
production target in anticipation of the lingering challenges
in the coal market in the near-term.
Adaro’s president director and CEO Garibaldi Thohir said
his company would focus on cost discipline, saying he was
upbeat that coal would continue to be the most efficient and
low cost fuel for electricity generation and therefore crucial
to support economic growth.
“Although the short term outlook remains challenging due to
slower demand growth and macroeconomic uncertainty, we
believe that demand for coal, in particular from Indonesia,
South Asia and Southeast Asia, will play a key role in the
future.
“We continue to develop the non-coal mining parts of our
business and improve their contribution to Adaro to better
withstand the cyclical nature of the coal market,” Garibaldi
added. “We are on track in our move downstream to power
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and to create maximum value from Indonesian coal,” he said.
Demand from China, the world’s largest consumer of raw
materials, fell by 25 million tons, or 31 percent, to 54 million
tons in the first half, the biggest drop since at least 2009.
While Indian imports rose by 23 million tons, or 35 percent,
to 88 million tons in the six-month period, surging domestic
output probably means demand will shrink, Bloomberg
reported last week.
Meanwhile, the world’s five largest exporters increased sales
in the first half of this year, with combined shipments from
Indonesia, Australia, Russia, Colombia and South Africa
gaining 0.1 percent to 343 million tons, government data and
estimates from Bloomberg Intelligence show.
Australia’s Newcastle coal, an Asian benchmark, has slumped
to about $60 a ton from as much as $136.30 in early 2011.
Adaro’s average selling price (ASP) declined by 13 percent
year over year as coal prices remained under pressure,
according to the company’s documentation.
Adaro’s exports, which account for more than 70 percent of
its total sales, declined by around 16 percent annually to
$1.03 billion.
Adaro is currently working on three power plant projects,
two of which — with total investment expected to hit around
$4.55 billion — are expected to have financial closure in
October before entering the construction phase, as the
company attempted to intensify business diversification
amid unfavorable prices. The two projects are a 2x1000
megawatt (MW) power plant in Batang, Central Java, and
a 2x100 MW mine-mouth power plant in Tabalong, South
Kalimantan.
Ariyanto Kurniawan from Mandiri Sekuritas said the firm’s
financial performance was below expectations, making only
64 to 70 percent of analysts’ predictions.
3
coal
news
BHP expects coal rebound and
makes move in Borneo
- 8 September 2015 -
Sydney Morning Herald, Jakarta - BHP Billiton is set to
ramp up its focus on Indonesian coal, revealing it will open
a second mine on Borneo within two years as it predicts a
rebound in global markets.
BHP’s Indonesian coal boss, Mark Small, said mining had
this year started at Haju in Central Kalimantan which is the
first coal deposit mined in the IndoMet coal project, a joint
venture which is 75 per cent owned by BHP and 25 per cent
by Adaro Energy.
He also said the company would look to start its next
Indonesian mine within two years.
“In parallel we have commenced construction within a
second CCoW (Coal Contracts of Work) due to come on-
stream in 2017,” he said.
Mr Small said IndoMet would seek to create a world-class
metallurgical coal basin supporting a suite of mines and
employing many thousands of people.
BHP’s strategy is to mine only the world’s largest mineral
resources which can be expanded for generations or even
centuries and therefore it rarely goes into a new mining
province without evidence of a substantial resource.
“To date we have identified a resource of 1.3 billion tonnes
with further exploration planned,” Mr Small told Ozmine
Jakarta, a forum organised by Austrade. Coal prices have
dived as part of a global commodity slump but Mr Small said
that, beyond the challenging short-term outlook, he was
optimistic about both thermal coal and metallurgical coal in
the medium to long term.
“We are potentially more bullish about metallurgical coal,”
he said. “In the long term I think there will be a recovery, to
what extent I am not sure.”
He said there was an opportunity in Indonesia to “consolidate,
get the cost base right and establish a sustainable business
going forward”. Mr Small said BHP had undergone a
“simplification project” in terms of identifying its key assets.
The demerger with South32 enabled it to focus on four key
resources: coal, iron ore, petroleum and copper. “Across the
business we are focusing on safe productivity whilst driving
costs down,” Mr Small said.
One of the benefits of Indonesia was that it had a relatively low
wage structure but there were also potential improvements
in productivity factors, he said.
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“I think we will continue to see costs come down,” he said.
The IndoMet project had a target of employing 70 per cent of
its staff from the local community in Kalimantan. “We are in
the process of recruiting now ... we are ramping up to 1200
people (and) are absolutely committed to supporting local
communities wherever possible.”
Mr Small said there was a lot of opportunity in Indonesia
and it was possible to operate with the same standards as
you would in Australia or another developed economy.
“Indonesia is certainly a place of opportunity. I would just
reinforce finding a suitable partner who is aligned with your
own values and standards.”
Australian Mining Chamber in Indonesia chairman Andy
Coles said Indonesia had advantages over other jurisdictions.
He said the disadvantage of Mongolia was that China was
the only buyer, the regulatory environments in Yemen and
Cambodia were 15 to 20 years behind Indonesia and mines in
Malaysia were fairly small.
“Indonesia still stands out from the pack. There are some
issues, there are some problems but BHP has been here 20
years and they are still here. The proof is in the pudding. The
regulatory environment is not easy but it is still doable,” he
said.
Trade commissioner Michael Helleman said Indonesia
continued to be an important player in the global mining
scene with significant levels of coal, copper, gold, tin and
nickel.
He said global mining companies consistently ranked
Indonesia highly in terms of coal and mineral prospects,
however their assessments of mining policies and the
investment climate were less positive. He said Indonesia
nonetheless continued to attract significant investment with
Freeport Indonesia, Vale and Weda Bay Nickel all making
significant investments in recent years.
The Indonesian government banned the export of
unprocessed minerals from January 2014 in an effort to push
construction of smelters and boost value of mineral exports.
Australian ambassador to Indonesia Paul Grigson told the
forum Australian investment in Indonesia and vice versa was
“significantly underdone”.
“Investment into Australia from Indonesia runs runs at $1.45
billion. Similarly from Australia into Indonesia runs at $5.3
billion – again, I think a little low. I think medium term focus
on investment and services is important for us,” he said.
4
coal
news
October 2015
Indonesia’s Coal Output Falls
15.4% in January-August
- 14 September 2015 -
The Jakarta Globe, Jakarta - Indonesia’s coal output declined
15.4 percent in the January to August period this year on the
back of low demand, a ministry official said on Monday.
Adhi Wibowo, director of coal business development at
the ministry, said that Indonesia’s coal production was 263
million tons in the first eight months of this year, down 15.4
percent from 311 million tons in the same period last year.
“The production decline is caused by the low global demand
of coal,” Adhi told reporters on Monday.
He also said that Indonesia’s coal export declined 18 percent
to 211 million tons in the January to August period compared
to 258 million tons in the same period a year earlier.
Coal miners continue to face challenges in the industry
because of weak commodity prices sparked by lower global
demand.
However, Adhi added that the weak coal price did not affect
the domestic demand for coal. The domestic volume reached
52 million tons until August, down one million ton compared
to the January to August period last year.
“The domestic demand remains stable because there are
needs for power plants and the industrial sector,” he said.
The coal output reached 81.88 percent of the total target that
the government set for this year, which is 425 million tons.
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Coal Update Indonesia: Price,
Environment, Health & Batang
Plant
- 14 September 2015 -
Indonesia Investments, Jakarta - Indonesia’s reference
thermal coal price hit another all-time low. The Ministry of
Energy and Mineral Resources set the September coal price
(in Indonesian: Harga Batubara Acuan, or HBA) at USD $58.21
per metric ton (FOB), down 1.6 percent from the August
reference rate, and the fifth consecutive month of decline.
Indonesia is the world’s largest thermal coal exporter.
Indonesia’s reference thermal coal price (HBA), which is
set each month by the Energy Ministry, is calculated by
taking the average of the following four indices: the Platts
Kalimantan (5,900 kcal/kg), the Argus-Indonesia Coal Index
1 (6,500 kcal/kg), the Newcastle Export Index (6,322 kcal/kg),
and the global COAL Newcastle Index (6,000 kcal/kg). The
HBA forms the basis for determining prices of 73 Indonesian
coal products, sold domestically or abroad, as well as for the
calculation of coal royalties.
Conditions remain tough for Indonesian coal miners with
little hope for a rebound in coal prices on the short or middle
term due to persistent concern about a global supply glut in
combination with weak coal demand from China, the world’s
largest coal consumer (due to the country’s hard landing,
stricter environmental rules, and government support for
local miners).
Recently, the Indonesian Coal Mining Association (APBI)
stated that almost 80 percent of Indonesian coal miners have
temporarily ceased coal production as the production cost
margin turned negative (meaning that they lose money when
producing and selling coal products).
In the first half of 2015, Indonesia’s coal exports fell 18 percent
(y/y) to 186.8 million metric tons, while the nation’s coal
production was down 15 percent (y/y) to 232.9 million tons
over the same period. Meanwhile, domestic coal demand in
Indonesia has dropped slightly this year, primarily on lower
demand from state-owned utilities company Perusahaan
Listrik Negara (PLN). Earlier this year, the Indonesian
government cut its coal production target for full-year 2015
from 425 million tons to 400 million tons.
5
coal
news

October 2015

Is A Coal Price Indus Coal seeks more time

Recovery Near? to restructure debts

- 16 September 2015 - - 17 September 2015 -

Oil Price, Jakarta - Lower prices have had a mixed effect on

commodities production. Metals like gold and iron ore have
seen output stay stubbornly high -- with Platts reporting this
week that iron ore exports from key producers Australia and
Brazil are running near record levels, despite a plunge in
prices.

Other metals like copper and platinum are starting to show

production slowdowns. But news this week suggests that
one commodity appears to be responding fastest to lower
prices: Thermal coal.

On Monday, the world’s top coal-exporting nation, Indonesia,

said that its production is in major decline. Having already
fallen by double-digit percentages this year.
Government statistics showed that Indonesia’s coal
production for January to August fell 15.4%, as compared to
same period of 2014. With total production coming in at 263
million tonnes -- down from 311 million last year.
That means Indonesian producers have already taken nearly
50 million tonnes of supply off the market. And suggests that
the full-year cut in production could be close to 75 million
tonnes.
That’s a significant amount for the global market. Especially
given that Indonesia is one of the world’s lower-cost
production centers for coal -- and one of the few places that
had been continuing to expand output over the last two
years.
Argus Media, Singapore - Indonesia-focused mine exploration
and development firm Indus Coal has asked for more time to
try and restructure its debt.
Shares in the firm, which trade on the Australian Securities
Exchange, will remain suspended at least until 15 October.
Indus, through its 38pc-owned Indonesian subsidiary BMC,
has been involved in the development of the Muko Muko
high-grade thermal coal project in western Sumatra’s
Bengkulu province, along with another large-scale mining
project in nearby Jambi province.
Indus was previously granted a forestry permit for the Jambi
project and had said it expected to start production at both
ventures in 2014. But the firm suspended trading in its shares
in September 2014 as it sought to restructure its financing.

But that trend is now reversing. And if Indonesian miners are
having trouble at today’s prices (which are running around
$58 per tonne for the blended basket of Indonesian coals), it’s
a safe bet most of the world’s coal miners are facing similar
difficulties.
In fact, some estimates are that 80% of Indonesia’s
coal miners are now curtailing output. Suggesting that
government projections on 2015 production -- which had
been forecasting 400 million tonnes, down from 458 million
in 2014 -- will likely have to be revised downward.
Mining firms in Sumatra’s Jambi province have been
particularly hard hit by the slump in Indonesian coal prices.
The region produces high-quality coal, but most mining firms
with an interest in the region have previously been small-
scale, high-cost operators.
Indus in July said it had signed an initial agreement through
BMC and a unnamed Chinese engineering and construction
firm to potentially develop a mine mouth coal-fired power
plant in Sumatra.

All of which shows this is a market that’s quickly changing

direction. It may take some time for price effects to trickle
through, given the incredible ramp-up in Indonesian
production of late (66% growth over the last five years) -- but
the right things are starting to happen to seed a recovery.

CARSURIN www.carsurin.com 6
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coal
news
October 2015
Bukit Asam in Talks
to Supply Coal to
Freeport
- 20 September 2015 -
The Jakarta Globe, Jakarta - State coal miner Bukit Asam
is cooking up plans to supply coal to Freeport Indonesia, a
local unit of US mining giant Freeport-McMoran, as part of
the government’s initiative for Freeport to use more locally-
based products in its business.
“We’ve started talking with Freeport about the prospects
of providing coal for Freeport’s power plants and about
teaming up to build the power plants. Hopefully, these
plans can materialize soon,” Bukit Asam president director
Milawarman said in a statement.
Milawarman added that the publicly-listed state company
is hoping to become a partner for Freeport’s power plant in
Timika, Papua, and its smelter in Gresik, East Java.
Talks between Bukit Asam and Freeport were conceived amid
calls from Industry Minister Saleh Husin, urging Freeport to
utilize local components and products.
“Freeport has become a part of the national industry, so it
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must be supported by other industries,” Saleh said during his
visit to Freeport’s mine in Papua’s Mimika district over the
weekend.
“In line with Freeport’s investment commitment and
operations in Indonesia, I asked them to use more local
products, such as steel from Krakatau Steel, cement from
Semen Indonesia, and coals from Bukit Asam, among other
things.”
Others to attend the meeting included National Development
Planning Minister Sofyan Djalil and Minister of Energy and
Natural Resources Sudirman Said, as well as several top
executives from state owned enterprises, such as Bukit
Asam, steel maker Krakatau Steel and cement manufacturer
Semen Indonesia.
Responding to calls from the Industry Minister, Freeport
Indonesia president director Maroef Sjamsuddin said that
the miner is “open” to the opportunity of partnerships with
state-owned companies.
7
coal
news
October 2015
Bukit Asam calls it
a day on exploration
- 21 September 2015 -
The Jakarta Post, Jakarta - State-run coal miner Tambang
Batubara Bukit Asam has announced it is halting its
exploration activities and will focus on operating its existing
mines. The coal miner, which has seen slowing business
amid declining prices and oversupply, announced that the
company would not explore any possible additional reserves
in the period between October this year and March next
year, and would focus on exploration to support production
planning and to collect data necessary for daily and short-
term production purposes.
Bukit Asam corporate secretary Joko Pramono said the
move was not driven by cost-cutting or anxiety about an
unfavorable commodity market, but more by the fact that the
company had abundant reserves to meet production needs.
“We have enough reserves to supply operation for the next 40
years, so I think for now we can stop exploring,” Joko told The
Jakarta Post. Bukit Asam’s coal resources, he revealed, stood
at 7.29 billion tons, while its coal reserves were at 1.99 billion
tons. The company currently produces 20 million tons of coal
per year, and in the next five years, annual output is expected
to reach 50 million tons.
“That does not necessarily mean that we will stop adding
reserves. If we want to we can do so externally through an
acquisition.”
The company’s latest acquisition was in May, when it
acquired coal miner Tabalong Prima Resources (TPR) and
coal transport Mitra Hasrat Bersama (MHB) in a transaction
worth US$36 million. TPR operates a 3,145 hectare mining
concession in Tabalong, with 292 million tons of coal
resources and 109 million tons of mineable coal reserves.
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Despite selling a higher volume of coal, Bukit Asam saw its
profits fall in the first half of this year as the commodity’s
price plunged. The publicly listed coal supplier booked a
31.22 percent drop in net profits to Rp 795.6 billion in the
January-June period this year from the same period last
year, its earnings dragged down by weak coal prices.
Coal prices have halved in the last two years amid oversupply
and declining demand from China, where the economy is
slowing and which is trying to combat pollution. Demand
from the world’s largest consumer of raw materials fell by 31
percent in the first half, the biggest drop since at least 2009.
Bukit Asam’s coal sales rose mildly by 2.02 percent to 9.03
million tons, resulting in a 1 percent rise in revenue to Rp 6.51
trillion, Joko added. Bukit Asam produced 8.32 million tons
of coal and purchased 0.82 million tons from a third party,
reaching a total of 9.14 million tons, up 4 percent on a yearly
basis, according to company records. Of that amount, 4.62
million tons were delivered to domestic buyers, while the
remainder was shipped overseas.
William Simadiputra from DBS Vickers predicted that Bukit
Asam’s earnings would drop by 30 percent on an annual basis
to Rp 1.4 trillion, mainly on lower average selling prices and
higher cash cost per ton, despite higher sales volumes.
Isnaputra Iskandar from Maybank Kim Eng Indonesia said
that he had cut his earnings forecasts for Bukit Asam for
2016 and 2017 by 21.8 percent and 40 percent, respectively,
on expected lower sales volume and lower coal prices. He
predicted that the miner would book declining net profits in
the next two years, from this year’s estimated Rp 1.4 trillion
to Rp 1.39 trillion in 2015 and Rp 1.03 trillion in 2016.
8
coal
news
October 2015
Reliance Power to sell
of three Indonesian coal
mines
- 30 September 2015 -
Financial Express, Jakarta - The Anil Ambani-led Reliance
Power has decided to sell three coal mines in Indonesia
and concentrate on coal mining business in the country to
support Prime Minister Narendra Modi’s initiative of ‘Make in
India’.
“India has ambitious plans of doubling its coal production
from 450 million tonnes to 900 million tonnes. We have also
decided to exit the coal business in Indonesia and we hope
to complete transactions (in this regard) in the course of
this year,” Ambani told shareholders at the company’s 21st
annual general meeting today.
He said the company will be focusing on coal mining business
and coal resources business in India.
In 2008, the company through its subsidiary Reliance Coal
Resources (RCRPL) had acquired 100 per cent in three coal
mines in Indonesia with total reserves of two billion metric
tonnes. RCRPL had acquired Srivijaya Bintangtiga Energy,
Bryayan Bintangtiga Energy and Sugico Pendragon Energy
in South Sumatra of Indonesia spread over 40,000 hectares.
R-Power currently has only two coal mines which are located
in Sasan in Madhya Pradesh — Moher and Moher captive coal
block for its 3960 mw Ultra Mega Power Project (UMPP) with
a total reserve of 20 million tonnes. The coal ministry through
a notification on May 7 this year had cancelled the allocation
of Chhatrasal coal block for the Sasan UMPP.
“The government has cancelled the allocation of Chhatrasal
block. But we have now challenged this decision in the
Delhi High Court and the matter is sub-judice. Similarly, the
3,960-mw Krishnapatnam UMPP in Andhra Pradesh is under
litigation, post changes in regulations in Indonesia,” Ambani
said. R-Power has also backed out from the 4,000 MW Tilaiya
UMPP citing delay in land acquisition.
He further said the company has signed an MoU with the
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Bangladesh government for setting up 3,000 MW gas-based
project and has proposed to relocate equipment from the
2,250-mw Samalkot project in Andhra Pradesh to Bangladesh.
“Our Samalkot project is linked with gas supply. India is
facing tremendous shortage of gas. Nearly, 25,000 mw of
gas based plants with investment of over Rs 1 lakh crore are
sitting idle for want of gas.
“Gas is a national asset whether it is public sector or private
sector and India is short of energy and we do not have gas,”
he said.
“To fire this 25,000 mw, we need nearly 100 million cubic
metre of gas, so we are far away from those targets.
Therefore, we have taken a strategic decision to relocate our
Samalkot facilities to Bangladesh for which we have signed
an MoU. There is a huge shortage of power in Bangladesh and
we hope that it will be an ultimate solution for us,” he added.
R-Power will use the equipment it had contracted for its
Samalkot project in Andhra Pradesh for setting up the power
plant in Bangladesh in three years from the date of signing
the power purchase agreement (PPA). Ambani further said
the company has completed phase-I of its Rs 50,000 crore
capital expenditure programme and now has 6,000 mw
operating capacity.
“All our plants including 3,960-mw Sasan and 1200-mw Rosa
in Uttar Pradesh are operating at PLFs of nearly 90-100 per
cent compared with the national average of 65 per cent,”
Ambani said. “We are committed to profitable and sustainable
growth while remaining financially conservative,” he added.
Speaking about renewable energy plans of the company,
Ambani said R-Power has already signed an MoU with the
Rajasthan government for setting up 6,000 mw of solar
capacity and solar parks and will be also participating in the
upcoming solar auction in various states.
9
minerals
news
October 2015
Timah’s profits nosedive
despite surging revenues
- 2 September 2015 -
The Jakarta Post, Jakarta - Publicly listed state-run PT Timah
saw its profits nosedive during the first half of this year
despite rising revenues and higher sales volumes.
According to the company on Monday, Timah pocketed
net profits of only Rp 11.28 billion (US$801,962) during the
January-June period, which plunged by 96.62 percent from
Rp 334.36 billion in the same period last year. The company
also announced on Monday that its total revenue rose 17
percent to Rp 3.22 trillion in the first half from Rp 2.75 trillion
booked in the same period last year, but its costs of goods
sold rose by 40.48 percent from Rp 2.10 trillion to Rp 2.95
trillion.
Timah sold 14,096 metric tons of tin during the period, a
45.88 percent rise compared to 9,633 metric tons recorded
in the same period last year. However, the world tin price
declined by 23.19 percent this year to an average of $17,076
per metric tons.
Timah corporate secretary Agung Nugroho said his firm’s
revenue growth was slowing because of the fall in prices.
He admitted that the weakening rupiah, that was supposed
to widen the profit margin of Timah’s tin exports, did not
in fact boost the company’s revenues due to the plunge in
the tin price. Agung expressed hope that newly approved
regulations by the trade minister would lead to tighter export
requirements thus maintaining a stable tin price.
In May, the Trade Ministry issued a revised regulation for the
tin trade amid concerns over illegal mining activities and an
ongoing decline in commodity prices. The new ruling would
only allow the export of three types of tin, namely refined
tin ingots, tin solders and other types of tin products, in
contrast to the previous export allowance for four types of
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tin comprising refined tin ingots, refined tin non-ingots, tin
solders and non-solder tin alloys. The regulation regarding
the trade of the three types of tin will be effective from Aug. 1.
Under the revised regulations, tin can be exported only if
producers or miners have paid the appropriate royalty and
presented the required documents such as working plans
and budgets as well as maintained a “clean and clear” status,
all of which have to be verified by the Energy and Mineral
Resources Ministry’s directorate general for minerals and
coal.
The requirements for the “clean and clear” status will be
effective from Nov. 1. Meanwhile, to maintain the company’s
growth, Timah has diversified its range of businesses to
include non-tin businesses such as hospital and property
business, said Agung.
Timah president director Sukrisno said recently that the
country’s biggest tin miner was keen to increase its non-
mining income, which currently accounted for only around
5 percent of the company’s revenues, to 50 percent by 2019.
Currently, Timah is set to develop an idle asset — a 176-hectare
site located in Bekasi, West Java — into a mixed-use complex,
in partnership with state-run builders Wijaya Karya and Adhi
Karya. The project, as previously reported, will cost around
Rp 1 trillion. Agung said that, despite the gloomy outlook
of the mining industry, his firm intended to reach the same
growth target as last year.
“However, being able to obtain profits in this situation can be
considered as a sign of our positive business performance,”
he said.
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news
October 2015
Indonesia’s ore export ban
a hard blow to China Nickel
Resources
- 3 September 2015 -
Platts, Jakarta - China Nickel Resources, listed on the Hong
Kong Stock Exchange, had to admit publicly how badly it is
suffering from the Indonesian government’s sudden ban on
all ore exports, including iron and nickel ore.
The ban, started in January 2014, forced China Nickel
Resources to halt operations at almost all of its core
businesses, including a special and stainless steel and nickel-
chromium alloy plant in central China’s Henan province, as
well as its nickel smelter in east China’s Jiangsu province.
The root cause for all these suspensions in its Chinese
operations, however, is it was unable to ship its iron-nickel
ore out of Indonesia due to the export ban by the Indonesian
government.
It is also safe to assume that China Nickel Resources is a
known and typical case illustrating the deep trap that many
investors in Indonesia’s coal and nickel mines, including
individuals or privately-owned companies, are now in. But
fortunately for many, not being listed companies, they do
not have the obligation to expose their wounds to the public.
In 2015, China Nickel Resources suspended operations at its
Zhengzhou Yongtong Special Steel plant in central China’s
Henan province from late February until early July amid
fierce competition in domestic steel market in general, as
well as due to no more internal supplies of iron ore and nickel
with the Indonesian ban, the official said.
Yongtong resumed operations gradually in early July but
is operating at high costs as it has to procure iron ore from
third parties inside China, the company’s interim report
stated on September 1. Yongtong is designed with 500,000
mt/year special steel and stainless steel and 500,000 nickel-
chromium alloy capacities.
Additionally, China Nickel’s operations at the 6 million mt/
year Yiwan iron-nickel mine in Indonesia under its subsidiary
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PT. Yiwan Mining were completely halted for the first half of
2015 as no nickel ore could be exported from Indonesian
government. The Indonesian business contributed 91% of
China Nickel’s sales revenue in 2013.
Indonesia was China’s top nickel ore supply country prior to
the ban, but the sudden break has enabled the Philippines
to catch up, becoming China’s current top nickel ore supply
source. Sadly for the Philippines, though, its supply volume
is no match to that of Indonesia, and it is unable to fill the
gap left by Indonesia even though the market share is free
to take on.
China’s nickel ore imports at Lianyungang, once the top nickel
handling port in east China’s Jiangsu province, for example,
posted a slump of 4.29 million mt year on year in nickel ore
imports for H1 to 2.13 million mt in light of Indonesia’s ban
and the Philippines’ inability to supply more, a port official
confirmed on in late August.
Without the nickel ore supply, China Nickel’s 1 million mt/
year nickel alloy plant in Lianyungang City, east China’s
Jiangsu province, was idled from January to June. The plant,
under the management of the subsidiary Lianyungang City
East Harvest Mining Company, went into trial production in
H2 2012. To counter the impact of Indonesian policy in the
long run, China Nickel is exploring the possibility of building
a steel plant in Indonesia under its newly-established PT.
Mandan Steel to produce rebar.
“We do not have any concrete details yet, but this will enable
us to consume our resources domestically to be free from the
ban,” the company official said.
Despite the similar suffering and the plan to develop
downstream to bypass the Indonesian ban, very few investors
have been heard to have completed constructing their nickel
smelters or steel plants. It seems that the journey is not as
smooth as assumed.
11
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news

October 2015

Indonesia puts 500,000 tonnes Coal Mining Industry

copper concentrate in doubt Indonesia: Government in
Search of Unpaid Bills
- 3 September 2015 - - 3 September 2015 -

Indonesia Investments, Jakarta - Starting from the fourth

quarter of 2015 Indonesian governors will have the power to
revoke mining permits when miners - those operating with a
Mining Business Permit (IUP) - fail to meet requirements for
the so-called “clean-and-clear” status. The clean-and-clear
status shows that the mining company has no outstanding
royalty and other tax obligation, fulfilled exploration and
environmental commitments, has no property delineation
issues, and obtained the necessary forestry permits.

Indonesia’s Energy and Mineral Resources Ministry is

currently conducting research to check whether the country’s
Mining.com, Jakarta - Last year Newmont Mining Corp
miners comply with (royalty and tax) payments as well as
(NYSE:NEM) were barred from exporting copper and gold
environmental regulations. It also investigates whether
concentrate from its operations in Indonesia for a full nine
miners’ activities do not overlap with other mining areas/
months.
permits.
Like its US peer Freeport-McMoRan (NYSE:FCX), Newmont’s
According to the ministry there are currently 10,432 IUP-
local unit, PT Newmont Nusa Tenggara, had to ceased
holders active in the nation’s mining industry. However, only
shipments when a new rule took effect banning the export
6,156 have obtained the mandatory clean-and-clear status.
of unrefined minerals and punitive export taxes were levied.
Reportedly, approximately 2,000 unpaid bills (including
Exports from the Batu Hijau copper and gold mine in
royalties, dead rent, land rent, and coal sale fees), valued
Sumbawa Island and from Freeport’s Grasberg mine in Papua
at a combined total of IDR 10 trillion (USD $705 million),
province resumed about a year ago.
still need to be settled in Indonesia’s mining industry. The
Ministry of Energy and Mineral Resources met the Corruption
But now Reuters reports Newmont’s Indonesian copper
Eradication Commission (KPK) on Wednesday (02/09) to
export permit, which expired on Tuesday, will not be renewed
discuss the legal standing of these unpaid bills which date
because the company failed to meet government stipulations
back to the period 2001-2011.
for developing a domestic smelter, government officials said.
Bambang Gatot, Coal and Minerals Director General at
Chief Executive Gary Goldberg said on Tuesday Newmont
the Energy and Mineral Resources Ministry, refrained from
is in talks with the Indonesian government and he said he
mentioning any names of mining companies that are still
expected it would take “a couple of weeks” to sort out,”
in debt to the government. The ministry will send three
according to the report:
warning letters first before imposing sanctions. It is also
not revealed whether it involves mining companies that are
“In the meantime we continue to operate at full capacity. The
already producing commercially or are still operating in the
last export shipment was earlier today,” Goldberg said in an
exploration stage.
interview at an industry conference in Denver.
According to the latest data from the Energy and Mineral
Newmont, the country’s number two exporter behind
Resources Ministry, non-tax revenue from the mining sector
Freeport, is forecast by the Indonesian government to
stood at IDR 19.7 trillion (USD $1.4 billion) in the first eight
produce 500,000 tonnes of copper and gold concentrate in
months of 2015, or approximately 37.7 percent of the full-
2015.
year target in 2015, making it highly unlikely that the full-year
target will be achieved.

The sluggish global economy (particularly caused by

China’s downturn) has resulted in low commodity prices.
Last month, the Indonesian Coal Mining Association (APBI)
said that almost 80 percent of Indonesian coal miners have
temporarily ceased production as the production cost margin
has turned negative.

CARSURIN www.carsurin.com 12
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minerals
news
October 2015
Govt withdraws plan
to ease ore export ban
- 8 September 2015 -
The Jakarta Globe, Jakarta - The government has decided
to withdraw its plan to ease the ban on ore exports as the
relaxation of the mining policy would harm its commitment
to fully implement the 2009 Mining Law.
Energy and Mineral Resources Minister Sudirman Said
explained Monday the plan was scrapped because it would
bring more harm than good to the government’s efforts in
developing the downstream industry in the mining sector.
“The development of the downstream industry in the mining
sector is part of an important process in our industrialization,”
he said.
Sudirman also noted the plan would contradict the
government’s commitment to strengthen the downstream
industry in the mining sector so that Indonesia will be
able to export mineral products with higher added value.
The government applied the ban on mineral ore exports
in January last year as part of the implementation of 2009
Mining Law, which requires mining firms to process minerals
in local smelters before selling them overseas. It was intended
to increase the value of the country’s mineral production.
Exemptions were granted to major copper producers such
as PT Freeport Indonesia and PT Newmont Nusa Tenggara
to export semi-finished mineral products, known as copper
concentrates, as these two producers showed serious
commitment to build smelters.
The regulation was met with protest, including the request
last year for a judicial review of the government’s ban filed
by a group of mining companies, including Indonesia’s
Mineral Entrepreneurs Association (Apemindo). However,
the Constitutional Court rejected the review, stating that the
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prohibition did not violate the Mining Law.
Earlier this year, government’s advisory team also proposed
the removal of the export ban on raw minerals particularly
nickel and bauxite to help miners raise fresh funds for the
construction of their smelters, which had been stalled due to
financial problems. The proposal included allowing exports
from miners whose smelters are more than 30 percent
complete.
Sudirman admitted that the government previously
discussed relaxing the policy as an incentive to attract
investors and to help expedite the smelters development as
it would provide cash flow from the exports. However, he said
that the government would look for other kinds of incentives
to expedite the smelters.
Based on the data from the ministry, there were currently 88
holders of mining operation permits (IUP) that were building
72 smelters throughout Indonesia as of July. Out of the total,
28 IUP holders that were building 25 smelters were on the
commissioning or production phase, which is the last phase
of the progress.
Nickel smelters dominate with 35 projects ongoing at present,
followed by 11 zircon facilities and eight iron. Last week, 21
smelter companies claiming to have spent US$30 billion in
total investment stated that the relaxation of nickels and
bauxites export ban would also kill the smelters.
“If the [ore] export is opened again, we are dead,” vice
president director of PT Bintang Delapan Mineral Alexander
Barus said as quoted by tempo.co, adding that Bintang
Delapan Group subsidiary PT Sulawesi Mining Investment
has invested $2.3 billion for nickel smelters.
13
minerals
news
October 2015
Newmont Grants Rp5.5 Billion
to West Nusa Tenggara Police
- 5 September 2015 -
Tempo.co, Jakarta - Copper mining company Newmont Nusa
Tenggara has granted Rp5.5 billion to support West Nusa
Tenggara provincial polices activities to increase security and
public order in the province.
Newmont Nusa Tenggara’s General Manager for Social
Responsibility and Government Relations, Rachmat
Makassau, signed a cooperation agreement to this effect with
Chief of the Nusa Tenggara Barat Provincial Police Brig. Gen.
Umar Septono on Friday, September 4.
Makassau noted that the grant is aimed at increasing the
existing synergy between both sides in creating a conducive
situation and ensuring public order in the province.
“The cooperation agreement signed this time is a follow-up
to the same agreement signed in 2012,” he pointed out. He
expressed hope that the cooperation would be realized by
maintaining security and public order, upholding the law,
and protecting the public.
“Hopefully, the signing of the cooperation agreement, as
a continuation of a similar cooperation, would benefit all
sides, particularly the people of East Nusa Tenggara,” he
emphasized.
Newmont Nusa Tenggara is a copper and gold mining
company operating under the work of contract of generation
IV signed on December 2, 1986.
Since it became fully operational in Indonesia in 2000,
Newmont has contributed Rp90 trillion to the state, including
through tax and non-tax levies, royalties, employee salaries,
purchase of domestic goods and services, and dividends for
national shareholders.
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Government to Reduce
Steel Imports
- 16 September 2015 -
Tempo.co, Jakarta - The government will reduce its steel
import for bridge construction in various regions in the
country in an effort to boost the use of domestically produced
steel, according to Industry Minister Saleh Husin.”Hopefully,
next year the use of locally produced steel for bridge
construction would already have reached 80 percent,”
Minister Saleh Husin said after attending a meeting on bridge
construction at the Vice Presidential Office here Tuesday.
This year, imported steel still dominates the use of the
commodity for the construction of bridges in various regions
in Indonesia. Its composition is about 60 percent imported
steel and 40 percent is domestically produced.His ministry
accorded priority to the domestic industry in the construction
of bridges in the country by using their steel products, Husin
said.
The capacity of the national steel industry is enough to meet
the need at home like PT Krakatau Steel (KS) which has a
production capacity of up to 3.9 million tons per annum, the
minister explained.”We still have steel industries other than
KS.
Domestic industries are able to supply the need for products
at home,” he added.By giving priority to the domestic industry,
the government will obtain many other advantages such as
enhancing employment and boosting the growth of local
industries. The use of steel for the construction of bridges at
home was targeted at 1.8 million tons in 2015, Public Works
and Public Housing Minister Basuki Hadimuljono said.
Therefore, the priority in the use of local steel products will
benefit the efforts to increase domestic steel production,
he said.The government had not yet decided the volume of
local steel products that would be used for the construction
of bridges in the country in 2016, Hadimuljono said. This is
because in the first stage the design of bridges which could
be built would be made first.
“We will design bridges in November and December that
will be built together with the Agency for Assessment and
Application of Technology (BPPT),” he said.The steel which
will be used to build the bridges will be handed over to
domestic producers. It is based on the BPPT standard so that
the product could be mass produced.
14
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news
October 2015
Timah’s Lost Tin Highlights
Scale of Illegal Mining
Problem in Indonesia
- 17 September 2015 -
The Jakarta Globe, Jakarta - Indonesian state-controlled
tin miner Timah claims it loses up to 80 metric tons of the
metal every day as a result of illegal miners operating in its
concession, and sees no end to the problem because of how
lucrative the practice has become.
There are an estimated 1,600 locations where illegal miners
operate inside Timah’s concession in the Bangka-Belitung
islands off southern Sumatra, according to corporate
secretary Agung Nugroho.
“If in a day they can produce 50 kilograms of tin ore from each
site, then that’s 80,000 kilos that we’ve lost,” Agung said in
Jakarta on Wednesday.
The administration of President Joko Widodo has promised
to crack down on decades of illegal mining that have skewed
production figures and undercut legitimate exporters.
Indonesia is the world’s largest tin producer, and Bangka-
Belitung produces about 90 percent of the nation’s tin.
Illegal mining has long been a problem in Indonesia, where
enforcement of regulations is lax at best and the draw of
striking it rich trumps offers of legitimate employment by
mining companies. In Timah’s case, the miner struck an
agreement several years ago with residents of Bangka-
Belitung to allow them to mine in its concession on an
artisanal basis, but under strict safety and operational rules
from the company.
“There are 5,500 miners working [under this scheme] for
our partner companies. Those partner companies, in turn,
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contribute to about 50 percent of Timah’s production,”
Agung said.
For the most part, though, small-scale miners would rather
work on their own and keep what they find, says Adhi
Wibowo, the Energy and Mineral Resources Ministry official
in charge of technical and environmental compliance in the
mining sector.
Working for companies like Timah, he said, “is apparently not
an attractive option for them, because they will only get paid
for their mining services, whereas otherwise they could be
pocketing the profit from selling the ore themselves.”
Under a 2010 regulation on mining, residents can secure a
so-called people’s mining permit, or IPR, to operate on an
artisanal scale. But Adhi said few people were capable or
willing to meet the requirements set out under the regulation.
“They find the technical requirements difficult to fulfill,
such as a prohibition on the use of heavy equipment and
explosives. IPR holders aren’t allowed to operate those two,”
Adhi said, arguing that this would make it difficult for them to
mine, hence the appeal of illegal mining.
He called the issue a “cross-ministerial” one that would
be raised at an upcoming meeting led by the coordinating
minister for maritime affairs and natural resources.
“There needs to be a legal umbrella to regulate this issue,”
Adhi said.
15
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news
October 2015
2009 Mining Law Indonesia:
No Copper Concentrate Export
Extension for Newmont
- 20 September 2015 -
Indonesia Investments, Jakarta - As Indonesia’s Ministry
of Energy and Mineral Resources declined to issue a
recommendation for the extension of Newmont Nusa
Tenggara’s export permit, operations at the Batu Hijau mine
(an open-pit gold and copper mine located on the island of
Sumbawa in the eastern part of Indonesia) have become
uncertain. The six-month permit for copper concentrate
exports of copper miner Newmont Nusa Tenggara, a unit of
US-based Newmont Mining Corp, expired on Friday (18/09)
and was not extended as the company failed to fulfill the
government’s requirements regarding smelter development.
Based on Indonesia’s 2009 New Mining Law, mining
companies in Indonesia have not been allowed to export
mineral ore since January 2014. Instead, these miners are
required to add value (extract the valuable element via
smelting). However, as Indonesia’s smelting capacity was
insufficient at the start of 2014 (and still is insufficient), some
miners - including Newmont Nusa Tenggara and Freeport
Indonesia - were allowed to resume exports of unprocessed
minerals provided that they would agree and comply with
specific requirements (a full ban on mineral ore exports will
come into effect in 2017).
One of these requirements was that the miner would
establish smelting facilities (by themselves or by teaming
up with another miner) and would provide evidence to
the government regarding the progress made with the
development of these facilities. If progress is satisfying then
Indonesia’s Energy and Mineral Resources Ministry’s Mineral
and Coal Directorate General issues a recommendation,
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needed to obtain a six-month export permit.
Last year, Newmont Nusa Tenggara announced that it
had signed a memorandum of understanding (MoU) with
Freeport Indonesia (the local unit of US-based Freeport
McMoran Inc) for the development of smelting facilities in
Indonesia. However, there have been no updates regarding
this partnership. Last Friday (18/09), Newmont spokesman
Ruby Purnomo said the company tries to fulfill all government
requirements in order to extend the export permit but he
declined to respond to local reporters’ questions about the
fate of the MoU with Freeport Indonesia.
Newmont Nusa Tenggara produces approximately 350,000
tons of copper concentrate per year. About 30 percent of
production is sent to a smelter located in Gresik (East Java),
while the remaining (unprocessed) output is exported
abroad. Domestic absorption of Newmont’s copper output is
low and therefore a (temporary) stop to exports will impact
heavily on production.
Both Freeport Indonesia and Newmont Nusa Tenggara were
allowed to resume copper concentrate exports in the second
half of 2014 after successfully renegotiating their contracts
with the Indonesian government. While Freeport Indonesia
quickly decided to cooperate with authorities, Newmont
Nusa Tenggara almost filed for international arbitration in
mid-2014 as the 2009 New Mining Law was not in line with
the previously existing contracts. Arbitration would have
made the company’s long-term future in Indonesia highly
uncertain.
16
minerals
news
October 2015
Newmont seeks new deal as
export permit set to expire
- 23 September 2015 -
The Jakarta Post, Jakarta - The director for minerals at the
Energy and Mineral Resources Ministry’s mineral and coal
directorate general, Mohammad Hidayat, said on Tuesday
that the two companies were currently in talks to extend the
validity of their memorandum of understanding (MoU) on the
smelter facility development.
“We have received information that Newmont and Freeport
are still discussing the extension of their MoU. Both parties
have an interest in this matter, so it’s their choice whether to
accelerate it,” Hidayat said on Tuesday.
The renewal of the MoU is necessary for NNT, a subsidiary
of the US-based Newmont Corporation because it is part of
the requirements it must meet in order to be able to get a
recommendation from the Energy and Mineral Resources
Ministry to obtain an export permit from the Trade Ministry.
Based on the recommendation, Newmont was granted a six-
month export permit, which will be valid until Sept. 22.
As required by the 2009 Mining Law, the government
introduced a ban on the export of mineral ore starting from
January 2014. However, it is still allowing the exports of semi-
finished products, such as copper concentrate, until 2017 in
return for the companies’ commitment to develop processing
or refining facilities to process the minerals into metal end
products. The smelter can be built by the company itself or in
partnership with other companies.
As part of its attempt to meet government requirements and
secure export permits, Newmont Nusa Tenggara, a subsidiary
of US-based Newmont Mining Corp., has previously signed a
number of MoU agreements with several other firms planning
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to develop smelter facilities, such as PT Nusantara Smelting,
PT Indosmelt and PT Indovasi Mineral Indonesia.
The MoU agreement covered commitments to supply copper
concentrate to the planned smelters. However, no progress
has been reported. In a similar move, the company also has a
deal with Freeport Indonesia on a partnership of the latter’s
smelter project in Gresik, East Java. The MoU between the
companies, which is an extension of a previous MoU, will be
valid until Sept. 30.
Newmont Nusa Tenggara spokesperson Ruby Purnomo did
not immediately respond a text message seeking comments
on his company’s MoU with Freeport Indonesia. However,
Freeport Indonesia said that it had committed to establish a
new smelter in Gresik.
“We have committed to establish a smelter,” Freeport
Indonesia’s spokesperson Riza Pratama said.
Freeport Indonesia, a subsidiary of US-based Freeport-
McMoRan Inc., last July secured an extension of export
permits from the government after frantic efforts to assure
the government that it has made progress with its smelter
development. The company, which operates the Grasberg
mine in Papua, is planning to build a new smelter in Gresik,
East Java, near an existing copper smelter operated by PT
Smelting Gresik.
Freeport Indonesia also received some respite by having to
pay a lowered export duty, thanks to the minor progress of
the smelter’s development.
17
minerals
news
October 2015
Semen Indonesia Resumes
Factory Construction Amidst
Opposition
- 29 September 2015 -
Tempo.co, Jakarta - PT Semen Indonesia has decided to
continue to develop its new factory in Rembang, Central Java.
Semen Indonesia CEO Suparni said that the construction has
currently reached 60 percent completion and the factory is
predicted to start operating on October 2016.
“Operation will start gradually,” Suparni said at the state
palace on Monday, September 28, 2015.
Suparni admitted that the development of the factory has
been opposed by some of the local residents. Not only
residents of North Kendeng, experts and academics have
criticized the development of the factory. Untung Sudadi, a
geologist from the Bogor Institute of Agriculture said that the
North Kendeng area, where part of the factory will be built,
is a karst area.
Similar to an underground basin, karst areas function as
water catchment areas. “Karst is essential to maintain water
supply,” said Untung. He added that conducting mining
activities in karst areas will cause environmental damage.
On the other hand, Suparni said that the Environmental
Impact Assessment (EIA) for the cement factory has been
completed. Suparni also ensured that the presence of the
factory will not disturb water supplies to the local society.
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ESDM Ministry Drafts Mining
Divestment Regulation
- 29 September 2015 -
Tempo.co, Jakarta - The Energy and Mineral Resources
(ESDM) Ministry is drafting a ministerial decree that contains
divestment obligation for private companies that work
in mineral and coal businesses. The decree will be more
detailed and contain some restrictions.
“We will not equalize divestment,” said mineral and coal
director general Bambang Gatot Ariyono on Monday,
September 28.
Divestment regulation is previously stipulated in Government
Regulation No. 77/2014 article 97 about divestment obligation
for mining business permit (IUP) holder and special mining
license (IUPK) holder up to 51 percent within five to ten years
of operation period.
Bambang said the divestment obligation will not apply for
all mineral and coal business agreements. There are some
differentiating factors, such as the type of commodity,
business time period and mining area.
Divestment recipient will also be regulated in a separate
chapter. The Government Regulation No. 77/2014 only
contains the types of stock recipients, which are BUMN,
BUMD and public through stock market.
ESDM secretary-general Teguh Pamudji said the divestment
obligation must be specifically regulated in ministerial
decree. He ensured that the new regulation will be more
complete and have stronger legal certainty.
18
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October 2015
OJK optimistic of foreign
mining companies offering
shares
- 30 September 2015 -
Antara, Jakarta - The Financial Service Authority (OJK) has
expressed hope that foreign mining companies operating in
Indonesia would sell part of their shares through an initial
public offering (IPO) at the countrys stock exchange.
“Certainly, foreign companies that have businesses and
assets, such as mines in Indonesia, are expected to prioritize
launching an IPO in Indonesia to benefit our people. That
would be very positive, and it is what we hope for,” OJK
capital market executive supervisor Nurhaida noted here on
Thursday.
She remarked that the regulation, requesting companies
that have been operating for a minimum of five years to
divest, was positive, and the IPO mechanism could be one of
the best options to meet it.
“Divestment can be carried out through an IPO, but indeed,
there are several factors that need to be considered as the
IPO mechanism would allow anyone to buy their shares. We
will coordinate with the concerned ministries with regard to
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the technicalities,” she claimed.
Tito Sulityo, the president director of the Indonesia Stock
Exchange (BEI), pointed out that the clause on divestment
is part of Government Regulation Number 23, 2010, on the
implementation of the coal and mineral mining business.
“The method of divestment is not regulated, but I appeal that
they should do it through an IPO at the BEI,” he affirmed. If it
is done through an IPO, the people will have an opportunity
to own some of the companies shares, he noted. At present,
16 foreign companies are planning to divest in stages in
Indonesia.
“Indeed foreign mining companies could buy back the
shares they have sold, but minimally, the Indonesian public
will have an opportunity to own some of their shares if they
would divest through an IPO in Indonesia. It will also be a
good measure to build the image of our capital market,” he
added.
19
October 2015

Tips of
the Month

RESERVES AND RESOURCES - OPEN CUT

Under the JORC code Geologists can assess coal tonnage
Resources, ie tonnages in-situ in the ground. Mining Engineers
are required to assess coal Reserves ie those tonnages that
are actually produced from the mining process. Adherence
to the strict tenets of JORC would indicate something of the
order of a pre-feasibility study at least to prepare an estimate
of Reserves available and able to be reported to Stock
Exchanges and in other public documents.
For an open cut deposit that has never been mined or with
mining just starting a NON-JORC method of estimation is as
follows…Use a “rule of thumb” of 80% Modifying Factor to
convert resource tonnages in the ground to estimated Run
of Mine reserve tonnages that may cross the weighbridge.
The Modifying Factor will take into account the above loss
factors. This is a figure arrived at by observation of many
mining operations aver the years.

However it is obvious that from time to time an estimate of
Reserve tonnages potentially available is required for internal
management purposes and to be provided by the Geologist
in the absence of a Mining Engineer. Of course a software
package may have been used to assess Resources and this
may also be able to give a Reserve estimate (although to be
used with caution)
If the Run of Mine tonnages are to be treated in a coal
preparation or Washery Plant then the estimated Recovery
percentage (derived from similar operations near by in
same seams) must be factored into the final “Run Of Plant “
Reserve tonnages.

In the mining process a number of factors will reduce the

ultimate number of “Run of Mine” Reserve tonnages across
the weighbridge compared to the Resource number in-situ.
Some coal will be left in the ground, some coal will be mined
but lost (as dust, fall of back of truck etc).

Tips
For a coal mine that has been in operation for some time
examination of production figures should be compared
with tonnages of coal estimated to be from the location Antony H. Osman
where mining has taken place. Make sure not to include any FAusIMM (CP) MMICA MAIMVA (CMV) FGS
coal tonnages left in the ground outside of the mined area. JORC and KCMI accredited
Division of production figures divided by Resource tonnages Senior Geological Adviser
from the mined area gives a Modifying Factor for approximate A member of PERHAPI, IAGI & MGEI
estimate of Run of Mine Reserves.

*****************
This article is a non-JORC assessments and figures.
For a non-obligatory discussion of all your coal deposit exploration and evaluation matters, for expert opinions on the
content and presentation of your company’s report, please contact: coal.tech@carsurin.com or coal.ops@carsurin.com
at the CARSURIN Coal and Minerals Division.

CARSURIN www.carsurin.com 20
Quality with Integrity
October 2015
Australasia November 2015 Public Holidays
Australia
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China
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Hong kong
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HISTORY
Carsurin was founded in 1968
by Captain Hein Christopher
Tiwan as Indonesia’s first
private company specializing
in independent surveying and
superintending services for
the maritime and petroleum
industries.
Since its inception, Carsurin
has been dedicated to meeting
the needs of its clients whilst
delivering services with quality
and integrity.
As Indonesia’ leading
independent surveying and
superintending services
company, our corporate culture
is based upon 5 universal and
easily understood values:
Integrity
We will not compromise our
integrity when delivering our
services to our clients
Quality
We will provide our services
with adherence to the highest
standards of quality achievable
Commitment
We are committed to delivering
our services in a professional
manner
Determination
We are determined to work
hand in hand with our clients to
provide long-term solutions and
services that are in their best
interests
Development
We are committed to
continuous development in
human capital
PT. CARSURIN makes no warranties as to the accuracy of the information and assumes no liability when information is used in any way or form.
Indonesia
Japan
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Thailand
Coal & Minerals Services:
• Geology survey, Mapping,
Drilling, etc
• Quality Control for mines
production
• Laboratory Services
• Shipment survey (Quality &
Quantity)
• Export Verification
• Maritime inspection
ISPS Services:
• Internal audit (minimum once
a year)
• Training (as required, for refresh-
ing, change of PFSO, etc)
• Drill (minimum once in 3 months)
• Exercise (minimum once in a
year)
• Assessing and planning for ports
and ships security worldwide
according to the ISPS Code.
• Reviewing / revising of PFSP,
re-assessment of PFSA if needed
• Consultancy
LLOYD’S AGENCY :
• Pre-shipment and Out Turn
Surveys
• Marine, Vessel and Cargo Dam-
age Surveys
• Claims Investigation and
Settlement
• Vessel Movements and Casual-
ties Reporting
• Storage / Warehouse Risk Assess-
ment Surveys.
PETROLEUM & CHEMICAL Services:
• Loading and Discharging Super-
vision for Crude Oil, Petroleum
Product, Petrochemical and
Oleo chemical
• Sampling and expediting for
Crude Oil, Petroleum Product,
Petrochemical and Oleo
chemical
• ROB Bunker Survey
• Pre-shipment Inspection
• Tank Cleanliness Inspection
• Wall wash test
• Inventory Taking
• Gas Free Inspection and Certi-
fication
• Investigation survey for Cargo
Oil losses
COPYRIGHT © 2015, PT. CARSURIN
India
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Singapore
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MARINE & CARGO Services: PALM OIL Services:
• Pre-Hire Survey • Loading & discharging
• On / Off Hire Survey • Quantity & Quality determi-
• Draught Survey nation
• Towing and Lashing Survey • Remaining on board inspection
• Investigation Survey • Sampling & analysis
• Condition Survey : • Losses investigation
- Pre-entry • Tank cleaning inspection
- Pre-purchase
- Follow up COTTON Services:
- Valuation • Seal Breaking
- Suitability • Devanning
• Hull and Machinery Survey • Tally
• Cargo Hold Cleanliness • Weighing
• Bunker Survey (Quantity & • Sampling
Quality) • Taring
• Project Cargo Management • Surveying / inspection
• Container Inspection • Sorting of bales to mark
• Damage Survey (Cargo & Vessel)
• Weighing & Measurement OIL & GAS Services:
• Nautical Inspection for the : • Inspection & Certification
- Panama Bureau of Shipping - Pressure Vessels
- Bahamas Maritime Authority - Cranes / Lifting Gear
• Ship Repairer’s Liability - Pressure Safety Valves
• Loss of Hire - Welding Inspection
• Tally and Condition Survey • Calibration of ATG
• Container Inspection • Non Destructive Test
• Stuffing / Unstuffing and Seals / • Man Power Supply
Unsealing • Maintenance
• Preshipment and Preloading - Mechanical / Electrical
Condition - Engineering
• Weighing and Measuring - Painting and Blasting
• Pre-breakbulk, Opening Seals/ - Fire Proofing
Unsealing • EPCI Project Management
• Cargo Damage Survey
• Cargo Quantity / Quality
• Port Captaincy
CARSURIN
Quality With Integrity
Wisma 77, Tower 2, 19th Floor
Jl. Letjen S. Parman Kav. 77 - Slipi
Jakarta 11410 — INDONESIA
Ph: +62.21.2967.5868 | Fax: +62.21.2967.5818
E: cm-marketing@carsurin.com, minerals@carsurin.com
www.carsurin.com