Development Potential

of the
Wara Coal Deposit
to meet
Indonesia’s Future Power
Requirements

1
 COAL RESOURCE

• Indonesia has large resources of lower heating value sub-

bituminous coal

• the resources are largely in South and East Kalimantan and

South Sumatera

• the resource base is many billions of tonnes

• these resources have not been developed to date because

production growth from existing deposits has been sufficient
to meet domestic and export demand

2
 COAL RESOURCES

• the coal resources in South and East Kalimantan are:

– close to the surface
– suitable for low cost open pit mining
– close to the sea
or
– close to rivers that give deep water access to the sea
• the Kalimantan coal resources in some locations are:
– low in ash
– low in sulphur
– give low NOx emissions
– have suitable trace element content
• however some of the coals are:
– relatively high in moisture
– relatively low in heat value
– relatively soft which will mean handling considerations

3
 COAL RESOURCES

• a number of the deposits of the lower heating sub-bituminous coal

are in areas currently being mined

• have had some exploration and development work

• are close to existing mine infrastructure

• in some cases the mines are already opened

• could be developed or expanded quickly with first or increased

production in a matter of months

• need long term markets to justify full development

4
 WARA COAL DEPOSIT

• once such lower heating value sub-

bituminous coal resource is the
Wara deposit in PT Adaro
Indonesia’s Coal Cooperation
Agreement area in South
Kalimantan
• the Wara resource base is
estimated at over 1 billion tonnes
of surface minable coal with a low
strip ratio
• the Wara deposit lies 5 kilometers
west of Adaro’s existing mining
operations at Tutupan
• the Wara area is already connected
to the road infrastructure of the
Tutupan operations
• the coal resources of Wara are the
second largest in Adaro’s area
after the Tutupan resources

5
 PT ADARO INDONESIA

Adaro's Production Since 1992

• Adaro commenced mining in its
40
resource area in 1991 35

30

Million Tonnes
• its production has climbed steadily 25

20
from less than 1 million tonnes in its 15

first year of production to a planned 10

5
34 million tonnes this year 0

92

94

96

98

00

02

04

06
19

19

19

19

20

20

20

20
• the area contains sub-bituminous
coal resources in exceess of 3 billion
tonnes in three deposits known as
Paringin, Tutupan and Wara

• all the coal in these deposits is

typified by medium to low calorific
value, medium to high moisture and
low sulphur and ash

6
 PT ADARO INDONESIA

• the Adaro deposits are characterized by

thick seams of surface mineable coal
with low stripping ratios and favourable
mining conditions
• the development of the coal resource
was based on the construction of a 75
km coal haul road from the deposits to
a crushing, stockpiling and barge
loading site built at Kelanis on the
Barito river
• the Barito river provides deep water
access to the sea
• at Kelanis, coal is loaded on to barges
for transport either direct to domestic
customers or for transshipment into
bulk carriers

7
 PT ADARO INDONESIA

• Adaro is a major exporter with sales

to 17 countries in Asia, Europe and
North America
• Adaro is the largest supplier to the
domestic market with approximately
35% of its output being supplied to
PLN and private power producers,
the cement industry and general
industries such as paper and pulp
• a 36 million tonnes per year output
from Tutupan, which will be
achieved in 2007, is considered
optimum for this deposit
• any additional production output
above this level will come from the
Wara deposit

8
 WARA COAL DEPOSIT

• the Wara deposit has been drilled and a large resource base has been
delineated

• mining operations were carried out in 1995 and 1996 as a European

customer was using a blend of Wara and Tutupan coal in a power
station that had been previously using high sulphur lignite

• the Wara blend, with its ultra low sulphur and ash, was used to allow
the station to keep generating and meet EU emission standards
without installation of flue gas desulphurisation equipment

• however it was found that the station could accept the Tutupan coal
which was already under large scale mining and the mining at Wara
was subsequently stopped

• since then there has been no mining at Wara as Adaro has sufficient
reserves in its Tutupan deposit to meet its current domestic and
export markets

9
 WARA COAL GEOLOGY

• exploration work carried out at Wara includes geological and coal outcrop
mapping, trenching, drilling, geophysical downhole logging and coal
sampling and analysis
• A geotechnical analysis and aerial photogrammetric topographic mapping
has also been undertaken
• exploration work identified two separate deposits, named Wara 1 and Wara
2, each with multiple seams
• the Wara 1 deposit has three major coal seams with some splits in the
seams

10
 WARA COAL GEOLOGY

• the Wara 1 coal strikes in a general north-east / south-west direction, and

the coal seams dip to the south east at approximately 45 degrees
• the average coal thickness for the seams is 12 meters, with a range of
between 4 to 30 meters
• the Wara 2 deposit, northwest of Wara 1 deposit, does not outcrop and
was discovered by drilling
• the Wara 2 coal appears to be shallow, flat lying and may be of a higher
moisture than Wara 1
• only limited work has been done on Wara 2

Map of the cross

sections

11
 WARA COAL QUALITY

• a total of 25 quality holes have TYPICAL SPECIFICATIONS

been drilled in Wara 1, Proximate Analysis Total Moisture (a.r) 40
intersecting the three major % Inh Moisture (a.d.b.) 27
seams Ash (a.d.b.) 2
Volatile Matter (a.d.b.) 37
• the total moisture of the Wara 1 Fixed Carbon (a.d.b.) 34
Calorific Value (a.d.b.) 4850
coal is relatively high and varies Calorific Value (g.a.r.) 4000
from 39% to 41% Total Sulphur (a.a) 0.15
H.G.I. 60
• Inherent moisture is 26% to 31%.
Run of mine moisture percentage
Ultimate Analysis (Dry Ash Free Basis)
will depend on the mining method % Carbon 69
and coal handling Hydrogen 5
Nitrogen 1.4
• ash is low at 2% and sulphur is Oxygen 23
low at 0.15% Sulphur 0.1

• the average calorific value of Wara Ash Fusion (Reducing Atmosphere)

1 is 4,850 kcal/kg (adb basis) Temperature Initial Deformation 1300
o
• the coal quality of the Wara 2 C Spherical 1370

deposit has not been defined. The Hemispherical 1450

Flow 1490
ash and sulphur contents appear
to be similar to Wara 1

12
 WARA COAL RESOURCES

• the Wara coal deposit is classified in the measured, indicated or inferred

resource categories
• the total insitu coal resources have been calculated at 1,086 million tonnes
of which 850 million tonnes is in the Wara 1 deposit

WARA I & II RESOURCES

Deposit Resources
Measured Indicated Inferred Total
Wara I 254 280 316 850
Wara II 59 73 104 236
Total 313 353 420 1086
( million mt )

13
WARA COAL COMBUSTION TESTING

• a 5 tonne sample of Wara 1 coal

was tested at the Energy
Technology Laboratory (UPT-
LSDE, BPPT) Puspiptek, Serpong,
Tangerang

• the report, including all the results

of the tests, showed the suitability
of the use of the coal in existing
power plants in Indonesia

• the results were similar to that

obtained from the combustion
testing of Adaro’s Tutupan coal, a
coal now widely used in power
plants around the world

14
 WARA MINING and TRANSPORT

• the mining method will be by

conventional truck and shovel
mining similar to Adaro’s current
operation
• this system best suits the proposed
multi bench pit layout, and gives
maximum scheduling flexibility
• equipment size will be as large as
possible to lower the unit production
cost. However the philosophy of
larger size equipment will be
balanced with what equipment size
can be maintained under Kalimantan
conditions
• at the Barito river a new coal
crushing, stockpiling and barge
loading facility would be constructed
at Kelanis beside the one currently
in use

15
 WARA HANDLING AND SHIPPING

• the Kelanis system would receive the

coal delivered by haul trucks. After
crushing, the system would convey the
coal to a stockpile area or convey
directly to barges
• the facility at Kelanis for Wara coal
would have a planned capacity of 20
million tonnes per year and would take
9 to 12 months to design and construct
• before that time up to 2 million tonnes a
year of Wara coal could go through the
current system
• transportation from Kelanis to power
plants on Java would be by direct
barging in barges up to 14,000 tonne
capacity
• this transport method is commonly
used in domestic supply of coal and is
well able to expand to meet increased
demand

16
 MARKETING STRATEGY

• the first stage will be to identify the

markets for the Wara coal
• the best markets would be new
power plants designed for the coal
quality with:
– facilities of a size to handle
the tonnage
– mills of a suitable type
(beater mills?)
– large fan capacity
– boilers designed for such coal
• markets could be in:
– Indonesia – new power plants
– China – coastal power plants
– India –planned new power
plants
– South-East Asia

17
 MARKETING STRATEGY

• the optimum market for the Wara coal is

the one with the shortest transport
distance given the low heat value of the
coal
• optimum markets in order of priority are:
– on-site power plants
– new power plants in Kalimantan
– new power plants in Indonesia
• target markets are the 10,000 MW of new
power plants to be built under the
Indonesian Government program of
which 5,000 MW will be on Java
• the Java plants will require 20 million
tonnes a year:
– Adaro can deliver in barges up to 14,000
tonnes direct from barge
– loading at Kelanis
– 4 to 5 days delivery time
– can provide competitive delivered price
per unit of heat value

18
 MARKETING PROGRAM

• the marketing program will be to

provide Wara coal information to
possible power plant developers

• provide trial samples as needed

from 5 kg up to 500 tonnes from
the present trial mine

• make test burn results available

• have Adaro’s coal combustion

consultant available to provide
technical advice

• arrange inspection visits to

operating power plants using
similar coals

19
 GOVERNMENT POLICIES

• adjustments to some Government policies would assist in the

development of the large energy resource of lower heat value sub-
bituminous coals in Indonesia

• Government promotion of the use of this type of coal in new

power plants would bring it to the planned developers
consideration

• reduction of the royalty in Coal Cooperation Agreements and Coal

Contracts of Work from the current 13.5% would allow more of
this type of coal to become economically viable

• new power plants require long term coal supply contracts if the
plant is built to use particular types of coal. Many of the current
Coal Cooperation Agreement’s come up for renewal from 2020.
Early renewal of these Agreements would promote long term
planning and development of this national energy resource

20
 WARA COAL CONCLUSIONS

• the Wara deposit is a large resource of lower heat value sub-

bituminous coal in South Kalimantan

• part of the deposit has been drilled and the coal quality and the
resource base defined

• the coal resource outlined to date is over 1 billion tonnes

• the coal is close to the surface and amendable to low cost open
pit mining. It is also close to a large scale mining operation with
which it can share infrastructure

• a new mining operation at Wara would only require construction

of a crushing, stockpiling and barge loading system at Kelanis on
the Barito river, a project that could be completed in less than a
year

21
 WARA COAL CONCLUSIONS

• coal combustion testing has established that the Wara coal will
perform similar to other sub-bituminous coals of its type in
commercial power plants

• the Wara deposit has not been developed to date because

production growth from existing deposits has been sufficient to
meet domestic and export demand

• the Wara coal is environmentally friendly and is a deposit whose

characteristics make it suitable for use in the growing domestic
power plant market.

22
Terimakasih, Maturnuwun.

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