February 2016

CARSURIN
Quality with Integrity
February 2016 | 1
IN THE FIELD BY CARSURIN
Sumatra
• All districts and cities in Indonesia signed a
cooperation agreement with the Ministry of Public
Work and Public Housing (Kemen Pu-Pera) through
the Directorate General of Human Settlements in
Jakarta (25/1). Tebingtinggi city is the only city in
North Sumatra participated in the cooperation
agreement, which covering the fields of waste and
wastewater, the support in equipment received
by Tebingtinggi Mayor. This cooperation declared
objectives and targets 100-0-100 or Universal
Access in 2015-2019. (Energi Today)
• PT Semen Indonesia Tbk menjajaki pinjaman
sebesar Rp 1 triliun dari lembaga pembiayaan
ekspor (export credit agency/ECA) tahun ini.
Pinjaman tersebut akan menjadi salah satu sumber
belanja modal (capex) 2016 yang sekitar Rp 7
triliun. Tahun ini, perusahaan menargetkan pabrik
Indarung IV dan pabrik Rembang Jawa Tengah
dapat beroperasi secara komersial, juga ekspansi
pabrik di Aceh dan Nusa Tenggara Timur (NTT),
dengan kapasitas masing-masing diproyeksikan
sebesar 3 juta ton. (Energi Today)
• PT Semen Indonesia Tbk considered loans of Rp
1 trillion from export financing institutions (export
Kalimantan
• Three workers buried in the ground when operating
the coal mine equipment (1/28) in the morning at
the exploration site of PT Lembuswana Perkasa,
in Samboja, East Kalimantan. Until the process of
search and rescue (SAR) was stopped before dusk,
three victims have not been found and evacuated.
(Tribun News)
• Based on Ministry of Energy and Mineral
Resources (ESDM) Coal Price Reference (HBA) in
the beginning of 2016, the price is still continuing
to downslide. The government set HBA in January
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credit agency/ECA) this year. The loan will be
one source of capital expenditure (capex) in 2016
which was estimated to Rp 7 trillion. This year,
the company expects Indarung IV and Rembang
factories in Central Java can operate commercially.
It is also the expansion of the plant in Aceh and East
Nusa Tenggara (NTT), with each has capacity of 3
million tons. (Energi Today)
• Throughout 2016, PT Bukit Asam Tbk targets its
coal production to reach up to 25.75 million tons,
an increase of 34 percent from the realization
in 2015 that only 19.24 million tons. Meanwhile,
PTBA Muaraenim Regency Tanjung Enim in South
Sumatra mining target would be to contribute 24.7
million tons of total production this year. (Energi
Today)
• Mount Sinabung in Karo, North Sumatra, continues
to erupt in the recent past weeks. According to
the officer, lava occurred with sliding distance of
500 meters led to southeast and east, with high
eruption column reached 1,500 meters as the
dome in the volcano’s crater grows and collapses.
(Energi Today)
2016 amounted to US$ 53.2 per ton, down 0.58%
compared to the HBA per December 2015. This
condition has been resuming as in not only the
export demand is shrinking, domestic demand
does not pick up. (Tribun News)
• Coal miner PT Adaro Indonesia South Kalimantan
through its subsidiary, Adara Persada Mandiri (APM),
construct a 150-hectare Regional Integrated and
Support Area (RISA). RISA facilitates the company
that became a PT Adaro Indonesia contractor,
February 2016 | 2
IN THE FIELD BY CARSURIN
thereby it helps increasing the effectiveness and
facilitating the company operational activities.
(Energy Today)
• PT Petrosea Tbk (PTRO) acquired a new contract
in the coal mine project, namely the removal of
overburden and coal haul at PT Anzawara Satria.
The contract period is valid for 36 months with
a total contract value reached up to Rp 622.09
billion. (Energi Today)
• PT Berau Coal Energy Tbk will expand production
to 14,624 hectares in Berau, East Kalimantan. The
new location has production capacity of 6.557
million metric tons per year and the total planned
production is 55 million metric tons for 15 years.
Technically and economically, the coal is low
calorie, ranging from 3,900-4,300 Kcal per kilogram,
which corresponds to domestic market, utilize only
for electricity generation. (Energi Today)
www.carsurin.com
• East Kalimantan provincial government confirmed
to impose a moratorium (suspension) for the
issuance of mining, agriculture and forestry
business licenses. This policy is enforced as
many mining business activities have been not
environmentally friendly to the environment and
local community.
• PT Chakra Minerals Tbk confidences to hoist the
sales of their core products, zircon sand. With a
production target of around 350 tons - 400 tons
per month, the company could reap revenues of
US$ 4.5 million. Chakra believes to expand the
zircon sand export market in other Asian countries.
Currently, approximately 70 percent of Chakra
zircon export is targeting China, Italy, Germany and
Ukraine.
February 2016 |3

Coal Price Guide (HBA)

January 2016

HBA (US$ / Ton)

Kualitas:
CV = 6322 kcal/kg GAR; TM = 8%
53,2 FOB Vessel
TS = 0,8 % ar; Ash = 15% ar

www.carsurin.com
February 2016 |4
coal news
Big coal miners plan
higher production
this year
The Jakarta Post, Jakarta - The country’s major coal miners
plan to further boost production in 2016 although analysts
estimate that an oversupply in the world’s coal market will
continue.
The production levels proposed by large coal miners are
quite different from those filed by small and medium coal
miners, who mostly plan to reduce production on account
of low demand in the world’s coal market.
According to data from the Energy and Mineral Resources
Ministry’s mineral and coal directorate general, by mid-
December, as many as 71 companies, consisting of 64 coal
contract of work holders and 7 permit holders, proposed
a total of 303.33 million tons of production in 2016. The
2016 production plan will be far lower compared to the
proposed 419 million tons in 2015.
The ministry’s director for coal, Adhi Wibowo, said that a
large number of small coal producers had yet to file their
production plans for this year. However, their contribution
to the country’s total production is quite small.
Figures from the mineral and coal directorate general
showed that most big firms actually planned to increase
their output. Among 11 firms producing more than 5 million
tons, only two firms proposed lower output in 2016,
namely PT Adaro Indonesia with a slight 0.8 percent cut
and PT Kideco Jaya Agung with almost 18 percent.
President director of Adaro Energy, the owner of Adaro
Indonesia, Garibaldi Thohir said earlier that his company
would set output at a range of 52 to 54 million tons in 2016,
around 7 percent lower compared to targeted output in
2015 of 54 to 56 million tons.
“We sell most of our coal under long-term contracts and
only a little we offer on the spot market. We will reduce
the amount [of coal offered] on the spot market,” he said.
Meanwhile, Kideco is unlikely to raise its production
because its sales remain sluggish. Figures from Jakarta-
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- 4 January 2016 -
listed Indika Energy, which is Kideco’s parent firm, showed
that the subsidiary company had suffered from a 15.6
percent drop in selling price from January to September
2015. The company also became less aggressive as
its realization of capital expenditure, particularly for
maintenance and heavy equipment spending, stood at
only US$4.3 million during the first nine months of 2015,
only around 25 percent of the budgeted $17.8 million.
On the other hand, state-owned PT Bukit Asam will boost
its output this year, partly because a new train transport
facility and long-term contract have been sealed. Adhi
said that small miners with less than 3 million tons in
production tended to cut output because they were the
most affected by plunging prices. Meanwhile, big firms
continue to increase their production.
“There are fixed costs companies have to pay. To pay the
costs, increasing the production volume is the only way.
However, we will evaluate further if higher production
is meaningless and firms continue seeing losses, we will
reject the proposals,” Adhi said.
He revealed that the company that proposed the highest
drop in output for 2016 was PT Kaltim Jaya Mineral, which
slashed its plan to only 150,000 tons in 2016 compared to
1.2 million tons in 2015.
Global coal companies have been suffering from declining
prices, particularly on slowing growth of demand while
stockpiles continue to rise as producers pump up output.
The benchmark thermal coal price at Newcastle Port in
Australia fell to US$50.63 per ton in the last two weeks
of December, according to figures from Bloomberg. The
price was the lowest level since December 2006.
Indonesia’s coal reference price (HBA) for December was
set at $53.51 per ton, around 16 percent lower compared
to a reference price of $63.84 per ton set in January. The
December price is around 57 percent lower compared
to the all-time high HBA price of $127.05 per ton set in
February 2011.
February 2016 | 5

coal news

Coal mining Indonesia:

Focus on other
markets than china - 5 January 2016 -

www.carsurin.com
February 2016 |6

Indonesia Investments, Jakarta - Indonesia’s Ministry of
Energy and Mineral Resources expects coal shipments
to India to rise in 2016, while coal exports to China are
expected to decline further as the world’s second-largest
economy is experiencing a persistent slowdown (and
China curbed imports of coal with a lower calorie grade).
Adhi Wibowo, Director for Coal at the Energy Ministry, said
- contrary to China - coal demand from India has not fallen.
Moreover, India is highly dependent on Indonesia for its
thermal coal.
The sluggish global economy, particularly China’s
slowdown, has been plaguing global coal prices hence
making the coal mining industry an unattractive one. The
benchmark thermal coal reference price of Indonesia
(Harga Batubara Acuan, or HBA), set by the Energy Ministry
each month, declined another 1.69 percent (m/m) to USD
$53.51 per metric ton (FOB) in December 2015, touching
a new all-time record low level (this reference price was
started in 2009).
In the January-November 2015 period, coal imports into
China fell over 30 percent year-on-year from the same
period last year, partly due to the slowdown as well as
to the government’s policy to curb imports of low grade
coal.
Hendra Sinadia, Executive Director at the Indonesian
Coal Mining Association (APBI), said Indonesia - given the
current situation - cannot rely on China for its coal exports.
Indonesia’s coal industry should therefore focus on the
domestic market, particularly now as new coal-fired
power plants are set to start operations in 2016.
Data from Indonesia’s Energy Ministry show that in 2014
China was Indonesia’s largest export market for coal
shipments. During 2014 Indonesia shipped a total of 41.54
million tons of coal to China. India was the second-largest
export market for Indonesian coal in 2014 (37.48 million
tons). Wibowo added that - besides India - the Philippines,
Pakistan and Malaysia are still interesting export markets for
Indonesian coal and form an opportunity for Indonesian
coal miners.
In the January-November 2015 period Indonesia exported
253 million tons of coal, down 27.71 percent (y/y) from its
export performance in the same period one year earlier.
Meanwhile, Indonesia produced 335 million tons of coal
in the first eleven months of 2015, down 20 percent (y/y).

Indonesian Production, Export, Consumption & Price of Coal:

2007 2008 2009 2010 2011 2012 2013 2014 20151

Production 217 240 254 275 353 412 474 458 425
(In million tons)
Export 163 191 198 210 287 345 402 382
(In million tons)
Domestic 61 49 56 65 66 67 72 76
(In million tons)
Price (HBA) n.a n.a 70.7 91.7 118.4 95.5 82.9 72.6 60.1
(In USD/ton

¹ indicates forecast
Source: Indonesian Coal Mining Association (APBI) in USD/ton

www.carsurin.com
February 2016 | 7
coal news
Indonesia’s 2015 coal
production, exports
decline
Argus Media, Singapore - Indonesian coal production
likely declined by around 14pc last year from 2014 to
around 392mn t as mining firms reduced their output
because of weak prices and sluggish demand, Indonesian
Coal Mining Association chairman Pandu Sjahir said.
Last year’s production was significantly below the initial
target of 460mn t set at the start of 2015 by Indonesia’s
minerals authority, and also fell well short of a revised
target of 425mn t.
The country’s exports last year likely fell by around 23pc
compared with 2014 to 295mn t because of lower demand
from several key markets, notably China and India. And
exports could fall by at least another 15pc to below 250mn
t in 2016, Sjahir said.
One of the key reasons for the decline in exports last
year was China’s increased import tariffs and stricter coal
quality regulations. Chinese coal imports fell to 204mn t
last year, a 30pc slump from 2014.
Deliveries to India – historically another key destination
for Indonesian coal – also fell because of rising domestic
production and weaker-than-expected utilisation by
coal-fired power plants. India’s receipts of imported coal
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- 19 January 2016 -
during April-December fell by 15pc compared with a year
earlier to 132.3mn t, coal secretary Anil Swarup said earlier
this month. In addition, slower-than-expected demand
growth from Indonesian power generation firms has
compounded weaker demand from China and India.
Jakarta is adding new generation capacity, which could
soak up some of the coal oversupply that has helped push
coal prices to their lowest levels in years. But capacity
additions are not happening as quickly as hoped because
of delays to power plant projects, some of which have
been hit by land acquisition disputes, licensing delays
and funding problems. Fob prices of GAR 4,200kcal/kg
Indonesian coal declined by around 26pc last year and
are currently at $26.41/t.
But Indonesian coal demand could increase by around
22pc from last year to as much as 110mn t in 2016 as new
capacity is brought on line, Sjahir said.
The Indonesian government said last week it is aiming
to invest $16.38bn in 2016 to support plans to boost the
national electrification ratio to just over 90pc by the end of
the year, up from 88pc in 2015, by bringing new generation
capacity on line and improving the transmission network.
February 2016 | 8
coal news
State miners to be
integrated into parent
company
The Jakarta Post, Jakarta -The State-Owned Enterprises
Ministry has established a special committee to act as
a virtual holding company for four state-run mining
companies with combined assets of around US$4.8 billion
before a parent company is set up later this year.
The ministry’s assistant for mining, strategic industry
and media, Fajar Harry Sampurno, said on Friday that a
consolidation committee was established last year, and
included directors of the four companies to be integrated
under the planned holding company.
The four companies are diversified miner PT Aneka
Tambang (Antam), coal miner PT Tambang Batubara Bukit
Asam, tin miner PT Timah and aluminum producer PT
Indonesia Asahan Aluminium (Inalum). All but Inalum are
listed on the Indonesia Stock Exchange (IDX).
“The holding company does not yet exist, but the
committee will act as a virtual holding company for the
firms and will determine their course. We will begin hearing
feedback from the committee within three months,
probably,” Fajar told reporters at a press conference.
“Our minister wants the holding company to be established
this year, so we’ve started by establishing the committee.
It’s an uphill struggle, and as an initial target we want to
see the holding company begin operations within two
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- 23 January 2016 -
years,” he added.
Discussions were ongoing, he said, as to whether the firm
would be a completely new entity or whether one of the
firms would be appointed as the holding company. Fajar
added that while it would be no problem to unite the
miners under one parent company, the challenge would
be how to integrate the firms financially.
Antam, Bukit Asam, Timah and Inalum, according to their
respective financial statement and directors’ statement,
had combined assets of around $4.8 billion as of
September. Antam has the most assets with $1.79 billion,
while Timah has the least with around $670 million.
The ministry was working to set up a number of holding
companies for state-owned firms operating in similar
sectors, in an attempt to integrate, strengthen and simplify
their operation and funding, State-Owned Enterprises
Minister Rini Soemarno said.
Previously, the ministry’s assistant for restructuring and
planning, Aloysius K. Ro, said the ministry was planning
to establish seven holding companies to start operation
by the end of 2019 at the latest. The holding companies,
he said, would oversee logistics and trade, plantations,
pharmaceuticals, shipping, construction and infrastructure,
strategic defense and mining.
After the holding companies were established, Aloysius
said, the number of state-owned firms would be reduced
from 118 to 85.
The government took a previous step in 2013 when it
appointed publicly listed PT Semen Gresik as a holding
company for PT Semen Padang and PT Semen Tonasa.
Semen Gresik subsequently changed its name to Semen
Indonesia. The company is currently the biggest cement
producer in the country and controls more than 40
percent of the country’s cement market.
The State-Owned Enterprises Ministry expects similar
committees for construction and heavy industry to be set
up next week, and for the defense sector the following
month.
February 2016 | 9
coal news
Production & Export
Down, Coal Consumption
in Indonesia Up
Indonesia Investments, Jakarta - Domestic consumption of
coal in Indonesia rose 14.8 percent (y/y) to 87.43 million
tons in 2015 according to the Ministry of Energy and
Mineral Resources. This figure is considerably higher than
the government’s target of 70 million tons. Adhi Wibowo,
Director for Coal at the Energy Ministry, said this increase is
caused by higher electricity demand in domestic industries
in the second half of 2015. Meanwhile, Indonesia’s coal
production reached 392 million tons in full-year 2015,
below the government target at 425 million tons.
Coal production in Indonesia fell 14.4 percent (y/y) to 392
million tons in 2015 from 458 million tons in the preceding
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- 18 January 2016 -
year. Production declined due to weak global demand
and the subsequent persistent weakness of global coal
prices amid sluggish global economic growth (particularly
China’s economic slowdown). Last year, the Indonesian
Coal Mining Association (APBI) said the free cash flow
of many Indonesian coal miners has turned negative.
A negative free cash flow is only a positive matter if it is
caused by large investments that will bring returns on the
long-term. However, in the case of the Indonesian coal
miners, the negative free cash flow is caused by weak coal
prices.
Indonesia’s benchmark thermal coal reference price (in
Indonesian: Harga Batubara Acuan, or HBA), a monthly
rate set by the Energy Ministry, fell 0.58 percent (m/m) to
a new record low of USD $53.20 per metric ton (FOB) in
January 2016 from USD $53.51 in December 2015. However,
the month-on-month decline is smaller than declines
recorded in the preceding months. But whether this is a
sign that the fall is stagnating and coal prices will soon
rebound is uncertain.
Demand from Indonesia’s main export markets is not
expected to improve significantly in the short-term.
Domestic coal demand, on the other hand, may grow in
the year ahead due to accelerating economic growth,
growing industrial output, and new coal-fired power
plants that are coming online. The economy of Indonesia
is expected to expand 5.3 percent (y/y) in 2016, up from an
estimated 4.7 percent in 2015.
Meanwhile, exports of Indonesian coal in 2015 fell 22.9
percent (y/y) to 294.5 million tons from 382 million tons in
the preceding year.
February 2016 | 10

Indonesian Government’s Benchmark Thermal Coal Price (HBA):

Month 2012 2013 2014 2015 2016
January 109.29 87.55 81.90 63.84 53.20
February 111.58 88.35 80.44 62.92
March 112.87 90.09 77.01 67.76
April 105.61 88.56 74.81 64.48
May 102.12 85.33 73.60 61.08
June 96.65 84.87 73.64 59.59
July 87.56 81.69 72.45 59.16
August 84.65 76.70 70.29 59.14
September 86.21 76.89 69.69 58.21
October 86.04 76.61 67.26 57.39
November 81.44 78.13 65.70 54.43
December 81.75 80.31 69.23 53.51

in USD / tons
Source: Ministry of Energy and Mineral Resources

Indonesian Production, Export, Consumption & Price of Coal:

2007 2008 2009 2010 2011 2012 2013 2014 2015¹

Production 217 240 254 275 353 412 474 458 392
(in million tons)

Export 163 191 198 210 287 345 402 382 295
(in million tons)

Domestic 61 49 56 65 66 67 72 76 87
(in million tons)

Price (HBA) n.a n.a 70.7 91.7 118.4 95.5 82.9 72.6 60.1
(in USD/ton)

¹ indicates forecast
Source: Indonesian Coal Mining Association (APBI)

www.carsurin.com
February 2016 | 11
coal news
Indonesia’s HBA thermal
coal price at new record
low in January
Platts, Singapore - Indonesia’s Ministry of Energy and
Mineral Resources set its January thermal coal reference
price, also known as Harga Batubara Acuan, at a record
low for the ninth consecutive month at $53.20/mt FOB, the
lowest ever recorded since its inception in January 2009.
January’s HBA price represents a drop of 0.6% from the
December price, which was set at $53.51/mt, representing
an all-time low at that time. On a year-on-year basis, the
HBA fell 16.7%.
The HBA is a monthly average price based 25% on the Platts
Kalimantan 5,900 kcal/kg gross as received assessment;
25% on the Argus-Indonesia Coal Index 1 (6,500 kcal/kg
GAR); 25% on the Newcastle Export Index — formerly
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- 28 January 2016 -
the Barlow-Jonker index (6,322 kcal/kg GAR) of Energy
Publishing — and 25% on the globalCOAL Newcastle
(6,000 kcal/kg NAR) index.
In December, the daily FOB Platts Kalimantan 5,900 kcal/kg
GAR coal assessment averaged $47.66/mt, while the daily
90-day Platts Newcastle FOB price for coal with a calorific
value of 6,300 kcal/kg GAR averaged $52.10/mt.
The HBA for thermal coal is the basis for determining the
prices of 75 Indonesian coal products and for calculating
the royalties Indonesian producers have to pay for each
metric ton of coal they sell locally or overseas. It is based
on 6,322 kcal/kg GAR coal, with 8% total moisture content,
15% ash as received and 0.8% sulfur as received.
February 2016 | 12
coal news
Rio Tinto sells Mt
Pleasant coal mine site to
Indonesia’s MACH Energy
ABC, Australia - Mining giant Rio Tinto has continued to
scale down its Australian coal interests with the sale of its
Mount Pleasant mine to Indonesian interests.
Rio Tinto said it had reached a binding agreement to sell
the Hunter Valley thermal coal asset to MACH Energy
Australia for $US224 million ($320 million) plus a share of
future royalties.
However, the royalty payments only kick-in once the
coal price exceeds $US72.50 per tonne, well above the
current level of around $US43 per ton. MACH is owned by
Indonesia’s largest conglomerate, the Salim Group, which
has interests in food processing, palm oil, logging and
recreation, as well as resources.
Rio has now offloaded $US830 million ($1.2 billion) worth
of coal assets in recent months following the sale of its
interest in the neighbouring Bengalla coal joint-venture
late last year. Mount Pleasant was one of Rio’s largest
undeveloped coal assets with total marketable reserves
of 474 million tonnes.
The sale follows continued weakness in coal prices
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- 28 January 2016 -
despite numerous mine closures and millions of tonnes
of production being removed from the market. A recent
survey by global energy analysts Wood Mackenzie found
that around a third of Australian coal mines would be
losing money at current prices.
Rio Tinto Copper & Coal chief executive Jean-Sebastien
Jacques said the recent asset sales delivered significant
value for shareholders.
“We believe Mount Pleasant can have a very positive
future under its new owners with different priorities for
development and capital allocation,” Mr Jacques said.
Rio Tinto’s senior management has repeatedly said it is
open to more asset sales and would consider any deal that
that offered more than the company’s internal valuation.
The company has announced a total of $US4.7 billion ($6.7
billion) of asset sales since early 2013.
Rio Tinto will continue to focus its coal production in the
Hunter Valley at its Mount Thorley open-cut mine which
employs around 1,300 workers.
February 2016 | 13
coal news
Miners still digging
for victory
Financial Times, London,UK - Demand growth changed
dramatically across metals and bulk commodities last
year. It slowed in aluminium and nickel, was flat in copper
and contracted in iron ore and steel. Thermal coal was a
notable exception, where growth continued unabated.
As such, 2015 will be remembered as the year when long-
term growth prospects were challenged with “China peak
consumption” predictions brought forward for many raw
materials.
Yet supply remained remarkably resilient. Massive cost
cutting delayed curtailments, particularly at coal and iron
ore operations. There were also significant volumes of
“close to completion” mine projects that could not be
halted in copper and nickel.
Even markets which show a better demand/supply
dynamic such as zinc, with solid demand growth and
significant capacity cuts, have been unable to avoid the
implications of one simple truth — nobody is willing to
make a call on the prospects for the Chinese economy, still
the largest commodity consumer. And without a view on
future demand it is impossible to know if enough is being
done to address oversupply.
When forecasting 2016 prospects, investors and analysts
face three uncertainties: predicting Chinese economic
growth; predicting the impact of a consumer-led Chinese
economy on commodity demand; and identifying other
markets or new applications to replace some of the China
growth gap.
Across the industry, cost cutting has been extensive and
successful. Bulk commodities, in particular, have been
aided by the collapse of oil prices, declining freight rates
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- 28 January 2016 -
and depreciation of commodity currencies. Workforces
across the industry are also being trimmed, as substantial
changes to labour practices are implemented.
Capital expenditure has been slashed, with so-called
“supercycle” projects rescheduled, delayed or cancelled.
Both cost cutting and capital expenditure reductions
conserve cash.
A number of operating assets have also been sold or
are slated for sale. Unlike in 2011, when the majors last
attempted significant asset sales, there appear to be
plenty of potential buyers. Earlier this week Indonesia’s
Salim Group paid $224m for a stake in one of the largest
coal projects in New South Wales, Australia, from Rio Tinto.
The main supply issue, therefore, is that there remain
too few closure or mothballing announcements. Unless
capacity is removed from demand/supply equations,
nothing the miners are doing brings forward the prospect
of balanced markets. And with energy and other input
costs still falling, low borrowing costs, refinancing
available, favorable exchange rates and interested buyers,
we should not expect any significant closures soon.
Unlike previous cycles, both demand confidence and
oversupply concerns are driving prices lower. Either
confidence in Chinese economic competence returns
or the world waits for evidence of an orderly Chinese
economic transition and proof of sustainable commodity
demand growth.
In the meantime miners continue to dig for victory,
reducing costs that lower industry cost curves and, in turn,
lower price expectations. A vicious circle until enough
competitors begin to fail.
February 2016 | 14
coal news
Adaro energy scales back
spending as global coal
turmoil continues
ABC, Australia - Publicly-listed coal miner Adaro Energy
is scaling back its capital spending for 2016, bracing for
another tough year for coal amid tumbling prices and
weak demand globally.
In a statement received by the Jakarta Globe on Friday,
the company reported that it would maintain spending
between $75 million and $100 million this year, which is
a 20 percent decline from a range of $75 million to $125
million that was allocated for 2015.
“We expect the coal market to remain challenging in the
near term, and are guiding the market for flat production
in 2016 of 52 million tonnes to 54 million tonnes,” Adaro
said in a statement on Friday. Such a range is, at most, a 5
percent increase from the 51.46 million tonnes that Adaro
produced last year.
The company noted that “2015 was a difficult year for coal”
as prices collapsed globally, largely due to an oversupply
in the market coupled with slower growth from countries
with traditionally high demand for coal, such as China,
leading to an 8 percent decline in production to 51.46
million tonnes last year as well as a 7 percent drop in sales
to 53.11 million tonnes.
About 22 percent of Adaro’s sales volume was contributed
by Indonesia, while China and India followed with 16
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- 28 January 2016 -
percent and 13 percent, respectively. The challenging
backdrop for coal may also erode the company’s stocks
valuations on the local exchange, especially with lingering
market volatility globally, according to Adaro.
The company’s shares, traded under ADRO, lost 50 percent
of their value to Rp 515 each last year from Rp 1,040 each
in 2014, amid a 12 percent drop in the Jakarta Composite
Index (JCI).
Still, the miner noted that its efforts to channel its coal to
the power industry have been making “good progress” as
of December last year, as it’s working to close the financing
for subsidiaries, Bhimasena Power Indonesia and Tanjung
Power Indonesia for a 2 times 100 megawatt power plant
in Tanjung, South Kalimantan.
“The prolonged cyclical downturn of coal further supports
our strategy of developing our non-coal mining businesses
and moving downstream into power,” Adaro said.
“As we move downstream into power generation, our
objective is to become a major player in the Indonesian
power sector. We are committed to support the strategic
intention of the government of the Republic of Indonesia
to build 35,000 megawatts (MW) of power plants in the
next five years, the majority of which will be coal-fired
power plants,” the company said.
February 2016 | 15
Minerals news
Cement industry
expected to pick up this
year
The Jakarta Post, Jakarta - The country’s cement
consumption is expected to recover from last year’s
sluggishness, driven by the government’s increased
infrastructure spending.
State-owned cement producer PT Semen Indonesia, the
nation’s largest cement producer, expects total cement
consumption to grow more than 5 percent this year, after
a stagnant 1 percent growth last year from 59.9 million tons
in 2014.
“Consumption has picked up since August, after the
slowing down earlier in the year, because infrastructure
development commenced, with toll roads and dam
projects,” Semen Indonesia corporate secretary Agung
Wiharto said.
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- 6 January 2016 -
The infrastructure projects began last year that he referred
to included the construction of 40 kilometers of toll roads
across Indonesia as well as 13 dams including Raknamo
Dam in East Nusa Tenggara. Agung added that the
commencement of infrastructure projects last year would
continue to boost cement consumption this year as many
projects would take years to finish.
“There are also other factors that support our expectations,
such as the [improving] economic growth and a
consumption per capita that remains low,” he said.
National cement consumption grew by 4.7 percent
year-on-year (yoy) in November last year to 6.1 million
tons, bringing total cement consumption from January
to November to 54.9 million tons, a 0.8 percent increase
from the corresponding period last year, according to
Indonesian Cement Association (ASI) data.
Cement consumption is one of the key indicators of
domestic consumption, which drives more than half of
Southeast Asia’s largest economy.
The data spurred optimism in the industry that suffered flat
growth or even contraction throughout last year, having
headed into its first plunge since 2009, as Indonesia’s
economy grows at its slowest pace in nearly six years.
Agung also applauded the Public Works and Public
Housing Ministry’s move to conduct early bidding on
project tenders to speed up spending and infrastructure
development. “These projects will also boost cement
consumption,” he said.
The ministry started bidding as early as August, to speed
up spending that only started around June last year so
that by Jan. 6 percent to 10 percent of its budget would
be disbursed. However, a research note by Mimi Halimin
from PT Daewoo Securities Indonesia stated that the
November’s cement consumption data confirmed that the
cement sector was yet to recover from last year.
“We predict December’s cement consumption will be
lower than November’s cement consumption due to the
holiday season as well as the rainy season,” it said.
February 2016 | 16
Minerals news
Antam prepares around
Rp 2t for capex
The Jakarta Post, Jakarta - State-run diversified miner Aneka
Tambang (Antam) is allotting around Rp 2 trillion (US$144.2
million) for capital expenditure (capex) this year to finance
its three priority projects, a senior official says, with a sum
of the fund to come from the firm’s recent equity issuance.
The publicly listed company’s finance director, Dimas
Wikan Pramudhito, said that this year’s capex would
mostly be used for the miner’s three main projects: the
smelter grade alumina (SGA) plant project in Mempawah,
West Kalimantan; anode slime project and the ferronickel
smelter project in East Halmahera, North Maluku.
“Part of the money will come from our rights issue,
exclusively to finance the ferronickel smelter. We are
currently looking for a third partner for the SGA project
and it will determine the financing scheme for the project,”
he told reporters.
“Depending on our needs, we will probably be looking
for loans.” The company expenditure last year stood at
around $200 million.
Antam generated Rp 5.37 trillion late last year from
issuing 14.12 billion of new shares, part of the state-capital
injection allotted by the State-Owned Enterprises Ministry
for strategic infrastructure investments of state-run
firms. Proceeds from the equity offering will be used for
Halmahera’s ferronickel smelter, which is expected to cost
the company about $1.6 billion.
The smelter is designed to produce 27,000-30,000 tons of
nickel in ferronickel (TNi), divided into two stages. The first
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- 6 January 2016 -
stage of the smelter, as previously reported, is slated to
finish construction in 2018, while the second stage was put
on hold until the company secured sufficient financing.
Dimas said that for this year, only around Rp 400 billion
from the rights issue proceeds would be used as capex,
while the remainder of the funds would be gradually
spent in the next year and the subsequent year.
Besides the Halmahera smelter, Dimas said that Antam
would also prepare around $40 million in capital to finance
construction of a facility in Gresik, East Java, that would
turn anode slime into gold, which was expected to boost
the firm’s gold production.
The third project to absorb this year’s capex was the
SGA plant, which was expected to require $1.7 billion in
investment and have an annual production capacity of 1.2
million metric tons of alumina. Antam is working with state-
owned aluminum maker Indonesia Asahan Aluminium
(Inalum) on the project, and has finalized the required
feasibility studies.
Dimas said that Antam and Inalum were waiting for a third
partner for the project to help cover the massive costs. A
number of foreign firms have proposed to join the project,
and Dimas said that the partner would be determined this
year.
Antam reported a 55.59 percent increase year-on-year
(yoy) in revenue to Rp 9.04 trillion during the first nine
months of the year, but its net losses nearly doubled from
Rp 590.37 billion to Rp 1.04 trillion on the back of rising
costs and slumping gold prices. The company’s gold sales
— its financial backbone — rose by around 129 percent to
12.65 tons.
Meanwhile, another state-run miner, coal producer
Tambang Batubara Bukit Asam, announced in a recently-
published statement that its coal production went up by
17.1 percent yoy to 19.17 million tons last year. The company
reported that its sales increased by around 7 percent to
19.17 million tons, with 53 percent of the sales absorbed by
the domestic market.
February 2016 | 17
Minerals news
Krakatau Steel
backs Wuling car
production in Indonesia
The Jakarta Post, Jakarta - State-owned steelmaker PT
Krakatau Steel is set to supply its steel products to Chinese
car manufacturer SAIC-GM-Wuling (SGMW) once the
latter’s factory in Indonesia begins to operate.
Industry Minister Saleh Husin said Monday that Krakatau
Steel had established a joint venture with Japan’s Nippon
Steel & Sumitomo Metal Corporation (NSSMC) to produce
automotive steel. Saleh told reporters on Monday that
the joint venture would sell its automotive steel products
to local car manufacturers, including SGMW’s local
production unit, which will manufacture the Wuling-
branded car.
He did not elaborate on the amount of steel products that
Krakatau would be able to supply, but said the plan had
been confirmed.
Krakatau Steel corporate secretary Iip Arief Budiman
said, however, that he had not been informed about the
planned cooperation with Wuling yet, saying that the
plan may still be at the ministry level. “We haven’t got any
information regarding the matter, but we will certainly
welcome the partnership should we be assigned to it,” he
said.
In December 2012, Japanese steel giant NSSMC and
Krakatau Steel formed a joint venture named PT Krakatau
Nippon Steel Sumikin (KNSS). The joint venture is based
in Cilegon, Banten, and engaged in the manufacture
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- 12 January 2016 -
and selling of cold-rolled steel and hot-dip galvanized
steel products for automotive application in Indonesia,
according to information published on KNSS’s website.
KNSS is set to commence operations in the middle of
2017 with a production capacity of 480,000 metric tons a
year. Its production plan is now in the construction stage,
the website reveals. Krakatau Steel itself has a production
capacity of 3.15 million tons a year at present, with the
utilization rate expected to reach 60 to 70 percent this
year, according to Iip.
The state-owned enterprise planned to partner with South
Korean steel producer Posco to boost its steel output to
between 7.5 million tons and 10 million tons a year, he
went on.
“We’re still conducting further studies to assess whether
our Cilegon cluster will be feasible for the production
boost,” Iip said, adding that supporting infrastructures was
also taken into account.
Saleh said the Wuling factory, which would mainly
manufacture multipurpose vehicle (MPV) cars, was
expected to become a production hub for both the
domestic and the Southeast Asian market. SGMW, which
has the biggest market share in the Chinese car market, is in
the process of constructing its factory worth up to US$700
million in the Deltamas industrial estate of Cikarang, West
Java.
February 2016 | 18
Minerals news
Timah allocates Rp
1.2t for capex, eyes
non-tin business
The Jakarta Post, Jakarta - State-run tin producer PT Timah
will allocate up to Rp 1.2 trillion for capital expenditure
(capex) this year, partly to develop the company’s non-tin
business and boost its revenue contributions by the end
of 2016.
Timah corporate secretary Agung Nugroho said the capex
would come from a combination of internal funding
and bank loans to finance production and business
diversification. While most of the company’s capex would
be channeled to tin production, Agung said, the company
would also focus on diversifying its business this year to
lessen the impact of plunging commodity prices.
“We have learned from our experience in 2015 that we
cannot rely solely on one commodity. We have to expand
our business beyond tin to maintain our profitability,” he
said. “This year, we are looking to see non-core businesses
contribute around 20 percent of our revenue, or at least
not to contribute any losses to our bottom line,” he added.
The company, he went on, would allocate at least Rp 100
billion to each of its non-tin businesses, namely property,
hospitals and tin chemical and solder downstream
facilities, and would set aside a sum of the capex to fund
the company’s rare-earth project.
In addition, Timah has been altering its internal hospitals
for public use since the past year, and now operates four
hospitals near its concessions in Bangka Belitung and Riau
Islands provinces; Agung mentioned the possibility of one
more hospital beginning operation this year.
The company — cooperating with state-run builders
Wijaya Karya and Adhi Karya — is also developing its idle
assets in Bekasi, West Java, into landed housing, and in
Jakarta into an office building. The company, Agung said,
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- 12 January 2016 -
was also considering expanding its downstream business
and altering its internal dock to be used by local fishermen.
He added that Timah was set to begin construction on a
rare-earth facility in around the third quarter of this year.
The plant will be the first of its kind in the country. The rare-
earth facility would take around two years to construct, he
said, and the capacity would be around 5,000-6,000 tons
per annum. The company was still calculating how much
was investment needed for the plant, he added.
Last year, Timah concluded construction of a rare-earth
mini plant as a pilot project, with the capacity to produce
1.5 tons of the minerals per year and with investment
hitting Rp 35 billion. The rare-earth facility, he said, would
add considerable revenue to the company, as rare earth
fetches ten times the price of tin.
Rare earth comprises 17 minerals commonly used in
the manufacturing of parts for hybrid cars, weapons,
flat-screen TVs, cell phones, mercury-vapor lights and
camera lenses. China has about a third of the world’s rare-
earth reserves but supplies about 90 percent of what is
consumed. It has placed restrictions on exports, sparking
concern among manufacturers from Japan to the US.
With business diversification and the operation of the
rare-earth facility, Timah might be able to salvage its
financial performance, which has been struck by plunging
commodity prices, export restrictions and rising costs.
Timah saw its revenue rise by 17.89 percent on an annual
basis to Rp 5.14 trillion in the first nine months of last year,
but its bottom line fell by 97.7 percent to Rp 10.47 billion.
The company aims to produce and market 30,000 tons of
tin this year, similar to last year.
February 2016 | 19
Minerals news
State firms may
be named to buy
Freeport shares
The Jakarta Post, Jakarta - Due to funding constraints,
the government has decided to forego the chance to
increase its stake in PT Freeport Indonesia and will likely
allow state-owned enterprises (SOEs) to buy the shares to
be divested by the gold and copper mining giant.
Finance Minister Bambang Brodjonegoro said the central
government would not purchase the 10.64 percent stake in
Freeport Indonesia, which would be sold by the company
to comply with the mandatory divestment order.
He said the government would not be able to buy the
shares because no funds had been allocated in the state
budget for such a purpose. “If there are SOEs interested,
go ahead as long as they have the money and they don’t
gnaw at the state budget too much,” Bambang told The
Jakarta Post on Thursday.
Under current regulations, Freeport Indonesia is obliged
to relinquish the balance of a 30 percent stake to either
the government or national companies. The government
already holds 9.36 percent of Freeport because of a
previous divestment scheme. The divestment of the
remaining 20.64 will occur in two stages and 10.64 percent
should be sold this year.
Freeport formally offered to sell the shares to the
Indonesian government on Wednesday, informing it of
the total value of the company, just one day before the
official deadline for it to do so, said the Energy and Mineral
Resources Ministry’s director general for mineral and coal
Bambang Gatot Ariyono.
Freeport said the total value of all of the company’s shares
was US$16.2 billion, according to Bambang. Thus, the 10.64
percent stake is worth $1.7 billion.
“Following the offering proposal, it is now the government’s
duty to evaluate the offer. After the evaluation, we will
meet Freeport Indonesia to settle the valuation based on
the parties’ agreement,” Bambang said.
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- 15 January 2016 -
He added that an assessment of Freeport Indonesia’s
valuation would involve several ministries, including
the Finance Ministry and the State-Owned Enterprises
Ministry. An independent party can also be appointed.
The evaluation results are expected within 60 days of the
offering.
“We will give the evaluation results to the Finance Ministry,
as the government’s treasurer, to determine who will be
appointed to perform the purchase,” Bambang said.
Under current regulations, the central government is first
in line to purchase the shares, followed by the provincial
and regency or municipality administrations. Next are the
SOEs, followed by local administration-owned enterprises,
which have to express their interest within 60 days of the
offering. If none of them are interested, private Indonesian
companies would then be allowed to buy the shares.
The SOEs Ministry said a number of state-owned firms have
shown interest in holding a stake in Freeport Indonesia.
“We have sent letters of interest about SOEs’ intentions
to buy stakes in Freeport Indonesia. The purchase will be
conducted by a consortium of four SOEs, namely PTBA
[coal miner PT Bukit Asam], ANTAM [diversified miner PT
Aneka Tambang], Inalum [Indonesia Asahan Aluminium]
and Timah,” said Aloysius K. Ro, the SOEs Ministry’s deputy
for restructuring and business development. The SOEs
would use their own funds and also be supported by local
banks to finance the stake purchase, according to Aloysius.
“We haven’t calculated the funds in detail. However, if we
talk about $500 million to $1 billion, we have it,” he added.
Funding availability has been an issue in share divestments
of big mining firms in the country while the government
is increasingly reluctant to allow private Indonesian firms
to obtain the divested shares. To date, the process of a
copper miner, PT Newmont Nusa Tenggara, divesting
itself of a 7 percent stake of its shares, remains unfinished.
February 2016 | 20
Minerals news
Freeport to get
extension of
export permit
The Jakarta Post, Jakarta - The government will extend
the export permit of PT Freeport Indonesia despite the
copper and gold mining giant not having made significant
progress in the construction of its new smelter plant in
Gresik, East Java.
Energy and Mineral Resources Minister Sudirman Said
unveiled on Tuesday that Freeport’s six-month export
permit, due to expire at the end of this month, would
be extended on the condition that it agrees to pay a 5
percent export tax and sets aside a guarantee fund for the
construction of the smelter plant.
Freeport will need to meet these two requirements
because the construction of its smelter plant is behind
target.
Despite the government’s ban on the export of raw
mineral in 2014, a mining company is still allowed to export
partly processed mineral products as long as it commits
to the construction of smelting plants and agrees to pay
export tax.
The export tax rate is linked to the progress of the
construction of their smelting plant. An export tax of
7.5 percent is imposed on those companies whose
disbursement for a smelting plant is at 0 to 7.5 percent of
their total investment. A 5 percent export duty is applied
to a company whose spending is at between 7.5 and 30
percent.
A company is exempt from export tax when smelter
development spending has progressed past 30 percent.
In addition to 5 percent export tax, US miner Freeport
McMoRan Inc is required to pay a certain amount in
guarantee funds for its smelting plant, according to
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- 21 January 2016 -
Sudirman. Under the existing export permit, Freeport
Indonesia pays 5 percent export tax and guarantee funds
of US$20 million for the smelting plant.
The company is still working on site preparation, basic
engineering and land clearing, according to its director,
Clementino Lamury. “Late last year, we signed an
engineering and procurement contract. We are expecting
the groundbreaking to occur this July, followed by
construction,” Clementino said.
According to Clementino, the smelter plant construction
progress has reached 30 percent. The sluggish progress of
Freeport Indonesia’s smelter in Gresik East Java indicates
that the company is not serious about building the smelter,
said Dito Ganinduto, a member of House Representatives’
Commission VII overseeing energy.
“If the company is not serious, there is no need for us to
discuss the possibility of extending its contract,” Dito said
during a hearing at the commission on Wednesday.
Freeport Indonesia holds a contract of work that is due
for extension in 2021. The firm is reported to be seeking
an early extension of its operation beyond this period.
However, it is unlikely that it will be able to get an early
extension because, according to the existing regulation, a
request for extension can only be made two years before
the expiry date.
Freeport’s president director Maroef Sjamsoeddin
announced his resignation from the company on Monday,
leaving the company with several unresolved issues,
including its mandatory divestment plan and the soon to
expire export permit.
February 2016 | 21

Minerals news

Indonesia Group Said to

Seek Funds for Newmont
Mine Takeover - 27 January 2016 -

www.carsurin.com
February 2016 | 22
Newmont Nusa Tenggara owns Batu Hijau,
the second-biggest copper and gold mine
in Indonesia after Freeport-McMoRan Inc.’s
Grasberg asset, The open-pit Newmont mine,
whose name means “green rock” in Bahasa
Indonesia, was discovered in 1990 in the
southwest region of Sumbawa island.
Bloomberg - An Indonesian consortium, led by veteran
investment banker Agus Projosasmito, is seeking funding
for a potential bid for control of Newmont Mining Corp.’s
copper operations in the country, people with knowledge
of the matter said.
The bidding group has approached banks about financing
an offer for a majority stake in local operating company
PT Newmont Nusa Tenggara, which could fetch as much
as $3 billion, according to the people, who asked not to
be identified as the information is private. The consortium
also includes the family of Kiki Barki, who started thermal
coal producer PT Harum Energy, and Arifin Panigoro, the
founder of energy-focused Medco Group, the people
said.
Projosasmito’s group could finance its bid with a
combination of equity, debt and mezzanine financing,
according to the people. The consortium plans to make an
offer for the controlling stake in Newmont Nusa Tenggara
in the first half of the year, the people said.
Newmont Nusa Tenggara owns Batu Hijau, the second-
biggest copper and gold mine in Indonesia after Freeport-
McMoRan Inc.’s Grasberg asset, which has the world’s
biggest gold reserves. The open-pit Newmont mine,
whose name means “green rock” in Bahasa Indonesia, was
discovered in 1990 in the southwest region of Sumbawa
island.
Market Experience
Rizal Ramli, a coordinating minister overseeing mining in
Indonesia, said in November that Panigoro plans to buy 76
percent of Newmont Nusa Tenggara for an estimated $2.2
billion, without providing further details. Newmont Mining
said the same day that no discussions to buy its assets met
its criteria.
www.carsurin.com
Newmont Mining owned 31.5 percent of Newmont Nusa
Tenggara at the end of September last year, according
to its latest quarterly report. Japanese trading house
Sumitomo Corp. and Indonesian investors also hold
stakes, the report shows.
Projosasmito has more than 30 years’ experience in the
Indonesian capital markets, including stints as president
director of local brokerage PT Danareksa Sekuritas and
president commissioner of Jakarta-based PT Nusantara
Capital Securities, according to a biography on Nusantara’s
website. He is now the founder and chief executive officer
of coal miner PT Ithaca Resources.
Mine Life
A receptionist at Ithaca’s Jakarta headquarters said
Projosasmito wasn’t in the office, and a person who
answered the phone at Barki’s office said he wasn’t
available. Panigoro didn’t respond to phone calls seeking
comment.
While Newmont is open to “serious expressions” of interest
in Newmont Nusa Tenggara, “there have not been any
that include fully committed funding,” Newmont Mining
spokesman Omar Jabara said in an e-mailed statement. “In
the meantime, we remain focused on operating Batu Hijau
safely and efficiently.”
A representative for Sumitomo declined to comment.
Newmont recorded $473 million of sales from its
Indonesian mining operations in the quarter ended Sept.
30, accounting for 23.3 percent of total revenue, data
compiled by Bloomberg show. The Batu Hijau mine is
expected to continue production until 2023 at current
rates, according to the website of the Newmont affiliate.
February 2016 | 23

Minerals news

Weak rupiah threatens

Indonesia’s energy
investments - 29 January 2016 -

The Wall Street Journal - Joko Widodo, Indonesia’s president, has staked his legacy on a flagship project to overhaul the vast
Southeast Asian nation’s outmoded infrastructure.

The ambitious plan, embracing highways, dams, ports and power stations, is expected to cost about $450bn over his
five-year term to 2019. Mr Widodo, also known as Jokowi, hopes it will transform Indonesia’s economy. But such huge
investments cannot be funded by the public purse alone. The government admits that it will have to turn to the private
sector for more than 70 per cent of the build out cash.

One of the government’s main priorities is to ramp up electricity output. Indonesia’s network of coal and gas power plants
produces about 51GW, less than enough to meet the fast-developing country’s needs. Blackouts are common in remote
areas.

The shortfall looks set to worsen. PLN, the state energy company, predicts that, assuming continued economic growth of 6-7
per cent a year, Indonesia’s peak load (the highest level of electricity consumption) will rise to 74.5GW by 2024.

The government plans to add 35GW to the grid by 2019 and hopes the private sector will fund most of the estimated
$90bn needed. It is an ambitious target. At present, three quarters of Indonesia’s capacity is supplied by PLN. By 2019, the
government hopes the private sector will generate more than half.

The plan is to build 109 power projects. PLN is scheduled to develop 35, leaving the private sector to do the rest. But
attracting further private investment into the power sector will be a challenge, according to FT Confidential Research, an
investment research service at the Financial Times.

The sharp depreciation of the rupiah — down more than 10 per cent against the US dollar over the past year — inflates the
debt of private contractors, which typically need to borrow in US dollars, and pushes up the cost of construction equipment,
most of which needs to be imported.

As a result, local banks have become less willing to support private sector-led power projects. A further complication is that
the private sector has only limited access to hedging facilities to mitigate currency risk.

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February 2016 | 24

This is not the case with state utility PLN, which has about $12bn in US-dollar-denominated liabilities. It is the ultimate purchaser
and distributor of all generated electricity, and state-owned banks are willing to provide it with guarantees even if they result
in losses. In April last year, for example, PLN signed a $950m hedging facility with three state-owned banks, providing it with
US-dollar liquidity to repay foreign exchange debt and other liabilities.

Private companies operating in the power sector are unlikely to secure that kind of protection. As a result, it is possible that
many private power projects will be put on hold, at the very least for several months until there is greater clarity over the
direction of the rupiah.

Minerals news

Freeport asks Indonesia

to cut or postpone $530
smelter bond: Mining Minister - 2 February 2016 -

Reuters, jakarta - Freeport McMoRan Inc has asked

Indonesia to reduce a $530 million smelter bond the local
unit of the U.S. copper mining giant must set aside before
receiving an extension of its export permit, Indonesia’s
mining minister said on Tuesday.

Freeport’s 6-month copper concentrate export permit

expired last week amid a deadlock over the bond, which
Indonesia has requested as a guarantee that the miner will
complete construction of another local smelter.
“They have appealed to ask whether we can postpone it
or give them a discount, but we asked them to show their
commitment in another equivalent way,” Energy Minister
Sudirman Said told reporters, referring to an exchange of
letters with the Phoenix, Arizona-based company

www.carsurin.com
January 2016 | 25

Tips of
the Month

Environmental
Considerations
Last month we discussed the first approach to be
considered with a company’s new exploration program.
This was the consideration of ada” and other cultural issues.
The next may well be environmental considerations to be
borne in mind even before the program gets underway.
This may relate to flora and fauna, watercourses, access
roads, gardens, agricultural plots, etc. Environmental
considerations have become extremely important over
the past years and non-adherence to legislation, decrees
and the like can see the curtailment of the program.
As an example, in terms of flora, the writer some years
ago on an assignment in a relatively remote area of
West Timor was shown a young “Rafflesia” plant growing
beside the river. The local geologists had built a small ring
of stones around the plant to warn others to be careful
when walking by (the writer had only ever seen the
large “Rafflesia” at the Bogor Botanical Gardens and was
unaware that it grew anywhere else).
Elsewhere in Timor Barat, the discovery of Sandalwood
sprouts or saplings are required to be carefully protected
for re-vegetation purposes. This due in times past to the
near stripping out of Sandalwood trees for export and
hence the near extinction of the species.
Tips
• Refer to previous exploration reports and technical
articles for details of environmental matters of
importance in your area. Read your IUP document
carefully as to what are your company’s responsibilities.
• If no previous data but in any case, go to the
relevant Dinas in the nearest Kabupaten town and
discuss environmental matters of importance in
your exploration area. In Jakarta, visit the relevant
Government Agencies for latest details on legislation,
etc. The Forestry Dept is an important Agency and
dealing with cutting down trees for drill site access
requires up to date information on what is, and what
is not, permitted. Special Forestry areas need to be
identified where drilling is not allowed.
• Visit your area with a local inhabitant or Dinas Officer,
drive and walk around it to get an idea of what is
involved environment wise. Check condition of roads
and location of watercourses.
• Prepare a guidance/information report for
Management concerning preparation of your
evaluation and drilling program.
Antony H. Osman
FAusIMM (CP) MMICA MAIMVA
(CMV) FGS
JORC and KCMI accredited
Senior Geological Adviser
A member of PERHAPI, IAGI & MGEI

*****************
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
www.carsurin.com
Minerals Division.
January 2016 | 26
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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
25: Good Friday
Japan
Thailand
- 1: Independent Movement
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 © 2016, PT. CARSURIN
India
-
Singapore
25: Good Friday
South Korea
Day
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