MINISTRY OF ENERGY AND MINERAL RESOURCES

DIRECTORATE GENERAL OF MINERAL AND COALDIRECTORATE GENERAL OF MINERAL AND COAL

““COAL POLICYCOAL POLICY AND THE NEW MINING LAW AND THE NEW MINING LAW NO. NO. 44//2009 2009 IN INDONESIA”IN INDONESIA”

Presented byPresented by ::THAMRIN SIHITETHAMRIN SIHITE

DirectorDirector General of Mineral andGeneral of Mineral and CoalCoalDirectorDirector General of Mineral and General of Mineral and CoalCoal

CLEAN COAL DAY IN JAPAN 2012 INTERNATIONAL SYMPOSIUMTokyo, September 4-5, 2012

MAIN TOPICSMAIN TOPICS

I. CURRENT CONDITION

II. COAL POTENCY

III. COAL PRODUCTION

IV. COAL POLICY

V. CONCLUDING REMARKS

CURRENT CONDITION

World’s Coal Producer and Exporter, 2009

2010 2010

Indonesia Coal Reserves is only 3,3% of World Coal ReservesThe 4th Coal Producer The 2nd Coal Exporteur

Article 33 of the Indonesia’s 1945 Constitution

CURRENT CONDITION

ConstitutionUUD

REGULATION OF MINERAL AND COAL

UUD

LegislationLAW Law No.4/2009 Regarding Mineral and Coal Mining

GOVERNMENT

REGULATION (FRAMEWORK)

1. Government Regulation No 22/2010 Regarding Mining Zone2. Government Regulation No 23/2010 Regarding Mineral and Coal Enterprises Activity revised by

REGULATION Goverment Regulation No. 24/20123. Government Regulation No 55/2010 Regarding Supervising and Controlling

Mining Activity

PRESIDENT -----

4. Government Regulation No 78/2010 Regarding Reclamation and Post mining

1. Minister Regulation No 7/2012 Regarding Procedurs of the Increase of Mineral Added Value Thorugh Mineral Processing and Refining Activity revised by Minister Regulation No. 11/2012

REGULATION

2. Minister Regulation No 28/2009 Regarding Service Mining Company3. Minister Regulation No 34/2009 Regarding DMO Obligation for Mineral and Coal4. Minister Regulation No. 17/2010 Regarding Mineral and Coal Price5. Minister Regulation No. 12/2011 Regarding Procedure for determining Mining Area

MINISTERREGULATION

COAL POTENCY

Coal Reserves Based on Calorific Value

Billion TonsBillion Tons

Low Medium High VeryTOTAL RESOURCES161.34 Billion Tons* TOTAL RESERVES

28.17 Billion Tons

Low Medium High Very High

*) Including 41 Billion Tons Under Ground Coal Resources

Resource : Geological Agency, 2011

COAL POTENCY

Coal Resources Coal ReservesMillion Tons Million

Tons

Hypothetic Inferred Indicated Measured Probable Proved

Milli TMillion Tons Million TonsProved reserve

Probable reserve

Source : Geological Agency, 2011

COAL PRODUCTION

Tons

Mill

ion

Coal Contract of Works (PKP2B)

COAL PRODUCTION

Coal Contract of Works (PKP2B)

67 74 48

53

Mining Business License (IUP)*)

C CIUP MINERAL COAL IUP CLEAR AND CLEAN PER MAY 2012IUP MINERAL COALJUMLAH 2.534 1.759TOTAL 4.293

*) IUP – Izin Usaha Pertambangan. Total IUP: 10.245

COAL POLICY

Implement priority fulfillment of mineral and coal for domestic needs

Provide certainty and transparency (Mining Law regulationsupporting, sanction violations of the provisions, etc.)

Implement priority fulfillment of mineral and coal for domestic needs

SIX

supporting, sanction violations of the provisions, etc.)

Improving supervision on good mining practiceDIRECTION

Increasing investment and state revenues from mining

Encourage the development of value-added products (i.e. processing,local content, local expenditure, upgrading brown coal, labor and CSR)

Maintain environmental sustainability through environmental management and monitoring, including the reclamation and post-mining

COAL POLICY National Energy Mix up to 2050 (Draft of National Energy Council)

(%)

2010 2025(%)

Oil

Gas

Coal

New and Renewable Energy (NRE)G

Oil 49,7

Gas 20,1

Coal 24,5

Oil 25

Gas20 Coal

30

NRE5,7

NRE25

2030 20502030Oil 20

Gas 15 Coal

25Oil 19,4

Gas 18,8Coal

31

2050

9,4NRE

40NRE30,9

Note:Renewable Energy including : hydropower,

geothermal, biomass, solar, wave, wind.

New Energy including: nuclear hydrogen CoalNew Energy including: nuclear, hydrogen, Coal Bed Methane, Coaliquefaction, gasification

10

COAL POLICY

HIGH RANK (BIT SUB BIT) EXPORT

COAL MEDIUM RANK

(BIT, SUB.BIT)

DOMESTICCOAL RESOURCES

MEDIUM RANK (SUB.BIT)

DOMESTICUSE

LOW RANK MMPP

UPGRADING

LOW RANK (LIGNITE)

GASIFICATIONLIQUEFACTIONPOWER PLANTINDUSTRYMMPP – Mine Mouth Power Plant

Added ValueAdded Value

PROJECTION OF COAL DOMESTIC CONSUMPTION ٭ >(2011-2014)

9060.18 82.6

88

6

70

80

90 75.17

40

50

60il

lion

Ton

es

10

20

30Mi

02011 2012 2013 2014

Electricity 47.46 69.5 60.49 70.6Cement 8.86 8.4 9.8 11.2Metallurgy 0.34 0.3 0.74 0.5Textile 21.97 1.9 1.93 2.3Paper Pulp 0.6 0.6 0.6 0.8Fertilizer 0.92 1.3 0.76 1.3Briquette 0.3 0.6 0.9 1.3

< ٭ Coal domestic consumption is determined on the basis of coal user demand projection

PROJECTION OF COAL PRODUCTION, DOMESTIC, AND EXPORT ٭ > (2011-2014)

400

300

350

200

250

om T

ones

100

150Mil

lio

0

50

02011 2012 2013 2014

Domestic 80 82 75 88Export 273 250 262 254Production 353 332 337 342

< ٭ Coal Production Growth is projected 1.5% annually

SUSTAINABLE DEVELOPMENT CONCEPT IN MININGNatural Resources

Capital

Man Made Capital(INFRASTRUCTURE)

Renewable Resources

Non-renewableresources Technological

Improvement (exploration

Human Resources Mineral Resources Exploration

GEOGRAPHYC

p ( pmetallurgy

GEOGRAPHYCPOTENCY Exploitation

Negative Impacts B fitNegative Impacts Benefits

PhysicalEnvironment

SocialEnvironment

Direct Indirect

Tax/Retribution Employees

CommunityDevelopment

MultiplierEffect Infrastructure Skilled

Human Resources

Mitigation Development

Mine ClosureRe-Investment

CONCLUDING REMARKSCONCLUDING REMARKS

• Indonesia’s coal production was 353 million tones last year It is predicted• Indonesia s coal production was 353 million tones last year. It is predicted that coal production will be 342 million tones in 2014.

• On the other hand, coal domestic consumption will rise very slowly from 79 million tones in 2011 to 104 million tones in 2014.

• Therefore, coal shipments abroad will be approximately maintained at the level of 240 million tones for the next four yearlevel of 240 million tones for the next four year

• The foreign investment is one of the crucial factors for developing mining industry. In this matter, there is a need to increase international cooperation t d l i i i t t t h l d d l t It ito develop mining investment, technology and manpower development. It is important to note that there are still a number of opportunities on mining development in Indonesia.

Arigato GozaimashitaArigato Gozaimashitaggwww.djmbp.esdm.go.id

COAL CONSUMPTION OF PLTU (PLN) 2001 – 2020

Million tons