Due to weakening global economy and most of all, the slowing industrialisation of China and its economic growth, global energy consumption has been decelerating. When China’s economy sneezes, it is contaging the world with cold, coughs, and ailments. As Chinese economy got matured, so was its business. Industrial saturation and over-capacity has been accompanied with the ballooning debts financing the economy expansion. China has been the world’s largest growth market for energy for the fifteenth consecutive year. In 2015, China’s energy consumption grew at its slowest rate in almost 20 years. Coal consumption in China fell by 1.48% to 1,920.4 mtoe; while global coal consumption declined by 1.83% to 3,839.9 mtoe. Coal matters in Asia Pacific as it contributed more than 50% of the fuel mix totaled at 13,147.3 mtoe.

1. Coal Mining Business in Indonesia
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1
Global Trends in Energy Industry
by Sando Sasako
Jakarta, 17 August 2016
This article is only a part of a business research on Energy Industry in Indonesia. Read more in
Sando Sasako, Coal Mining Business in Indonesia, Serabdi Sakti, Jakarta, August 2016,
http://bit.ly/2cu6VBA
or you can call us on +62 851 0518 7118 or +62 21 4027 8375 for presenting our research findings
in a flip book version, full of graphs, charts, and tables.
Due to weakening global economy and most of all, the slowing industrialisation of China and its
economic growth, global energy consumption has been decelerating. When China’s economy
sneezes, it is contaging the world with cold, coughs, and ailments. As Chinese economy got
matured, so was its business. Industrial saturation and over-capacity has been accompanied with the
ballooning debts financing the economy expansion.
China has been the world’s largest growth market for energy for the fifteenth consecutive year. In
2015, China’s energy consumption grew at its slowest rate in almost 20 years. Coal consumption in
China fell by 1.48% to 1,920.4 mtoe; while global coal consumption declined by 1.83% to 3,839.9
mtoe. Coal matters in Asia Pacific as it contributed more than 50% of the fuel mix totaled at
13,147.3 mtoe.
The decline in coal consumption was in contrast with other primary energy that grew positive such
as oil, (natural) gas, nuclear, hydroelectricity, and renewables. In total primary energy consumption,
coal only contributed 29.21%. In 1951, 65 years ago, coal provided more than a half of the world’s
energy; while oil’s share was almost exactly to its share today, at a little over 30%. In today’s
money, oil price was equal $16.
As with any other zero sum game, the loss in coal means the gain in other fuel types, mostly oil,
natural gas, and renewable energy, recording solid growth in 2015. On the other hand, the price of
fossil fuels fell sharply. The analogue of zero sum game applies again, as well. The fuel mix
composition adjusts, favours, and shifts to the most economic and abundant resources, that is oil.
Coal seems to get abandoned in the process of changes in the fuel mix, as natural gas and renewable
energy is shifting up. As a result, carbon emission was estimated to be flat in 2015, marking it as the
lowest growth in nearly a quarter of a century. But the challenge to tackle the acceleration of global
warming remains substantial, that is energy efficiency and power mix composition.
The decline in fossil fuel prices has been predicted to occur as the US shale revolution really did
and has unlocked the huge swathes of oil and gas resources. Instead to function as the complement,
the US shale existence means to substitute the existing fossil fuel role in energy mix. It could also
mean that the US shale producers are the real rivals of ‘traditional’ energy producers.
As in any competition, the fierce free market won’t and hardly don’t accept newcomers taking and
stealing the cookies and cakes that have been shrinking from time to time. It’s not the total size that
has been shrinking, but the shares that they have been getting, which is smaller and smaller by the
end of the day (time).

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To get rid of the competition, none is better than applying the cut-throat and predatory pricing.
Some name it, positively, as a long-purse and/or deep-pocket strategy. Whatever the terms is, apart
from the ethical and lawful concerns, the strategy has been implemented for ages and since before
the name, label, attributed for the actions. It’s natural.
The Saudi Factor
Initially implemented in 2014, the cheap oil strategy of Saudi were rumoured to serve many
purposes. One, Saudi will keep on pumping oil to dump US shale. Two, to expel Russia from the oil
markets in Europe and Asia. Three, to ancipitate the economic uncertainty in China due to its
slowing economic growth.
However, Saudi’s strategy implementation don’t come cheap. Saudi has set 500pc rise in water
prices, creating public outcry. On the grassroot levels and neighbouring countries, migrant workers
are becoming increasingly frustrated with the Persian Gulf states. Given on the ratio of non-locals to
locals, social turmoil is just a matter of time to erupt and disrupt everything abruptly.
Saudi was rumoured to have borrowed $10b from a range of US, European and Asian banks. It was
the first international debt issuance in 25 years. In 2015, its main source of revenue fell 23%. The
lead arrangers, each contributing around $1.3b, include the Bank of Tokyo-Mitsubishi, HSBC, and
JPMorgan. Qatar is another country in Middle East that has increased overseas borrowing sharply.
The bond loan to Saudi was provided despite a sharp downgrade in Saudi’s creditworthiness from
Aa3 to A1 following Moody’s assessment in March 2016. Saudi was not alone. Oman also took a
downgrade (from A3 to Baa1) and Bahrain as well (from Ba1 to Ba2). The assessments don’t
downgrade Kuwait, Qatar, and the United Arab Emirates, but a statement of negative outlook. S&P
and Fitch did the same.
The credit rating agencies reasoned that those countries are not well positioned to weather future
shocks, following bad economic performance, either in lower growth, higher debt levels, and
smaller domestic and external buffers. They skipped the ambitious plans of Deputy Crown Prince
Mohammed bin Salman to transform Saudi into a global investment power by 2030.
During the period of 2010-2014, Saudi spending went berserk. About $80-100b a year was spent
inefficiently. In April 2016, state budget was cut by a quarter. Tight money policy has been applied,
including reinstate strict spending controls, tap the debt markets, and develop the VAT and other
levies. On the first half of 2015, the burn rate on Saudi’s cash reserves was $30b a month. In June
2016, Saudi burned another $11b and let its net foreign reserves to fall from the highest level of
$737b to $562b.
We can’t assume anything but actualising the facts. In October 2012, Saudi only had 88 rigs. In
April 2016, there was a report that Saudi has doubled its drilling rigs to 170, exploring and
developing "more costly offshore fields", 7 times more than the existing onshore rigs. Saudi
Aramco has been reported to have started CO2-EOR process, just to extract the last of the field's oil.
It could mean that Ghawar Oil Field, the largest in the world, is running out after about 65 years of
continuous production. From a 2009 dip of 8.25 mbpd, Saudi upped its output to 10.5mbpd and is to

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3
raise the output tp 11.5mbpd immediately, and 12.5mbpd in the next six-to-nine months starting
April 2016.
On the other hand, the warmonger Saudi has established an alliance with Turkey, planning to seize
Syria and Iraq's oil fields. That doesnot include Saudi’s recent bombings to Yemen, assisted with
the Western establishment. Here are some other facts, in November 2005, the Republic of Yemen
expropriated its oil basins - the Marib Al-Jawf Block - from Hunt Oil Company and ExxonMobil
affiliates.
The detailed 2002 United States Geological Survey (USGS) revealed that Yemen possesses vast
offshore oil reservoirs, exclusive of its 3 billion barrels of proved oil reserves. In 2008, a cable from
Stephen A. Seche as the US Ambassador in Yemen was read that the governorates of Shabwa,
Marib and al-Jawf have high potential for significant gas deposits.
In other oil producing countries, the condition has been less the same. The low oil price has also
transformed Nigeria to become a war-torn country. Venezuela and Brazil are expected to experience
production disturbances, following recent political upheavals in both countries. Venezuela and
Algeria are 2 oil-export-dependent countries that do not have sufficient monetary reserves or clear
access to bond markets.
During hard economic times, most oil producing countries like China, Iran, Saudi, and Russia have
its domestic oil industries been propped up by its government. But not in the US and Canada, as
their governments let oil and gas companies fall into bankruptcy, leaving workers unemployed and
national resources ripe for capture by foreign investors.
The Revolutionary US Shale
At the heights of subprime mortgage crisis, the oil price peaked in July 2008 at $145 per barrel.
This event had created ample incentives to develop advanced fracking technology in the US.
Billions of dollars had been raised to finance the R&D in shale technology as it promises to be the
lowest-cost oil production industry.
Technology development to produce shale natural gas was initiated in 1980s and 1990s by Mitchell
Energy and Development Corporation in Barnett Shale, north-central Texas. In 2000, commercial
large-scale natural gas production from shale came to life. In 2005, Barnett Shale produced almost
half a trillion cubic feet (Tcf) of natural gas.
In the Annual Energy Outlook 2014, EIA estimated that the US has approximately 610 Tcf of
technically recoverable shale natural gas resources and 59 billion barrels of technically recoverable
tight oil resources. This placed the US as the second country to have been endowed with shale oil
resources after Russia and was ranked fourth globally after China, Argentina, and Algeria in shale
natural gas resources.
However, the increased American shale oil production have been unwelcomed by Saudi. Fear of
significant reduction cuts in the market share, Saudi has been rejecting the suasion to lower its oil
production, but keep pumping out the oil and flooding the market. The oil glut has caused oil price

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4
to crumble below $100 per barrel towards October-November 2014 and went into freefall
afterwards.1
Figure – Potential future global oil projects by average breakeven prices
Source: Wood Mackenzie in Ed Crooks, US shale is lowest-cost oil prospect, New York, 20160713,
https://www.ft.com/content/0a7a817a-4863-11e6-8d68-72e9211e86ab
Note: Brent equivalent
For some time, Saudi strategy succeeded in curbing US output. After peaking at 9.7 mbpd in April
2015, the highest monthly level since 1971, US oil production fell back to 8.9 mbpd in May 2016.
Since then, US oil production appears to have stabilised, while the output forecasts was about 8.3
mbpd in 2017.
At that time, US shale producers were on the phase of higher production cost. The cheap oil has
bankrupted more than 130 US oil and gas companies since 2015. Overexposed with heavy debts,
the US shale companies began to experience lowered capital expenditures, laid off workers, sold
assets, downgraded by credit rating agencies, then filing a bankruptcy protection. It does create
some havoc in the industry and in communities.
In the second half of 2016, reports have surfaced that shale companies can operate with oil prices in
the range of $40-50 per barrel. It means that full-cycle break-even costs have fallen below that price
range. Although new wells production declines, rig counts are going up. Multi-pad drilling means
that 3 wells are now routinely drilled from the same rig, and sometimes 6 or more.
1
Oil glut has been present for several times. The Asian financial crisis in 1997 had created an oil glut, due to
plunging demand. It caused oil price to slip below $10 a barrel in London in December 1998, despite some production
cuts by OPEC in March and June 1998. As oil stockpiles began to deplete in developed economies in early 1999, oil
price began to rise.

5. This article is only a part of a business research on Energy Industry in Indonesia. Read more in
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Average well productivity has risen 5-fold in the Permian since early 2012. New rigs can be built in
135 days flat. It is a dramatic contrast to deep-water mega-projects that can take seven to 10 years
just to build 1 new rig. According to Wood Mackenzie, most US shale fields/wells are now viable at
$60.
As much as 90% of the 3,900 drilled but uncompleted wells (DUCs) are profitable at $50. The pre-
tax production costs in the Permian Basin of West Texas have fallen to $2.25 a barrel. This level of
production cost surely far below levels needed to fund the Saudi welfare state and its military
machine, or to cover OPEC budget deficits.
Revolutionary improvements in drilling technology and data analytics have changed the cost
calculus faster than almost anybody thought possible. The shale industry has proved remarkably
nimble and effective in cutting costs and improving productivity. In 2006, the 'decline rate' of
production over the first four months of each well was 90%. In 2012, it dropped to 31% and 18% in
2016. Drillers have learned how to extract more.
This means that Saudi’s predatory pricing has still failed to break the back of the US shale industry.
Nevertheless, Saudi gained some victory in lowering investment in upstream exploration by $1.8t
for the period of 2014-2020 and killing off a string of global mega-projects in deep waters such as
in Nigeria and Angola waters, the Arctic, or the oil sands of Canada and Venezuela's Orinoco basin.
The success stories do encourage. The bleak ones are about to do some deals with the vultures,
eagerly waiting on the sidelines to buy distressed assets and take over the infrastructure.
Private equity groups such as Blackstone, Carlyle, Riverstone, and others are to scavenge the best
US shale oil properties and to purchase advanced fracking machinery at ten cents on the dollar. The
vultures swoop, buy, and cherry pick assets that have been devalued due to heavy debts and bad
investments. Buying binge of troubled shale companies will be on the rise.
References
Ambrose Evans-Pritchard, Texas shale oil has fought Saudi Arabia to a standstill, 20160731,
http://www.telegraph.co.uk/business/2016/07/31/texas-shale-oil-has-fought-saudi-arabia-to-a-
standstill/
BP, Statistical Review of World Energy, 65/e, June 2016.
Grant Smith, Shale Oil Isn't Saudi Arabia's Only Nemesis, 20160302,
http://www.bloomberg.com/news/articles/2016-03-02/saudi-arabia-faces-a-new-oil-titan-
once-battle-with-shale-is-won-ila2vccq
Laura Blewitt and Zachary Mider, Icahn Calls on EPA to Fix 'Mother of All Short Squeezes',
20160816, http://www.bloomberg.com/news/articles/2016-08-15/carl-icahn-calls-on-epa-to-
fix-mother-of-all-short-squeezes
Matt Egan, Saudi Arabia tries to make nice with U.S. shale oil, 20160224,
http://money.cnn.com/2016/02/24/investing/saudi-arabia-us-shale-oil/
Matt Robinson and Annie Massa, A $35 Billion Stock, an SEC Halt and Suspicions of
Manipulation, 20160816, http://www.bloomberg.com/news/articles/2016-08-15/a-35-billion-
stock-was-just-halted-on-manipulation-concerns

6. This article is only a part of a business research on Energy Industry in Indonesia. Read more in
Sando Sasako, Coal Mining Business in Indonesia, Serabdi Sakti, Jakarta, August 2016,
http://bit.ly/2cu6VBA
or you can call us on +62 851 0518 7118 or +62 21 4027 8375 for presenting our research findings
in a flip book version, full of graphs, charts, and tables.
6
Patti Domm, Saudi Arabia, Iran pump at high levels as U.S. producers cut back, 20160810,
http://www.cnbc.com/2016/08/10/saudi-arabia-iran-pump-at-high-levels-as-us-producers-cut-
back.html
R Sriram, Face-off between US shale and Saudi Arabia will benefit India, 20160802,
http://economictimes.indiatimes.com/markets/stocks/news/face-off-between-us-shale-and-
saudi-arabia-will-benefit-india/articleshow/53494685.cms
Richard Lein, US shale drillers face squeeze from Saudi oil policy, 20150911,
http://www.businessinsider.co.id/afp-us-shale-drillers-face-squeeze-from-saudi-oil-policy-
2015-9/?r=US&IR=T#e67Q36LSJ4H53A0L.97
Rita Nazareth, Oliver Renick, OJRenick, U.S. Shares Regain Records as Fed Outlook Hits Dollar;
Oil Jumps, 20160815, http://www.bloomberg.com/news/articles/2016-08-14/dollar-nurses-
losses-on-fed-outlook-as-japan-futures-signal-drop
Robin Pagnamenta, Saudis may rejevenate US shale instead of destroying it, 20160815,
http://www.theaustralian.com.au/business/companies/saudis-may-rejevenate-us-shale-instead-
of-destroying-it/news-story/a8f5a17bc9c630f3fe1ba9bc0d1db977
Robin Pagnamenta, Saudis may rejuvenate the US shale economy instead of destroying it,
20160815, http://www.thetimes.co.uk/article/saudis-may-rejuvenate-the-us-shale-economy-
instead-of-destroying-it-nbdtzhbff
sputniknews.com, As Oil Prices Fall, Saudi Arabia Borrows $10 Billion to Stay Afloat, 20160421,
http://sputniknews.com/world/20160421/1038357537/saudi-arabia-10bn-loan.html
sputniknews.com, Did the Saudis Kill the American Shale Oil Industry?, 20160518,
http://sputniknews.com/us/20160518/1039782506/saudi-america-obama-shale-oil.html
sputniknews.com, Out of Money: Saudi Arabia Shot Itself in the Foot by Dropping Oil Prices,
20160312, http://sputniknews.com/politics/20160312/1036177589/saudi-arabia-oil-price-
slump-money.html
sputniknews.com, Pump and Dump: Saudi Kills US Shale Oil Industry and Buys it for Pennies,
20160519, http://sputniknews.com/middleeast/20160519/1039930364/saudis-oil-fracking-
obama-economy.html
sputniknews.com, Riyadh's Dirty Secret: Saudi Arabia Thirsty for Yemeni Oil, Gas Reserves,
20160406, http://sputniknews.com/politics/20160406/1037584835/saudi-arabia-yemen-gas-
oil.html
sputniknews.com, Riyadh's Worst Nightmare: Is Saudi Arabia's Oil Business Going Bust?,
20160310, http://sputniknews.com/politics/20160310/1036086686/saudi-arabia-oil-business-
going-bust.html
sputniknews.com, Russia Denies Discussing Oil Output Freeze With Saudi Deputy Crown Prince,
20160420, http://sputniknews.com/middleeast/20160420/1038354274/russia-no-discussions-
saudi-prince.html
sputniknews.com, Saudi Arabia Could Have Gone Completely Broke by Early 2017, 20160423,
http://sputniknews.com/middleeast/20160423/1038499322/saudi-arabia-broke-2017.html
sputniknews.com, Vision 2030: Why Saudi's Financial Future is 'Destined for Disgrace', 20160517,
http://sputniknews.com/middleeast/20160517/1039741502/saudi-arabia-vision-2030.html
sputniknews.com, Wind of Change: Saudi Arabia Prepares for the End of 'The Oil Age', 20160508,
http://sputniknews.com/middleeast/20160508/1039279403/saudi-arabia-society-economic-
reforms.html
Tom DiChristopher and John W. Schoen, OPEC states that wanted production cuts buckle under the
new oil order, 20160601, http://www.cnbc.com/2016/06/01/opec-states-that-wanted-
production-cuts-buckle-under-the-new-oil-order.html

7. Serabdi Sakti
Jakarta, August 2016
Sando Sasako
Coal Mining Business
in Indonesia

9. Serabdi Sakti
Jakarta, August 2016
Sando Sasako
Coal Mining Business
in Indonesia

10. ii – Coal Mining Business in Indonesia
Perpustakaan Nasional RI: Data Katalog dalam Terbitan (KDT)
Sando Sasako.
Coal Mining Business in Indonesia / by Sando Sasako. Jakarta :
CV Serabdi Sakti, 2016.
xi + 139 pp. ; 21 cm
ISBN 978-602-73508-7-…
1. …. I. Judul.
Published by CV Serabdi Sakti
Graha Anggrek
Jl. Anggrek Rosliana VII No.63
Jakarta Barat 11480, Indonesia
Tel. +62 21 4027 8375 (Fren)
+62 851 0518 7118
Copyright © Sando Sasako
All rights reserved.
You may not reproduce the content of this book, in part
or in whole in any form with or without the written
permission of the copyright owner and publisher, as long
as you cite this reference as your ultimate one.
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11. Coal Mining Business in Indonesia – iii
Foreword
Coal deposits all around the world may have been declining. It’s on the surface, but not in deep
underground. Extracting coal physically beneath the earth, majorly under the deep seabed, is not an
easy task to fulfill and complete. Some advantages may have come for digging coal out of the
underwater. Coal washing doesnot need special water resources and treatment, but from the sea or
ocean. Every thing must have a plus and a minus. It depends on what perspectives you’ve taken all
along.
The choice then lend it to the tasks of extracting the coal ores, that is the molecular carbons in gas,
namely CO, CH4, and H2. Syngas, they used to call it as the term. But not the CO2. CO2 is mostly
considered as the public enemy number one to be captured and imprisoned in a dungeon, deep
underground, for good. Various CO2 absorbents have been sought and developed, along with the
technologies to filter out the impurities embedded with coal, namely SOx and NOx.
Many have mixed up inappropriately the understandingness between coal gasification and coal
combustion. Even FoE. Those two coal treatments are different things. The first is heating the coal,
while the second is burning the coal. Both process involves massive thermal chain reactions. The
problems with UCG is that how can you guarantee that it is the coal seam and the intended ones that
has been gasified.
How about the walls, the roofs, the floors, and the layers buffering the coal seams? How about if the
words of collapse and/or cracks applied to those layers? Won’t they initiate a flow of the
unexpected such as a mud flow for example as in Porong, Sidoarjo, East Java, Indonesia, that hasn’t
stopped since it began to erupt on 29 May 2006.
Even worse is how the earth is burning the coal seams underground. Burning Mountain of Mount
Wingen in New South Wales has been burning for 6000 years, Brennender Berg in German since
1688, Smoking Hill in NW Canada since its discovery in 1826, Emalahleni in South Africa since
1953, and Centralia in Pennsylvania since 27 May 1962.
The list doesnot include the burning of methane in Derweze, Turkmenistan since 1971, known as
door to hell; Baba Gurgur oilfield nearby Kirkuk, Irak for 2500 years, known as eternal fire; Yanar
Dag near Baku, Azerbaijan since 1950s, known as land of fire.
The unanswered questions to protect the environment underground and the surrounding area has left
many UCG projects to be terminated, cancelled, withdrawn, neglected, abandoned, forbidden. They
are all due to lack of environmental protection technologies, and most of all understandingness how
to deal and cope it before hand.
Therefore, UCG is not an option to exploit coal deposits underground. At least for now, and some
decades to come.
Jakarta, 31 August 2016
Sando Sasako
Email: sandosako @ yahoo.com
Mobile: +62 812 8056 516

13. Coal Mining Business in Indonesia – v
Contents
Foreword....................................................................................................................................... iii
Contents ..........................................................................................................................................v
List of Tables .................................................................................................................................ix
List of Figures .................................................................................................................................x
Global Trends in Energy Industry....................................................................................................1
The Saudi Factor..........................................................................................................................1
The Revolutionary US Shale........................................................................................................3
Primary Energy Consumption in the World .................................................................................5
Global Coal Trends..........................................................................................................................8
Coal Price Dynamics in the World...............................................................................................9
Fracking Coalmines...................................................................................................................11
Coal Gasification.......................................................................................................................12
Underground Coal Gasification..............................................................................................15
Kincardine UCG, Scotland, UK .............................................................................................16
Raven and Hat Creek Coalfield, BC, Canada .........................................................................19
Global Warming or Global Heating ...........................................................................................21
Greenhouse Gas.....................................................................................................................23
CO2 as One of GHGs ............................................................................................................25
Oxygen Carriers.....................................................................................................................26
CO2 Recovery .......................................................................................................................28
Underwater Coalmines ..............................................................................................................29
Hashima Coal Mine, Japan.....................................................................................................30
Okinoyama Coal Mine, Japan ................................................................................................31
Beizao Coal Mine, China .......................................................................................................31
Bomlo Coal Mine, Norway....................................................................................................33
Cape Breton Coal Mines, Nova Scotia, Canada......................................................................35
Solway Coal Mines, Cumbria, UK.........................................................................................39
North Sea Coal Mines, NE England .......................................................................................40
Forth Coal Mines, Scotland, UK ............................................................................................41
The End of Deep Coal Mines in the UK.................................................................................42
Energy Business in Indonesia in a brief .........................................................................................45
Coal-Bed Methane.....................................................................................................................47
The Milestone of CBM Commercialisation............................................................................49
CBM Asia @ Kutai West PSC...............................................................................................50
Dart Energy & IGas ...............................................................................................................52
Dart Energy & NuEnergy.......................................................................................................53
Coal...........................................................................................................................................61
History of Coal Business in Indonesia....................................................................................66
Regulatory Frameworks.........................................................................................................69
The Dutch Colonialism ......................................................................................................69
The Mining Law of 1967 ...................................................................................................69
The Production Sharing Contract in Coal Mining of 1975 ..................................................71

14. vi – Coal Mining Business in Indonesia
The Coal Contract of Work of 1981 ...................................................................................71
Forced Localisation............................................................................................................72
Issues on Enviromental and Decentralisation .........................................................................74
Ministerial Regulations (Permen ESDM) ...........................................................................75
Ministerial Decrees (Kepmen ESDM)................................................................................77
Clean and Clear: The Causes..................................................................................................80
The Non-CNC Status .........................................................................................................82
Unclear DMO System........................................................................................................85
Forestry Land Use Permit...................................................................................................89
Korsup Minerba .................................................................................................................90
CCoW Companies: The First Generations..............................................................................93
BHP Kendilo Coal Indonesia .............................................................................................98
BHP Businesses in Indonesia ...........................................................................................100
Rio Tinto..........................................................................................................................100
Tata Power.......................................................................................................................101
Arutmin Indonesia ...........................................................................................................103
Kaltim Prima Coal ...........................................................................................................103
Bumi Resources...............................................................................................................105
The IndoCoal Deals......................................................................................................105
Asmin Koalindo Tuhup....................................................................................................107
Allied Indo Coal...............................................................................................................108
References...................................................................................................................................111
Directory of Coal Mining Companies in Indonesia ......................................................................115
Abadi Batubara Cemerlang ..................................................................................................115
Abadi Coal Cemerlang.........................................................................................................115
Aceh Resources and Mineral................................................................................................115
Aceh Resources and Mineral Core .......................................................................................115
Adaro Indonesia...................................................................................................................115
Adimas Baturaja Cemerlang ................................................................................................115
Allied Indo Coal , PT...........................................................................................................116
Andhika Mutiara Etam.........................................................................................................116
Andhika Mutiara Lestari ......................................................................................................116
Andhika Mutiara Sejahtera...................................................................................................116
Antang Gunung Meratus......................................................................................................116
Anugerah Jatimulia..............................................................................................................117
Anugerah Jatimulya .............................................................................................................117
Arutmin Indonesia ...............................................................................................................117
Asmin Bara Bronang............................................................................................................117
Asmin Bara Jaan..................................................................................................................117
Asmin Koalindo Tuhup........................................................................................................117
Astaka Dodol.......................................................................................................................118
Bahari Cakrawala Sebuku ....................................................................................................118
Bangun Banua Persada Kalimantan......................................................................................118
Bara Mutiara Prima..............................................................................................................118
Bara Pramulya Abadi...........................................................................................................119
Bara Sentosa Lestari ............................................................................................................119
Bara Utama Unggul .............................................................................................................119

15. Coal Mining Business in Indonesia – vii
Baradinamika Mudasukses...................................................................................................119
Baramarta, PD .....................................................................................................................119
Baramarta ............................................................................................................................119
Baramulti Sukses Sarana......................................................................................................120
Baramulti Suksessartana ......................................................................................................120
Baramutiara Prima...............................................................................................................120
Barasentosa Lestari..............................................................................................................120
Batu Alam Selaras ...............................................................................................................120
Batubara Duaribu Abadi, PT................................................................................................120
Batubara Selaras Sapta, PT ..................................................................................................120
Baturona Adimulya..............................................................................................................121
Benakat Energi ....................................................................................................................121
Benakat Energy ...................................................................................................................121
Bentala Coal Mining............................................................................................................121
Berau Coal...........................................................................................................................121
Bharinto Ekatama ................................................................................................................121
Bima Duta Batubara Sakti....................................................................................................122
Borneo Bhaktibara Utama....................................................................................................122
Borneo Indobara ..................................................................................................................122
Buana Bara Utama...............................................................................................................122
Bukit Baiduri Enterprises.....................................................................................................122
Bukit Sunur .........................................................................................................................123
Bumi Laksana Perkasa.........................................................................................................123
Bumi Panen Sukses..............................................................................................................123
Bumi Sukse Mandiri ............................................................................................................123
Buntok Perdana Coal Mining ...............................................................................................123
Calicari................................................................................................................................123
Coal Duaribu Abadi.............................................................................................................123
Coal Selaras Sapta ...............................................................................................................124
Danau Mas Hitam................................................................................................................124
Daya Lapan .........................................................................................................................124
Delma Mining Corporation ..................................................................................................124
Dhamar Tejokencono...........................................................................................................124
Dharma Puspita Mining .......................................................................................................124
Dutaputra Tanaratama..........................................................................................................125
Ekasatya Yanatama..............................................................................................................125
Energi Batubara Sumatera....................................................................................................125
Energy Batubara Sumatra ....................................................................................................125
Fajar Bumi Sakti..................................................................................................................125
Firman Ketaun Perkasa ........................................................................................................125
Galicari................................................................................................................................125
General Sakti Kreasindo ......................................................................................................126
Generalindo Prima Coal.......................................................................................................126
Gunung Bayan Pratama .......................................................................................................126
Gunung Bayan Pratama Coal ...............................................................................................126
Hulubalang Inti Bumi ..........................................................................................................126
Indexim Coalindo ................................................................................................................126
Indominco Mandiri ..............................................................................................................127
Insani Bara Perkasa..............................................................................................................127
Interex Sacra Raya...............................................................................................................127
Intitirta Prima Sakti..............................................................................................................127
Intitirta Primasakti ...............................................................................................................128

16. viii – Coal Mining Business in Indonesia
Jorong Barutama Greston.....................................................................................................128
Juloi Coal.............................................................................................................................128
Kadya Caraka Mulia ............................................................................................................128
Kalimantan Energi Lestari ...................................................................................................128
Kalteng Coal........................................................................................................................129
Kaltim Prima Coal ...............................................................................................................129
Kartika Selabumi Mining.....................................................................................................129
Karunia Poladaya Bumi .......................................................................................................129
Karya Bumi Baratama..........................................................................................................129
Kendilo Coal Indonesia........................................................................................................130
BHP Kendilo Coal Indonesia ...............................................................................................130
Kideco Jaya Agung..............................................................................................................130
Kitadin.................................................................................................................................130
Kodeco Horna Mandiri ........................................................................................................130
Kurnia Sarana Lestari ..........................................................................................................130
Kutai Kertanegara Prima Coal..............................................................................................130
Lahai Coal ...........................................................................................................................131
Lanna Harita Indonesia ........................................................................................................131
Lianganggang Cemerlang ....................................................................................................131
Mahakam Sumber Jaya ........................................................................................................131
Mandiri Intiperkasa..............................................................................................................131
Mantimin Coal Mining.........................................................................................................132
Marunda Graha Mineral.......................................................................................................132
Marunda Grahamineral ........................................................................................................132
Maruwai Coal......................................................................................................................132
Maruai Coal.........................................................................................................................132
Meulaboh Energitama..........................................................................................................132
Meullaboho Energitama.......................................................................................................133
Mitrajaya Timuragung .........................................................................................................133
Multi Harapan Utama ..........................................................................................................133
Multi Tambangjaya Utama...................................................................................................133
Nusa Minera Utama .............................................................................................................133
Nusantara Termal Coal (D/A Nusantara Thai Coal) .............................................................134
Nusantara Thai Coal ............................................................................................................134
Pari Coal..............................................................................................................................134
Pendopo Energi Coal ...........................................................................................................134
Pendopo Energy Batubara....................................................................................................134
Perkasa Inakakerta...............................................................................................................134
Persada Permata Mulya........................................................................................................135
Persada Permata Mulia.........................................................................................................135
Pesona Khatulistiwa Nusantara ............................................................................................135
Pinang Jaya Sarana Bara ......................................................................................................135
Pinangjaya Sarana Bara .......................................................................................................135
Ramdany Coal Mining .........................................................................................................135
Ratah Coal...........................................................................................................................135
Restubara Karya Pratama.....................................................................................................136
Riau Bara Harum .................................................................................................................136
Salamindo Coalindo.............................................................................................................136
Salamindo Pahala.................................................................................................................136
Santan Coal..........................................................................................................................136
Santan Batubara...................................................................................................................136
Sarwa Sembada Karya Bumi................................................................................................136

17. Coal Mining Business in Indonesia – ix
Selatan Selabara...................................................................................................................137
Selo Argodedali...................................................................................................................137
Selo Argokencono Sakti.......................................................................................................137
Senamas Energindo Mulya...................................................................................................137
Senamas Energindo Mulia ...................................................................................................137
Sinar Benua Prima ...............................................................................................................138
Sinarindo Barakarya ............................................................................................................138
Singlurus Pratama................................................................................................................138
Solok Bara Adipratama........................................................................................................138
Sumber Barito Coal .............................................................................................................138
Sumber Kurnia Buana..........................................................................................................139
Suprabari Mapanindo Mineral..............................................................................................139
Tambang Damai ..................................................................................................................139
Tanito Harum ......................................................................................................................139
Tanjung Alam Jaya ..............................................................................................................140
Tanjung Alam Raya.............................................................................................................140
Taraco Mining .....................................................................................................................140
Teguh Persada Coal .............................................................................................................140
Teguh Reksa Daya...............................................................................................................140
Teguh Sinar Abadi...............................................................................................................140
Tempayang Cemerlang ........................................................................................................141
Timah Batubara Utama ........................................................................................................141
Torah Antareja Mining ........................................................................................................141
Trimarta Coal Perkasa..........................................................................................................141
Trimata Buana .....................................................................................................................141
Trimata Benua .....................................................................................................................141
Trimata Coal Perkasa...........................................................................................................142
Trubaindo Coal Mining........................................................................................................142
Wadung Mas Tambang Mulia..............................................................................................142
Wadungmas Tambang Mulia ...............................................................................................142
Wahana Baratama Mining....................................................................................................142
Whirakaneo Coalindo ..........................................................................................................142
Whiratama Bina Perkasa......................................................................................................142
Yamabhumi Palaka..............................................................................................................143
List of Tables
Table 1 – Primary Energy Consumption in the World by Countries, 2005-2015 (mtoe) ...................5
Table 2 – Primary Energy: Consumption in the World by Countries and by Fuel Type, 2014
(mtoe).......................................................................................................................6
Table 3 – Primary Energy: Consumption in the World by Countries and by Fuel Type, 2015
(mtoe).......................................................................................................................7
Table 4 – BP coal prices, 1987-2015 ($/tonne).................................................................................9
Table 5 – US coal export price, 2010q1-2016q1 ($/short tons).........................................................9
Table 6 – Coal In-Place Resources for Upper Limestone Fm + Limestone Coal Fm,
Kincardine, Nov.2014.............................................................................................17
Table 7 – Coal In-Place Resources for Upper Limestone Fm, Kincardine, Nov.2014 .....................17
Table 8 – Coal In-Place Resources for Limestone Coal Fm, Kincardine, Nov.2014 .......................17
Table 9 – Coal In-Place Resources, Kincardine, Nov.2014 ............................................................18
Table 10 – Estimates of trace chemicals abundance in the global atmosphere, 1980.......................25
Table 11 – Overview of existing chemical-looping combustors .....................................................28

18. x – Coal Mining Business in Indonesia
Table 12 – Some undersea coalmines in Solway Firth, Cumbria, UK.............................................39
Table 13 – CBM Resources in Indonesia .......................................................................................47
Table 14 – The 20 largest shareholders of Dart Energy Limited, 20100914....................................52
Table 15 – Some subsidiaries of IGas which were held through subsidiaries, 30 June 2015 ...........53
Table 16 – Coal reserves in Indonesia, 2014 ..................................................................................62
Table 17 – Coal supply in Indonesia, 2000-2014............................................................................63
Table 18 – Existing coal terminals in Indonesia .............................................................................64
Table 19 – Coal mining companies in Indonesia by permits, March 2015 ......................................66
Table 20 – CNC status of IUP by announcements, 20110630-20160104........................................81
Table 21 – Problems of Non-CNC IUPs by category and regions, 20140203 .................................82
Table 22 – Clean and Clear IUPs by province, 2014 – April 2016..................................................84
Table 23 – Coal Domestic Market Obligations in Indonesia, 2010-2015........................................85
Table 24 – Coal Domestic Market Obligations in Indonesia, by CCoW and KP/IUP
companies, 20100419-20150427 (mt) .....................................................................87
Table 25 – Overlay of IUP, COW, and PKP2B with Forest Area Map and IPPKH.........................89
Table 26 – IUP within conservation forests in 12 provinces, 2014-2015 ........................................89
Table 27 – The First Generation CCoW Companies: The dates, area, and resources/reserves.........93
Table 28 – The second generation of CCoW Companies: 17 of 19.................................................93
Table 29 – Coal produced from Kalimantan, 1997-2000 (1000 ton)...............................................94
Table 30 – The third generation of CCoW Companies: 106 of 114 ................................................95
Table 31 – Coal production from CCoW companies, 2005-2012 (1,000 ton) .................................97
Table 32 – Financial profile of 3 direct subsidiaries of Tata Power on coal business in
Indonesia, 2015q1 (₹ crore)...................................................................................101
Table 33 – Subsidiaries of Tata Power related with coal mining business in Indonesia, 2015q1
(₹ crore)................................................................................................................101
Table 34 – Tata Power companies in Indonesia, 2015..................................................................102
List of Figures
Figure 1 – Potential future global oil projects by average breakeven prices ......................................3
Figure 2 – Australian monthly thermal coal price, Jan. 1980 – July 2016 (US$/metric ton)............10
Figure 3 – Monthly coal prices from Australia, Colombia, South Africa, Jan. 1970 – July
2016 ($/mt).............................................................................................................10
Figure 4 – American weekly coal prices, 20080506-20160812 (US$)............................................11
Figure 5 – Various technologies implemented during power generation process ............................12
Figure 6 – Some chemical reactions in converting syngas..............................................................13
Figure 7 – Some routes of coal to chemicals from methane via syngas...........................................13
Figure 8 – Coal cycle and its derived products schematics, from liquid (CTL), to gas (CTG),
and chemicals (CTC) ..............................................................................................14
Figure 9 – Potential UCG in the UK, 2004.....................................................................................15
Figure 10 – Kincardine UGC project area of interest, 20141105 ....................................................17
Figure 11 – Kincardine UCG licenses in the Firth of Forth, 20150402. ..........................................18
Figure 12 – Kincardine area of interest in Midland Valley of Scotland, 20141105 .........................19
Figure 13 – Coalmines in British Columbia, Canada......................................................................20
Figure 14 – Selected significant climate anomalies and events, July 2016 ......................................21
Figure 15 – Earth's Annual Global Mean Energy Budget, July 1987 – Dec. 1988..........................22
Figure 16 – Earth’s Global Energy Budget, March 2000 – March 2004 .........................................22
Figure 17 – Monthly mean atmospheric carbon dioxide at Mauna Loa Observatory, Hawaii,
March 1958 – July 2016 (ppm) ...............................................................................26
Figure 18 – Oxygen transport capability of different MeO/Me systems..........................................27
Figure 19 – The effective aquifuge in Beizao Coalmine.................................................................32

19. Coal Mining Business in Indonesia – xi
Figure 20 – TBU Underwater coal mining in The Baltic Union......................................................33
Figure 21 – TBU Coal Island.........................................................................................................34
Figure 22 – TBU Sandisle structure...............................................................................................34
Figure 23 – Coal mines in Nova Scotia, Canada ............................................................................36
Figure 24 – Donkin coal resource block.........................................................................................36
Figure 25 – Solway Firth, Irish Sea, UK ........................................................................................39
Figure 26 – The map of Tynemouth-Boldon-Sunderland, NE England...........................................41
Figure 27 – Deep coal mining closures in the UK, 2010-2015........................................................43
Figure 28 – Deep coal mining closures in the UK, 1960-1969........................................................43
Figure 29 – Onshore coal distribution in the UK by depth, 2014....................................................44
Figure 30 – CBM Basins in Indonesia............................................................................................47
Figure 31 – Coal bed methane (CBM) resources in Indonesia, 2010 ..............................................48
Figure 32 – CBM PSC terms in Indonesia .....................................................................................48
Figure 33 – Some CBM PSCs in East Kalimantan .........................................................................51
Figure 34 – CBM basin in South Sumatera, Nov. 2011..................................................................54
Figure 35 – Tanjung Enim CBM PSC............................................................................................55
Figure 36 – Muralim CBM PSC ....................................................................................................56
Figure 37 – Sangatta West CBM PSC............................................................................................58
Figure 38 – The CBM PSCs of NuEnergy in Sumatera..................................................................59
Figure 39 – Gasification-based system concepts ............................................................................61
Figure 40 – Gasification chemistry ................................................................................................61
Figure 41 – Coal distribution in Indonesia by calory class, 2014....................................................62
Figure 42 – Supply and export of Indonesian coal, 1997-2014.......................................................63
Figure 43 – Export share over coal production in top producing countries .....................................63
Figure 44 – Coal seaports in Indonesia, 2015.................................................................................65
Figure 45 – UK banks involvement in Indonesian coal companies.................................................66
Figure 46 – Mining permits in Indonesia, 20140203 ......................................................................67
Figure 47 – Mining problems in Indonesia, 20140203 ...................................................................80
Figure 48 – JORC's general relationship between exploration results, mineral resources, and
ore reserves.............................................................................................................80
Figure 49 – Problems of Non-Clean & Clear Status of IUPs classified and mapped .......................83
Figure 50 – Adding value to the coal by implementing clean coal technology................................85
Figure 51 – Coal DMO mechanism in Indonesia............................................................................86
Figure 52 – Monitoring and reporting system on the implementation of coal DMO mechanism
in Indonesia ............................................................................................................87
Figure 53 – Clean & Clear Status of IUPs, May 2011 – April 2016................................................90
Figure 54 – The mechanics of $600m structure finance (fixed rate note) of IndoCoal in 2005......106
Figure 55 – The mechanics of unrated $900m structured export notes (FRN) of IndoCoal in
2006 .....................................................................................................................106