BUSINESS PERSPECTIVES ON CLEAN COAL TECHNOLOGY

Bob Kamandanu

Chairman APBI-ICMA

“ Energizing the World with Clean Coal Technology”Marina Bay Sand Convention Center, Singapore

October 31, 2014

Declining price

Oversupply

Slower demand from China (due to slower power

demand growth, stronger hydro generation,

credit tightening, etc)

Rise of anti pollution measures

Shale gas

Production cut in several coal producer countries

including Indonesia

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127.05

90.09

67.26

20

40

60

80

100

120

140

Jan

-11

Mar

-11

May

-11

Jul

-11

Sep

-11

Nov-

11

Jan

-12

Mar

-12

May

-12

Jul

-12

Sep

-12

Nov-

12

Jan

-13

Mar

-13

May

-13

Jul

-13

Sep

-13

Nov-

13

Jan

-14

Mar

-14

May

-14

Jul

-14

Sep

-14

6322 Kcal/kg GAR

5700 Kcal/kg GAR

5000 Kcal/kg GAR

4200 Kcal/kg GAR

USD/MTGraph of HBA dan HPB , Periods : January 2011- October 2014

Decline in globalcoal benchmarkprices due to theweakening of theEuropean economyand slowing of theeconomic growth inChina

DECLINING TREND OF INDONESIAN COAL PRICE REFERENCE (HBA)

Source : Ministry of Energy and Mineral Resources

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Indonesia contributes roughly 35% of the world coal supply

Global coal supply is expected to exceed the demand, of which it triggers down the

prices.

Source : Deutsche Bank Report , May 2013

Global supply potential vs import demand (Mt)

2013e 2014e 2015e 2016e 2017e 2018e 2019e 2020e

Indonesian exports 371 393 417 429 442 455 469 483

Australian exports 182 197 208 214 230 241 253 265

Russia exports 100 103 106 108 110 113 115 117

South African exports 76 77 79 81 81 82 83 84

Colombian exports 83 85 87 89 91 93 95 97

US exports 35 30 25 25 25 25 25 25

China exports 10 10 10 10 10 10 10 10

Other exports 180 182 183 185 187 189 191 193

Total supply 1,037 1,077 1,115 1,141 1,176 1,208 1,241 1,274

% Indonesian Supply 36% 36% 37% 38% 38% 38% 38% 38%

CAGR 3%

Japanese imports 143 146 148 150 152 154 157 159

Korea&Taiwan imports 173 176 179 183 186 189 192 196

European imports 220 220 211 201 197 179 160 164

China imports 230 220 200 195 195 195 195 195

India imports 122 127 134 142 150 162 175 189

Other imports 144 146 148 150 152 154 156 158

Total demand 1,032 1,035 1,020 1,021 1,032 1,033 1,035 1,061

CAGR 0.4%

Oversupply 5 42 95 120 144 175 206 213

Oversupply in the global coal market

Source : Wood Mackenzie Coal Supply & Markets Service, Kalimantan Coal Conference, 2014

WEAKER CHINESE DEMAND THE KEY DRIVER FOR PRICE WEAKNESS

While demand has continued to grow: total thermal volume 961 Mt (+ 7.1% y-o-y) in 2013, Chinese demand growth has slowed

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Source : Wood Mackenzie Coal Supply & Markets Service, Kalimantan Coal Conference, 2014

“SLOWER NOT LOWER”GROWTH DOMINATES DRIVERS OF COAL DEMAND OVER FIVE YEAR TIME HORIZON

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2045

2012 2025

2050

OilNatural Gas

Coal

New Renewable Energy

25%

22%30%

23%

20%

24%25%

31%

41,4%

23,6%29,4%

5,6%

TPE: 380 MTOE

TPE: 850 MTOE TPE: 980 MTOE

TPE: 169 MTOE

21%

24%26%

29%

Source:

Indonesian National Energy Council (DEN)

Indonesia is moving toward reducing dependence on coal in energy mix policy

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Due to slower demand, production cut, anti pollution measures,credit tightening and other financial and economic factors, future ofcoal lies on the use of clean coal technology.

Proven technology will be the most crucial issue to be addressed.

There is a strong tendency that Indonesian government will putpriority on coal value added.

Government and industry players will sit down to discuss proposeddirection on coal value added, therefore proven and affordable cleantechnology will be the key.

Attractive incentives is highly needed to encourage development andinvestment on clean coal technology.

CLEAN COAL TECHNOLOGY IS THE SOLUTION FOR THEFUTURE OF COAL

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CLEAN COAL PROJECT UPDATE

Source : Tekmira, Ministry of Energy and Mineral Resources

Many clean coal project in Indonesiaready to next step as CommercialPlant ( from 2016 ) ;

Bituminous and low rank coal isavailable in Indonesia to support thisclean coal project ;

A special incentive are needed tomaterialize this project.

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THANK YOUThe author gratefully acknowledges the sources of slides used in preparing this presentation

Chairman APBI-ICMA

T : +62 21 3001 5935

F : +62 21 3001 5936

Menara Kuningan Bldg, 1st Floor - Suite A

Jl. HR Rasuna Said Block X-7, Kav. 5

Jakarta 12940 – INDONESIA

Email : secretariat@apbi-icma.org

Website : www.apbi-icma.org

Bob Kamandanu

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