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2. FIVE COAL CONTRACTORS STARTS OPERATION.

The country's coal production is expected to continue to increase in the coming years following the operation of five contractors operating under the second coal mining working agreement (PKP2B). The five companies are PT Antang Gunung Meratus (AGM), PT Bentala Coal Mining (BCM), PT Bahari Cakrawala Sebuku (BCS), PT Jorong Barutama Greston (JBG) and PT Gunung Bayan Pratama (GBP), all in Kalimantan. GBP is in East Kalimantan and the rest in South Kalimantan.

BCS in Pulau Sebuku, Kota Baru, South Kalimantan started commercial operation in May 1998. Most of the coal production of the company, which is 80% owned by Straits Sebuku Pte Ltd from Singapore, and 20% by PT Reyka Wahana Digdaya, is exported to Hongkong, Taiwan, India and the Philippines. The coal production of GBP, which started operation in July 1999 in Kutai is exported to Japan, Europe and Malaysia.

BCM, which is one of the bad debtors now handled by the Indonesian Bank Restructuring Agency (IBRA) was reportedly to be sold to interested buyers. The company is facing bankruptcy. There are also coal contractors not entering the stage of production like PT Nusa Minera Utama (NMU), PT Indexim Coalindo (IC) owned by the Gajah Tunggal Group and PT Kartika Selabumi Mining.

There are 18 companies operating under the second generation of the PKP2B. The remaining 13 contractors are not yet ready for operation. With the 5 companies coming on stream, there are at least 15 PKP2B contractors in operation including 10 under the first generation. The only one of the first generation not yet operational is PT Chung Hwa OMD, which is beset by internal disputes.

Table - 1 Coal contractors of PKP2B generation I and II already operational, 1999
Name of company Location Acreage (Ha)

PKP2B Generation I:
Kaltim Prima Coal, PT Sangatta 140,436
Arutmin Indonesia, PT Tanah Laut 70,154
Multi Harapan Utama, PT Busang 49,200
Tanito Harum, PT Loa Tebu 23,789
Adaro Indonesia, PT Hulu Sungai Utara 35,520
Kideco Jaya Agung, PT Batu Sopang 50,400
Allied Indo Coal, PT Ombilin 844
Berau Coal, PT Lati 120,550
BHP Kendilo Coal, PT Pasir 4,133
Indominco Mandiri, PT Bontang 25,000

PKP2B Generation II:
Gunung Bayan Pratama, PT East Kalimantan 99,800
Jorong Barutama Greston, PT South Kalimantan 98,418
Bahari Cakrawala Sebuku, PT South Kalimantan 17,350
Bentala Coal Mining, PT South Kalimantan 61,606
Antang Gunung Meratus, PT South Kalimantan 98,455



Source: Data Consult

Under the contract, after five years the contracts are required to start divesting 15% of their shares, followed by 8% in the sixth year and 7% annually from the 7th to 10th years, that by the tenth year, Indonesian shareholders would be a majority 51% shareholders. The share price is based on the costs from the general surveys to working capital deducted with depreciation, amortization and debts by the end of year.

A dispute arose involving PT Kaltim Prima Coal, which is owned by two British companies - Rio Tinto Pie and British Petroleum PLc. The foreign company was to transfer 30% of its share to PT Timah by last year. The dispute was over the price. KPC set the price at US$ 200 million but the state-owned tin company described the price as too high saying that the reasonable price is between US$ 100 million to US$ 150 million. The mines and energy minister has set a deadline until October this year to settle the dispute and make the divestment or facing a sanction in the form of fine or the termination of the contract.

Investment interest high

The interest is still high in coal investment. On May 31, 1999, there were 12 domestic companies signing a new contract, the third generation of PKP2B with the government. Under the third generation contract, a contractor is required to pay in cash 13.5% of the production on free on board price or on at sale point price to the state treasury.

The building and land tax (PBB) to be paid in the production phase is equivalent to the amount of the fixed contribution (IT) plus 1.5% of the gross revenue of mining operation. Out of the total PBB revenue, 90% would go to the regional administration and 10% to the center. Four of the third generation companies - Baramulti Suksessarana, Kadya Caraka Mulia, Sumber Kurnia Buana and PD Baramarta - operate in the former concession of PT Chung Hua OMD after being taken over by the government in August, 1998.

On Oct. 12, there were 11 other PMDN companies signing new contracts having operational areas in South Kalimantan, East Kalimantan, Riau, Jambi and South Sumatra. Agreement with BHP Mineral Holdings Pty Ltd, foreign contractor from Australia, was postponed. The company was to operate in Central Kalimantan, East Kalimantan and Central Kalimantan.

Table - 2 Coal mining contracts signed in 1999
 Name of company Location

Approved 31 May 1999:
Bumi Laksana Perkasa, PT Kutai
Dayalapan, PT Kutai
Wadungmas Tambang Mulia, PT Kutai
Asmin Bara Bonang, PT Kapuas & Barito U.
Asman Koalindo Tuhup, PT Barito Utara
Torah Antareja Mining, PT Barito Utara
 dan Tabalong
Baramulti Suksessarana, PT Banjar & Tanah Laut
Kadya Caraka Mulia, PT Banjar
Sumber Kurnia Buana, PT Tapin & Banjar
Baramarta, PD Banjar
Energi Batubara Sumatera, PT Musi Banyuasin
Pinangjaya Sarana Bara, PT Lahat & Muara Tawas

Approved 13 October 1999:
Abadi Batubara Cemerlang, PT
Selo Argokencono Sakti, PT
Tanjung Alam Jaya, PT
Teguh Sinar Abadi, PT
Sempayang Cemerlang, PT
Andhika Mutiara Etam, PT
Bangun Banua Persada Kalimantan, PT
Teguh Reksa Daya, PT
Karya Bumi Baratama, PT
Sarwa Sembada Karya, PT
Firman Kataun, PT

 Name of company Province Acreage (Ha)

Approved 31 May 1999:
Bumi Laksana Perkasa, PT East Kalimantan 11,330
Dayalapan, PT East Kalimantan 88,380
Wadungmas Tambang Mulia, PT East Kalimantan 20,770
Asmin Bara Bonang, PT Central Kalimantan 86,540
Asman Koalindo Tuhup, PT Central Kalimantan 40,160
Torah Antareja Mining, PT Central Kalimantan
 South Kalimantan 69,060
Baramulti Suksessarana, PT South Kalimantan 16,020
Kadya Caraka Mulia, PT South Kalimantan 10,630
Sumber Kurnia Buana, PT South Kalimantan 10,920
Baramarta, PD South Kalimantan 7,486
Energi Batubara Sumatera, PT South Sumatra 38,700
Pinangjaya Sarana Bara, PT South Sumatra 32,650

Approved 13 October 1999:
Abadi Batubara Cemerlang, PT Riau
Selo Argokencono Sakti, PT South Sumatera
Tanjung Alam Jaya, PT South Kalimantan
Teguh Sinar Abadi, PT East Kalimantan
Sempayang Cemerlang, PT East Kalimantan
Andhika Mutiara Etam, PT East Kalimantan
Bangun Banua Persada
 Kalimantan, PT South Kalimantan
Teguh Reksa Daya, PT Riau & West Sumatra
Karya Bumi Baratama, PT Jambi &
 South Sumatera

Sarwa Sembada Karya, PT Jambi
Firman Kataun, PT East Kalimantan



The government through the general mining directorate general has also issued mining license for at least 7 rural cooperatives (KUD) in cooperation with first generation contractors namely PT Adaro to supply coal to PT Semen Bosowa in Ujungpandang.

Table - 3 KUD securing coal mining license, 1999
Name of KUD Location Acreage (Ha)

Bangun Karya Banj ar, Tanah Laut 368.9
Nusantara Kotabaru 171.4
Karya Meratus Kotabaru 85.7
Ikhlas Membangun Tapin, Tanah Laut 65.0
Tani Jaya Murni Tanah Laut 97.4
Kalimantan Tengah KotabarU 9342.0
Puskoveri Kotabaru 5657.0
(Pusat Veteran)



Source: Data Consult

Besides by contractors, coal is also produced by state companies PT Tambang Batubara Bukit Asam (BA), Mining Authority (KP) holders (Indonesian private companies) and KUD.

Production up 16.8% annually

Previously coal mining was controlled by PT BA, but based on a presidential decree in 1996 and ministerial decision June 6, 1997, PT BA was no longer the principal. Under the new regulation, the government became the principal for PKP2B contracts. In 1994-1998, the country's coal production rose from 32.8 million tons to 60.7 million tons mainly after the operation of 5 new contractors under the second generation of PKP2B. Production has also been boosted by the growing consumption for power and cement plants. PKP2B contractors now account for 70% of the country's coal production.
Table - 4
Indonesia' s coal production, 1994 - 1998

 ('000 tons)

Year PT BA Private(*)) Total Growth
 (%)

1994 6,707.2 26,149.9 32,857.1 -
1995 7,979.2 33,861.9 41,841.1 27.3
1996 9,230.6 41,110.2 50,340.8 20.3
1997 9,676.1 44,975.8 54,822.8 8.5
1998 9,835.1 50,901.4 60,736.5 11.0

Average growth (%) 16.8



(*) PKP2B contractor; private National and KUD; Source Directorate of Coal/Data Consult

Exports valued at US$ 1.34 billion

In 1994-1998, the country's coal exports rose considerably by 19.8% annually from 25.8 million tons valued at US$ 829.4 million in 1994 to 48.3 million tons valued at US$ 1.34 billion in 1998. Bituminous coal dominated exports in 1998 accounting for 36.4 million tons valued at US$ 1 billion of the total exports that year. Indonesian coal is superior in quality over Australian coal with lower sulfur content.
Table - 5
Indonesia's coal exports, 1994 - 1998

 ('000 tons)
 US$'000

Type of coal 1994 1995 1996

Anthracite 1,142 1,825 1,369
 39,050 60,060 48,082
Bituminous Coal 22,116 25,680 5,970
 723,857 867,169 946,338
Other Coal 2,105 4,064 4,616
 55,978 105,817 126,409
Briquettes Coal 406.20 382 78
 10,383 10,526 2,717

Total 25,770 31,952 32,033
 829,423 1,043,572 1,123,546

Type of coal 1997 1998

Anthracite 1,091 1,319
 33,773 31,307
Bituminous Coal 31,991 36,442
 1,166,732 1,065,335
Other Coal 9,047 10,489
 284,249 249,803
Briquettes Coal 164 95
 5,274 2,833

Total 42,293 48,345
 1,490,028 1,349,278



Source: CBS/Data Consult * * *3
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Comment:2. FIVE COAL CONTRACTORS STARTS OPERATION.
Publication:Indonesian Commercial Newsletter
Geographic Code:9INDO
Date:Nov 9, 1999
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