Adaro Energy update: Project Development

The following is an excerpt from IDX-listed energy firm PT.Adaro Energy 's second quarter report on project development released on Thursday. (ed)

PROJECT DEVELOPMENT

Overburden Crushing and Conveying System
The overburden crushing and conveying system project is aimed to offset the projected substantial increase in truck numbers and haulage distance required for overburden removal at the Tutupan pit, as well as reducing future projected levels of fuel consumption. On March 25th 2011, AI signed contracts with FLSmidth (?RAHCO?) and PT Wijaya Karya (Persero) Tbk (?WIKA?) worth in excess of US$175 million for a system that has a capacity to crush and transport 12,000 tonnes per hour of overburdens equivalent to 40 Mbcm annually.

In 2Q11, Adaro sought to novate the agreement between AI and FLSmidth to one between another wholly owned subsidiary of AE, Jasapower Indonesia (?JPI?), and FLSmidth. JPI has appointed a Project Manager and continued to recruit a support team during 2Q11. Both FLSmidth and WIKA went to the site to review available areas for the establishment of site facilities. The overburden crushing and conveying system is expected to reduce operating costs by US$1.00-US$1.20 per bank cubic metre of overburden extracted compared to the use of trucking. The project is expected to commence operation in the first quarter of 2013.

2X30 MW Mine-mouth Power Plant
The two by 30 megawatt mine-mouth power plant is owned and will be operated by our subsidiary, PT Makmur Sejahtera Wisesa (?MSW?), to power the overburden crushing and conveying system and other parts of the mining operations. The construction work at the site progressed well during 2Q11 and the power plant is on track to commence operation by 2012.

During 2Q11, MSW spent US$19 million mainly for EPC equipment supplies and construction services which brought total spending on this project to US$89.7 million. The project is expected to cost US$160 million and it is planned that the plant will be fuelled by approximately 300,000 tonnes of E 4000 (Wara) coal per year.

Expanding Capacity at the Kelanis River Terminal
Our coal crushing, stockpiling and barge loading facilities are handled at the Kelanis river terminal with a current through-put capacity of approximately 50 million tonnes a year. The Kelanis expansion project will support our plan to increase coal production levels up to 80 million tonnes a year. (end of excerpt)