Executive Summary of the Coal Benchmark Price Formulae Regulation

INTRODUCTORY NOTES
This Summary & Analysis is intended as an overview only of the Directorate General of Minerals, Coal & Geothermal (?DGoMCG?) Regulation re Formulae for Determining the Coal Benchmark Price, dated 20 March 2011, and issued pursuant to the Minister of Energy & Mineral Resources Regulation re Procedures for Minerals and Coal Benchmark Price Determination (?Coal Benchmark Price Formulae Regulation?).

This Summary & Analysis reflects our current understanding only of the Coal Benchmark Price Formulae Regulation and is subject to change as that understanding develops and evolves.

This Summary & Analysis should be read in conjunction with our earlier (i) Summary and Analysis, dated 9 January 2009, of the New Mining Law, (ii) Summary and Analysis, dated 30 November 2009, of the Implementing Regulation on Mining Services, (iii) Summary and Analysis, dated 25 January 2010, of the Regulation on Prioritization of Coal and Mineral Supply for Domestic Interest, (iv) Summary and Analysis, dated 19 February 2010, of the Implementing Regulation on Coal Mining Enterprise Activities, (v) Summary and Analysis, dated 13 September 2010, of the Implementing Regulation on Mining Direction & Supervision, (vi) Summary and Analysis, dated 5 October 2010, of the Implementing Regulation on Benchmark Price Determination and (vii) Summary and Analysis, dated 14 January 2011, of the Implementing Regulation on Reclamation & Post Mining Activities. Copies of these earlier Summaries & Analyses are available upon request.

The use of implementing regulations and decrees to augment a law is a very common practice in Indonesia. Laws are passed by the Indonesian Parliament with the intention they will set out the broad parameters only of a new regulatory regime while the details of the new regulatory regime will be provided in one or more implementing regulations and other instruments issued by the Ministry and or officials of the Ministry with primary responsibility for overseeing the application of the new regulatory regime. The use of the Coal Benchmark Price Formulae Regulation to expand on Articles 11(4), 19(3) and 21(4) of the Benchmark Price Regulation is, therefore, entirely consistent with long established Indonesian legislative practice and procedure.

Many of the points made in this Summary & Analysis are necessarily speculative in nature and subject to further clarification and confirmation. Accordingly, it would be prudent not to rely solely on this Summary & Analysis but, rather, to seek specific legal advice with respect to any issue concerning the Coal Benchmark Price Formulae Regulation before making a material business decision regarding the same.

CHRISTIAN TEO PURWONO & Partners would be pleased to assist you in this regard. Our contact details are set out below.

Address : CHRISTIAN TEO PURWONO & Partners
The Indonesia Stock Exchange Building
Tower II Floor 14 Suite 1405
Sudirman Central Business District
Jakarta 12190
INDONESIA
Telephone : [62-21] 515 0280
Facsimile : [62-21] 515 0281

Please contact, in the first instance, Mr. Bill Sullivan, Licensed Foreign Advocate (email:

bsullivan@cteolaw.com and mobile:[62-21] 81585060978) or Ms. Nurvita Kristianty Siregar, Senior Associate (email: nksiregar@cteolaw.com and mobile [62-21] 818482777).

EXECUTIVE SUMMARY
1. DGoMCG determines, each month, the Coal Benchmark Price for (i) steam (thermal) coal and (ii) coking (metallurgical) coal) based upon the applicable formula that refers to the average coal index price as determined in accordance with the international price mechanism and/or at a price that is generally applicable in the international market.

2. The Coal Benchmark Price must be used by holders of Operation Production IUPs,Operation Production IUPKs and PKP2B/CCoWs as a reference in determining the selling price of coal.

3. There are 2 types of Coal Index Prices as follows:
(a) Steaming (Thermal) Coal Index Price; and
(b) Coking (Metallurgical) Coal Index Price.

4. The formula for determining the Steaming (Thermal) Coal Index Price also applies as the formula for determining the Steam (Thermal) Coal Benchmark Price for Primary Coal and Other Coal.

5. In the case of term sales, the Coal Benchmark Price is determined based on the average

Coal Benchmark Price for the 3 months prior to the date of the contract between the buyer and the seller.

6. The details of each of the formulae for determining the different Coal Index Prices are set out in Appendices I to III of this Summary & Analysis. (ends)

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