Strengths...

The Group’s strong and large operation enables it to achieve economies of scale to support growing demand for Envirocoal. As a result, Adaro has increased its output each year and crossed the 40 million tonnes mark in 2009.

Adaro’s mine generally has thick seams of coal close to the surface making the coal less costly to extract. The planned stripping ratio for Tutupan mine is 5.0 Bcm/tonne (average for remainder of Tutupan is 5.7 Bcm/tonne), while the planned stripping ratio for Wara mine is even lower at 2 Bcm/tonne. The outsourcing of a significant part of mining operations allows the Group to take advantage of the expertise of multiple contractors and encourage cost competition between contractors. Adaro’s geographic location also allows it to supply coal to its primary markets in Asia and domestic market at lower freight costs compared to other coal producers in Australia and South Africa.

Most of Adaro’s coal exports are sold to blue-chip power generation companies. Substantially, all of these customers are long term as Adaro Energy has established contracts of more than 5 years, with nearly all of them. As its customers are located in different geographic locations, Adaro has been able to reduce country and region specific macro-economic risks.

Integrated operations covering the full coal supply chain

Adaro is supported by the vertically integrated operations provided by the Group, with each of the Group’s principal subsidiaries operating in a specific link of the coal supply chain. The Group’s subsidiaries are dedicated to owning and managing a coal mining concession, coal trading, coal mining contractor services, barging services, power generation and coal infrastructure and logistics, which provide the Group with significant control over the entire coal supply chain.

Well-positioned to take advantage of new market opportunities

According to McCloskey, Indonesia has grown to be the world’s largest supplier of seaborne thermal coal.
In 2008, Indonesian companies exported 140 million tonnes of coal, of which approximately 86.5% was exported to customers within Asia.
According to McCloskey, Japan was the largest export market for Indonesian coal, accounting for 20.3% of exports, followed by South
Korea at 14.4%, Taiwan at 14.3%, India at 11.9% and China at 6.4%. According to McCloskey, Indonesian coal exports are expected to grow by 78.1% to 250 million tonnes by 2014.

Significant demand for Envirocoal

According to McCloskey, since the introduction of Envirocoal to the market in 1990, global demand for seaborne thermal coal, which includes sub-bituminous coal, has steadily increased to an estimated 719 million tonnes in the year ended December 31, 2008.

Diversified ownership
with an experienced
management team

A group of five Indonesian
shareholders who together hold around 65% of Adaro Energy provides a collaborative forum to provide a natural system of checks and balances and decisions are made with significant consideration and debate. The Group’s controlling shareholders comprise of the founders and past executives of PT Astra International Tbk, an established and well-governed Indonesian corporation.

Established first generation Coal Cooperation Agreement

Adaro Indonesia operates under the first generation Coal Cooperation Agreement “CCA” with the Government of Indonesia which is valid until 2022, and that is when our CCA may then be converted into an extended IUP (Izin Usaha Pertambangan)/mining license with a period of 2x10 years.

Abundant reserves of a high quality asset

Adaro Energy has 3.5 billion tonnes of coal reserves and resources, and the ongoing exploration has allowed the Company to grow its reserve base to more than 600 Mt during the past 4 years.