Success Built In to Our Strong Business Model
Adaro Energy currently has almost 30 operational-level subsidiary companies, housed under six divisions that are vertically integrated from the start of the coal supply chain to the end: Mining Assets, Mining Services, Logistics, Marketing, Power and Land Asset Management.
Around half of our subsidiaries are currently operating as revenue-generating entities (the others are in development and exploratory modes) at various stages of the coal supply chain, where they operate alongside and to varying extents in competition with third-party contractors employed by Adaro.
Having at least one of our subsidiaries involved in each segment of the supply chain gives Adaro substantial control over the chain, allowing us to reduce costs, improve reliability, and boost operational efficiency.
In this challenging coal price environment, we will continue to focus on capital preservation, cost efficiency and deleveraging. The challenging conditions further encourage us to develop our non-coal mining businesses, and to boost their contributions to Adaro, to smooth out revenues and returns and offset uncontrollable declines in cyclical coal prices.
We want to have a business with a considerable contribution from power and other non-coal mining businesses. We will have three engines of growth: coal mining, mining services and logistics, and power.
Our vertical integration is focused on our long-established South Kalimantan Coal Co-operation Agreement (CCA) area, owned and operated by PT Adaro Indonesia, which is housed under the Mining Assets unit. Adaro Indonesia’s mining in South Kalimantan have historically accounted for the bulk of our revenue (90% in 2015).
At the CCA site, Adaro Indonesia and several subsidiaries under Mining Services alongside third-party contractors handle work from mining and overburden removal activities to building and operating a conveyor system, haul road and barge-loading river port.
After the coal is mined and transferred to barges, subsidiaries under Logistics Services take care of transportation, handling our river and marine logistics activities in South Kalimantan and taking the coal to our offshore anchorage for trans-shipping or to our coastal storage terminal.
The final part of our vertical integration is Power. With the goal of delivering positive energy to help fuel Indonesia’s growth, Adaro Power aims to participate in various power generation projects and become a major contributor to the country’s electricity generation sector, using coal from our own concessions. We expect our Power division to play a key role as we continue to seek growth without taking unnecessary risks.
We intend that this vertically integrated model will be replicated in recent acquisitions we have made in other areas of Indonesia (which account for most of our subsidiaries that are still in development mode).
Our subsidiaries are also positioned as independent profit centers, and if it is determined that taking our subsidiaries public would create shareholder value, we may list them on a public exchange in the future.
See the flowchart above for a detailed explanation of Adaro Energy’s subsidiary structure.
As our business model gives us better control over our costs and risks, we are able to offer a better reliability of supply to our customers by reducing counterparty risk and the likelihood of disruptions to our operations and expansion plans. This in turn improves the marketability of our coal.
Having better control over our costs also means we are at the bottom end of the global cost curve. In addition, being located in Indonesia is a strategic advantage as it gives us close proximity to emerging economies in the Southeast Asia region, India and China.
This allows us to supply coal to our primary markets in Asia at lower freight costs compared to coal producers in other countries such as Australia and South Africa. At the end of 2014, our coal cash cost (excluding royalties) was US$33.03, down from US$34.86 at the end of 2013.
PT Adaro Energy Tbk Corporate Identity
Name of Corporation PT Adaro Energy Tbk
Foundation Date July 28, 2004
Line of Business Integrated coal mining through subsidiaries
Authorized Capital Rp 8,000 billion
Issued and Fully Paid Capital Rp 3,198.60 billion
Ownership PT Adaro Strategic Investments 43.91%; Garibaldi Thohir 6.18%; Other key shareholders 14.68%; Public 35.23%
Headquarters Address Jl. H.R. Rasuna Said, Blok X-5, Kav. 1-2, Jakarta 12950, Indonesia.
Stock Exchange The common stock of PT Adaro Energy Tbk (trading symbol ADRO) is listed on the Indonesia Stock Exchange (IDX)
Public Accountant Tanudiredja, Wibisana & Rekan (a member of PricewaterhouseCoopers global network).
Jl. H.R. Rasuna Said Kav. X-7 No.6, Jakarta 12940, Indonesia.
Share Registrar PT Ficomindo Buana Registrar.
Mayapada Tower 10th Floor, Suite 2b, Jl. Jenderal Sudirman Kav. 28, Jakarta 12920, Indonesia.
Read More About Adaro
- Adaro at a Glance
Exploring for coal; mining and selling it; generating power from it. Understand our business in seconds.
- Our Vision
Adaro strives to deliver positive energy from Indonesian coal. See how our strategy helps us do that.
- Our Cleaner Coal Products
Our core product, Envirocoal, is the world’s cleanest solid fossil fuel. Find out what makes it remarkable.
- Our Reserves and Resources
We control or have options on 12 billion tonnes of coal in Indonesia. See where it is and how we plan to mine it.
- Our Market and Customers
We sell our coal to power providers and cement manufacturers in Indonesia and worldwide. Find out who and where.
- Our Corporate Structure
We own or have stakes in 21 vertically integrated subsidiaries. Find out how they operate and fit together.
We have a unique ownership based on five key shareholding families. Get to know our directors and commissioners.
Adaro has come a long way since first breaking ground. See how it has grown into one of Indonesia’s largest companies.
Adaro insists on world-class governance principles and standards, ensuring the best service for shareholders.
Adaro is consistently recognized for quality in mining, environmental care and as an employer. Read about our successes.
How do we find our coal? What CSR do we do? What is it like to work at Adaro? Find answers to these and more.
FGD, demurrage, overburden, GAR, panamax, calorific value: demystify coal’s complex terminology.