Our Market and Customers
Powering Asia and Beyond

Adaro-Customers

Over the past two decades, Adaro has become known for its consistent coal quality, reliability and dependability. Adaro Indonesia’s trademark Envirocoal, with its low-pollutant characteristics, has earned the reputation of being the most environmentally-friendly solid fuel available.

Our customers also benefit from top-class service, with our combustion engineers visiting them to provide technical advice on using Envirocoal.

Our coal sales efforts continue to be focused on the key thermal markets of Asia, including Indonesia. Asia accounted for about 90% of our sales in 2015. The rest was supplied to the Atlantic market and the Americas. In terms of volume, about 87% of customers were power generation companies and 11% were cement manufacturers.

We offer volume-based contracts with annual price negotiation. Prices are either fixed or set with reference to index prices, while costs are effectively managed through our unique vertically integrated business model. We do not expect to vary this pricing composition much in order to reduce the risk of price fluctuations.

Adaro in the Market

The poor coal market conditions persisted in 2015. The hoped-for bottom of the cyclical downturn did not occur, as prices fell further on oversupply and lower-than-expected demand.

In the global seaborne coal trade, the defining feature of the year was China cutting thermal coal imports by 67Mt, which caused the first annual drop in total global seaborne demand in seven years.

In a strategic response to the oversupply and weak prices, Adaro cut production for only the second time in more than two decades, producing 4.8Mt less than in 2014. Our strategy is to reserve our coal to drive domestic growth in the future and to accommodate Adaro’s own power plants.

Our core producing subsidiary, PT Adaro Indonesia (AI), recorded a total sales volume of 51.4Mt in 2015, serving 56 customers in 14 countries. Monthly sales averaged 4.3Mt.
We sold 11.0Mt of coal domestically, accounting for 22% of the total sales, with more than 90% of this coal supplied to power plants and more than 90% of sales based on long-term contracts.

We exported the remaining 40.4Mt. Our largest single export destination was China, with AI’s sales unaffected by weaker demand as we shipped 8.6Mt to China, 14% more than in 2014. The second-largest export volume was India with 6.9Mt, 20% down on 2014 due to aggressive price competition among producers in Indonesia.

North Asia – Japan, Hong Kong, Koreaa and Taiwan – consumed 14.9Mt, with sales to this premium market significantly down due to price competition from high-calorie producing countries such as Australia and Russia.

We also sold 6.4Mt to ASEAN nations, marginally less than in 2014, but we were encouraged by signs of penetration to new Southeast Asian markets in Bangladesh and Vietnam.

In response to market demand, in 2015 we also introduced a new product into the market, a blend of Wara and Balangan coal that produces a better high-calorie product than the pure Wara coal. We first sold the blend in November, and by year-end we had sold an encouraging 250,000 tonnes, or 0.5% of our total sales, and we expect continued interest in 2016.

Sales of our E5000 product decreased by 4.6Mt as we reduced its availability in order to retain sufficient reserves of this high-calorie product from our Tutupan pit.

We increased the sale of our lower-calorie E4900 by 3.9Mt to compensate for this, maintaining its quality performance by portfolio management or providing a suitable product mix according to the market demand and by penetration to new markets. Sales of our lower-calorie E4000 product decreased by 4.1Mt.

A Competitive Landscape

Adaro has three main competitors for E5000 and E4900 in the environmental, sub-bituminous coal market, while E4000 has many more. We compete on price, certainty of delivery and our established quality record. Our competitive advantage over other Indonesian coal companies lies in our large proven reserves, strong relationships with mining contractors, vertically integrated business model and proven track record of supplying quality Envirocoal to our customers.

We compete in the wider coal markets for domestic and international coal sales against a significant number of large Indonesian coal producers, including PT Kaltim Prima Coal, PT Arutmin Indonesia, PT Kideco Jaya Agung, PT Berau Coal and coal producers controlled by PT Indo Tambangraya Megah Tbk.

Our principal competitors in the wider coal markets in Asia include large producers from Australia, South Africa and China, such as Rio Tinto, BHP Billiton, Anglo American, Xstrata, China Shenhua Energy and China Coal Energy. We believe we hold competitive advantages over our Australian and South African competitors given our relative geographic proximity to Asian customers.

Our primary competitors for European sales are coal producers with operations in South Africa and Russia, including Xstrata, Anglo American and BHP Billiton. In the Americas our primary competitors for coal sales are domestic coal producers, including those in the Powder River Basin area, and Colombian coal producers.

We also face competition in all markets in which we operate from providers of alternative sources of energy to coal, most significantly from natural gas and nuclear power.

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.

  • Our Leadership Team

    We have a unique ownership based on five key shareholding families. Get to know our directors and commissioners.

  • Our History

    Adaro has come a long way since first breaking ground. See how it has grown into one of Indonesia’s largest companies.

  • Our Governance

    Adaro insists on world-class governance principles and standards, ensuring the best service for shareholders.

  • Awards for Adaro

    Adaro is consistently recognized for quality in mining, environmental care and as an employer. Read about our successes.

  • FAQs

    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.

  • Glossary

    FGD, demurrage, overburden, GAR, panamax, calorific value: demystify coal’s complex terminology.

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