Our Coal Supply Chain
From Pit to Port to Power
The backbone of Adaro Energy is its mine concession at Tabalong in South Kalimantan. Our subsidiary Adaro Indonesia has mined and hauled coal from there for more than two decades, and now produces about 55 million tonnes annually.

While Adaro Energy is expanding into new coal properties in Indonesia and diversifying in power generation, the Tabalong mine pits still account for over 90% of Adaro’s revenues, and our coal supply chain — how we get the coal from under the ground to our customers — is key to our ongoing success.

The Operations section of our website explains all about our Kalimantan coal supply chain, about our investments for making future improvements and efficiencies, about our plans to recreate the supply chain at some of our newly acquired mining concessions, and about our plans to establish a power generation presence in Indonesia.

On this page we start with an exploration of the coal supply chain:

PT Adaro Indonesia has mined its concession at Tabalong in South Kalimantan since 1992, and has created what is now the largest single-site coal mine in the southern hemisphere.

When Adaro Energy was created as a parent company in 2008, Adaro Indonesia became its core operating subsidiary, along with a number of other subsidiaries that support it, principally in mining services, coal hauling, barging and shiploading.

Our aim is to have these subsidiaries responsible for about 50% of total coal production volume, with the rest handled by third-party contractors. We principally use performance to determine the volume we give each year to each of our contractors.

Adaro's coal is sold mostly to blue-chip power utilities, and we must get the coal to the customer along our supply chain as safely and efficiently as possible as well as continuing our path of sustainable production growth. Adaro Indonesia achieved its second-highest production level in 2012 from the concession despite difficult market conditions.

In 2013, we added coal resources through the acquisition of 75% three companies with coal-mining licenses (IUPs) at a greenfield coal deposit in Balangan district, South Kalimantan, strategically located 11km southeast of Adaro Indonesia\s concession. The first started commercial operations in the first half of 2014.

Contractor Coal production (2015)
PAMA 45%
SIS 33%
BUMA 14%
RA 9%
Adaro Indonesia currently mines the Tutupan, Paringin and Wara pits in the South Kalimantan concession area, which is located along 14 coal seams measuring 21 kilometers in length and up to 60 meters thick.

Tutupan remains as our largest mine, producing 41.97Mt of coal in 2015. We had robust demand in 2015 for our E4900 product, which comes from the Tutupan pit. Production from our Wara pit was 2.97Mt and production from Paringin was 5.41Mt.

Adaro Indonesia focuses on exploration, mine planning and production supervision together with environmental management, and for its mining operations it uses four mining services contractors: PT Saptaindra Sejati (SIS), a fully owned subsidiary of Adaro Energy, PT Pamapersada Nusantara (PAMA), PT Bukit Makmur Mandiri Utama (BUMA) and PT Rahman Abdijaya (RA).

Currently, SIS handles about one third of our coal mining and overburden removal (stripping away and disposing of rock layers above coal seams), with the rest handled by third-party contractors. One of these contractors, PAMA, handles the largest volume.

Each contractor is responsible for providing its own equipment, supplies and labor to operate within its allocated areas and achieve production targets. We reward our contractors based on their performance and other efficiency measures including fuel consumption and coal delivery cycle time.

Contractor Coal Hauling (2012)
PAMA 37%
SIS 35%
BUMA 13%
RA 13%
RMI 2%
Coal is loaded into truck-and-trailer road trains at our run-of-mine stockpile in the mine site and hauled to our river terminal on the Barito river, 80 kilometers west of the concession area.

The trucks and trailers together have an average capacity of 130 tonnes. Hauling is done along an almost-straight, sealed haul road owned by Adaro. The hauling work is divided between the same contractors used for mining and is supervised by Adaro Indonesia. Our subsidiary SIS is currently the second-largest contractor used for hauling, and third-party contractor PAMA is the largest.

Through insights gained from SIS, we have been able to continually improve efficiencies both at our mine concession and along our hauling road, such as by reducing the average coal hauling cycle time, increasing the truck usage rate and requiring our contractors to reduce fuel usage by 2% each year.

To improve the cycle time for coal delivery from the mine to our river terminal, we remain committed to investing in road maintenance and upgrades along Adaro Indonesia's main hauling road.

Our terminal at Kelanis, which handles all coal crushing, stockpiling and barge-loading activities, maintained a high level of availability throughout the year. Kelanis has an annual capacity of 60Mt based on average operating conditions.

After the coal extracted from Adaro Indonesia's mines in Tabalong, South Kalimantan, has been hauled the 80 kilometers to our crushing, stockpiling and loading facility at Kelanis on the Barito River it is ready for barging down to the coast.

When it arrives the trucks dump it into giant hoppers and enters a screening and crushing system where it is broken into pieces of maximum 50mm diameter, the right size for use in power plants. It is then conveyed either directly to waiting barges or into one of two stockpiles for loading later.

Kelanis has a throughput capacity of approximately 55 million tonnes per year, and expansion plans were put in place in 2010 to expand this to 70 million tonnes in order to help Adaro meet its medium-term production target of 80 million tonnes. The first phase of this expansion was substantially completed in 2013.

The seven hopper, crusher and conveyor systems that are used to move coal from the haul trucks into the terminal now have an increased cumulative inloading capacity over 10,500 tonnes per hour, while new barge loaders and conveyor systems have increased total barge-loading capacity to 14,000 tonnes per hour.

Contractor Barging (2012)
MBP 46%
PSJ 18%
RTI 10%
MBSS 10%
MDM 2%
Coal that is barged downriver from the Kelanis terminal is destined for delivery in one of three ways: about 75% is barged straight to our open-sea anchorage near the mouth of the Barito river and for transfer to international customers' ships waiting there, about 20% is barged directly to Indonesian customers via the Java Sea, and about 5% is barged to our coal storage and dockside loading facility at Pulau Laut on the southeastern coast of Kalimantan.

On the Barito River we have five barging and shiploading contractors, including our subsidiary PT Maritim Barito Perkasa (MBP), which handles almost 50% of our barging activities. In 2012 it transported 22.5 million tonnes of coal.

Most barging is done using tugboats towing static barges. The average capacity across the fleet is 11,750 dwt, with several new barges of 18,000 dwt the largest barge units currently in use for coal transportation in Indonesia and an integral part of our continual efforts to increase the average barge size, reduce barge cycling times and maximize fuel efficiency as cost-reduction initiatives.

As the Barito River is the only viable route to transport our coal to the coast, it is essential that it is easily navigable and deep enough for our contractors' barges.

This is the responsibility of our subsidiary PT Sarana Daya Mandiri (SDM), which in 2008 tripled the potential transport capacity of the Barito River to 200 million tonnes per year by dredging a new barging channel in the river mouth.

A number of coal miners besides Adaro use the Barito River, and in 2012, 84.6 million tonnes of coal was transported through the river-mouth channel, a 7% increase over the previous year, mainly due to higher volumes from third parties. The total number of barges using the channel also increased 7% to 9,435 in the same year.

SDM, which is 51.2% owned by Adaro, now provides routine maintenance services for the 15-kilometer channel and conducts annual maintenance dredging to ensure that the guaranteed channel depth is maintained for safe vessel navigation.

Contractor Floating crane loading (2012)
MBP 52%
PSS 32%
MBSS 16%
Coal arriving by barge at the Taboneo open-sea anchorage, a short way off the coast of South Kalimantan, must be loaded to waiting customers' vessels as quickly as possible.

Some customers' ships are geared, equipped with their own cranes to load the coal from barges, but most are gearless and are loaded using floating cranes provided at the anchorage.

Shiploading by floating crane is done by three contractors, with Adaro subsidiary PT Maritim Barito Perkasa (MBP) again accounting for about 50% of the volume transshipped annually.

The largest of the heavy-duty cranes can load capesize vessels in excess of 200,000dwt, and transshipment capacity will be raised by delivery to MBP in 2013 of a floating transfer station with two high-capacity cranes that can discharge up to 21 million tonnes of coal per year from barges into shiploading conveyor systems.

Coal that is not transshipped at the Taboneo anchorage or barged direct to Indonesian customers is taken to a storage and loading facility at Pulau Laut on the southestern coast of Kalimantan.

Adaro subsidiary PT Indonesia Bulk Terminal (IBT) has been operating the Pulau Laut coal terminal since 1998. One of only two terminals in Indonesia authorized to provide common user coal-handling and shiploading services, it has a maximum annual capacity of 12 million tonnes.

It also has an adjacent fuel terminal with a tank storage capacity of 80,000 kiloliters jointly developed with PT Shell Indonesia that provides fuel storage and distribution in support of Adaro Indonesia's coal operations.Coal storage and loading at IBT has decreased gradually in recent years due to increased use of the less expensive facilities at Taboneo; in 2012, IBT loaded just under 4 million tonnes of coal to 55 vessels.

Developments of note in 2013 include four barge cranes being installed to replace older, smaller models, and this will increase the loading rate at the jetty, and construction of a new, sheltered jetty for fuel-loading to barges. The existing jetty is too exposed for barge-loading operations, leading to delays particularly during the end-of-year monsoon period.

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