Three Engines of Growth
We have a subsidiary at each part of the coal supply chain, which gives us better control over our costs, allows us to improve efficiency and reduce counterparty risks, including reducing the likelihood of disruptions to our operations and expansion plans.
This resilient business model places us in the bottom quarter of the global cost curve. In addition, it enables us to offer more reliable coal supply to our customers and improve the marketability of our coal.
We treat our subsidiaries as independent third-party entities; each one acts as a profit center and contributes value beyond the efficient, high-quality services they provide Adaro.
Mining and Moving the Coal
We produce sub-bituminous medium calorific value (CV) coal with heat values of 4,000 kcal/kg to 5,000 kcal/kg gross as received (gar) from two coal mining assets, PT Adaro Indonesia and PT Semesta Centramas (SCM).
Adaro Indonesia is our core mining asset, and has 873Mt of reserves and 4.9Bt of resources, reported in accordance with the JORC Code, as at the end of 2015.
Branded as Envirocoal, Adaro Indonesia’s coal is renowned because of its ultra-low sulphur, ash and nitrogen contents. SCM’s concession is just 11km from Adaro Indonesia, and its coal comes from the same geological formation as Envirocoal and shares the same low-pollutant traits.
The unique qualities of Adaro’s coal provide excellent economic and technical benefits to our customers, enabling us to get better prices for our coal compared to our competitors. Amid increasing concerns on the environment and trace elements, our coal continues to sell in China.
At Adaro Indonesia’s concession in South Kalimantan, we employ four main mining contractors that work under multi-year contracts to handle overburden removal and transportation, coal hauling and mine reclamation activities.
One of the mining contractors is our subsidiary PT Saptaindra Sejati (SIS), which is also the main contractor at SCM. SIS carried out 37% of AI’s overburden removal and 33% of AI’s coal production activities in 2015.
Services and Logistics
The next stage of our coal supply chain is from the pits to the Kelanis Dedicated Coal Terminal (Kelanis). We transport both Adaro Indonesia and SCM coal along our privately-owned 80km haul road to Kelanis, where we crush the coal and load it on to barges. We employ four main barging contractors to transport the coal 240km along the Barito River from Kelanis to the Taboneo offshore anchorage in the Java Sea.
At Taboneo, we load our coal onto customer vessels using floating cranes or floating transfer units for export, or continue to barge to domestic customers. One of the barging and shiploading contractors is our subsidiary PT Maritim Barito Perkasa (MBP). MBP carried out 56% of our barging activities and 96% of our shiploading activities in 2015.
Having multiple contractors creates a level playing field and encourages competition among the contractors. We want our subsidiaries to be responsible for up to 50% of our coal mining output and become a benchmark for productivity and safety and a role model for environmental awareness among our contractors. As with our other contractors, if our subsidiaries perform well and fulfil their target, we will reward them with more volume.
Other subsidiaries that provide services to Adaro Energy are PT Adaro Eksplorasi Indonesia (AEI), which assists the company in the areas of resources and reserves development, calculation and coal quality control, as well as mine planning, and PT Jasapower Indonesia (JPI), the owner of our Out-of-Pit Overburden Crusher and Conveyor (OPCC) at Adaro Indonesia’s concession. PT Adaro Logistics (AL) is responsible for managing and coordinating all of our logistics activities.
Aside from MBP, other subsidiaries in logistics are PT Indonesia Bulk Terminal (IBT), which operates a land-based port at South Pulau Laut, an island off the southeast coast of Kalimantan; PT Sarana Daya Mandiri (SDM), which conducts dredging and maintenance of the Barito River channel to ensure ease of barge passage; PT Puradika Bongkar Muat Makmur (PBMM), which provides stevedoring and manages incoming and outgoing customer vessels at Taboneo; and PT Indonesia Multi Purpose Terminal (IMPT), which manages the safety and security of the shiploading and transshipment activities at Taboneo anchorage.
In the marketing and trading segment, Coaltrade Services International Pte Ltd (CTI) carries out third-party coal trading with existing customers while actively developing new customers.
Moving into Power
The final part of our coal supply chain is power generation. PT Adaro Power (AP), our wholly owned subsidiary, continues to progress in development of coal-fired power plants in Indonesia.
Find operational details of subsidiaries involved in our three engines of growth on the following pages:
Ownership of Key Operating SubsidiariesAdaro Indonesia
100% owned by Adaro Energy
Maritim Barito Perkasa
Sarana Daya Mandiri
Indonesia Bulk Terminal
Coaltrade Services International