PT Alamtri Resources Indonesia Tbk · IDX:ADRO
PT Alamtri Resources Indonesia Tbk — Adaro Energy — Deutsche Bank Access Asia Conference 2011
50 slides from PT Alamtri Resources Indonesia Tbk's conference presentation, May 24, 2011
Slide 1: Adaro Energy: Creating Sustainable Value from Indonesian Coal
Adaro Energy Creating Sustainable Value from Indonesian Coal Deutsche Bank Access Asia Conference May 24-25, 2011 Singapore 0
Slide 2: Disclaimer
Disclaimer These materials have been prepared by PT Adaro Energy (the “Company”) and have not been independently verified. No representation or warranty, expressed or implied, is made and no reliance should be placed on the accuracy, fairness or completeness of the information presented or contained
Slide 3: Quick Updates
Quick Updates We are on track to achieve our production guidance with 10.6 million tonnes production recorded in 1Q11 after the record setting high volume of rainfall in 2010. Overburden extraction and handling climbed 34% to a record 65.38 Mbcm. The average demurrage rate per vessel decreased back
Slide 4: 1Q11 Operational Results
1Q11 Operational Results Units 1Q10 1Q11 % change Production MT 11.36 10.60 -7% Sales MT 11.46 10.91 -5% Units 4Q10 1Q11 % change Production MT 10.36 10.60 2% Sales MT 11.48 10.91 -5% 3
Slide 5: 1Q11 Financial Results
1Q11 Financial Results 1Q11 1Q10 % Change Net Revenue 757 678 11.7% Cost of Revenue (507) (435) 16.5% Gross Profit 250 243 3.0% Gross Profit Margin (%) 33.0% 35.8% -2.8% Operating Income 219 222 -1.2% Operating Margin (%) 29.0% 32.8% -3.8% Net Income 109 98 11.3% EBITDA 263 263 -0.30% EBITDA Margin
Slide 6: Adaro Energy at a Glance
Adaro Energy at a Glance Production/Sales 42.2Mt production in 2010 (40.6Mt in 2009) 5 Years CAGR of 10% Envirocoal Sub bituminous, moderate CV, high moisture ultra-low sulfur, ash and NoX emissions Customers Most customers are blue-chip power utilities Pricing Substantially annual price negotiation
Slide 7: Operating Subsidiaries to Increase Value Creation
Operating Subsidiaries to Increase Value Creation PIT TO PORT INTEGRATION Listed on IDX in July 2008 PT Adaro Energy Tbk Adaro Energy 1Q11: Revenue: US$757 million EBITDA: US$263 million 100% Alam Tri Abadi Simplified structure 100% 25% 100% 100% 100% 95%-100%-100% 51.20% 100% 100% IndoMet OML-MBP-
Slide 8: PT Adaro Indonesia
Balikpapan East Kalimantan Central Kalimantan Tanjung Kelanis Barge River Terminal PT Adaro Indonesia Banjarmasin South Kalimantan Taboneo Anchorage Domestic and Direct Barging South Pulau Laut Coal Terminal Coal and Fuel Storage Handling Port 7 7
Slide 9: PT Adaro Indonesia - Mining
PT Adaro Indonesia - Mining Coal Reserves Coal Mining Coal Hauling Coal Crushing Coal Barging Coal Loading Coal Port Tutupan Deposit Wara Deposit ROM Probable Proven Total Reserves (Mt) (Mt) (Mt) Tutupan 141 410 552 Wara 1 98 289 386 Total 239 699 938 Based on the Independent Statement on the Coal R
Slide 10: Largest single site coal mine in the southern hemisphere
Largest single site coal mine in the southern hemisphere 9
Slide 11: PT Saptaindra Sejati (SIS) – Mining Contracting
PT Saptaindra Sejati (“SIS”) – Mining Contracting Coal Reserves Coal Mining Coal Hauling Coal Crushing Coal Barging Coal Loading Coal Port 10 10
Slide 12: Coal loaded on trailers from run-of-mine stockpiles
Coal is loaded on the trailer by backhoes or wheel-loaders from run-of-mine stockpiles 1Q11 Contractors: Mining and Hauling Overburden Removal PAMA 41% 42% SIS 28% 29% BUMA 13% 17% RAJ 16% 9% RMI 1% 11 AI 2% 2%
Slide 13: Dedicated Coal Hauling Road
Dedicated Coal Hauling Road Coal Reserves Coal Mining Coal Hauling Coal Crushing Coal Barging Coal Loading Coal Port Hauling Equipment Capacity: 60 million tonnes Hauling Road Capacity: 80 million tonnes Hauling Road Distance: 80 km Hauling Road Vehicles: 200 road trains Balikpapan East Kalimantan C
Slide 14: Kelanis: One of World's Largest Inland Bulk Terminals
Kelanis: One of World’s Largest Inland Bulk Terminals Coal Reserves Coal Mining Coal Hauling Coal Crushing Coal Barging Coal Loading Coal Port Crushing Capacity: - 6 crushers with total capacity of 7,500 tph - Recent installation of additional crushing system to increase capacity Stockpiling Capacit
Slide 15: PT Maritim Barito Perkasa (MBP) – Barging
PT Maritim Barito Perkasa (“MBP”) – Barging Coal Reserves Coal Mining Coal Hauling Coal Crushing Coal Barging Coal Loading Coal Port Balikpapan East Kalimantan Central Kalimantan Tanjung Kelanis Barge River Terminal Banjarmasin South Kalimantan Taboneo Anchorage Domestic and Direct Barging South Pul
Slide 16: PT Sarana Daya Mandiri (SDM) – Dredging/Water Tolling
PT Sarana Daya Mandiri (“SDM”) – Dredging/Water Tolling Coal Reserves Coal Mining Coal Hauling Coal Crushing Coal Barging Coal Loading Coal Port Adaro’s Innovative Solution to River Bottleneck: - Adaro formed a joint venture, SDM, with central government port authority and South Kalimantan governmen
Slide 17: Capacity of the Barito River increased to 200mt per year
Capacity of the Barito River has increased to 200mt per year Barges waiting at crossing from old channel Five barges towing Adaro Indonesia’s coal passing through new channel Capacity : 200 Mt per annum (old 60 Mt) Length : 15,000 m (old channel:14,000 m) Base width : 138 m (old: 60m) Min depth : -6
Slide 18: PT Maritime Barito Perkasa (MBP) – Shiploading
PT Maritime Barito Perkasa (“MBP”) – Shiploading Coal Reserves Coal Mining Coal Hauling Coal Crushing Coal Barging Coal Loading Coal Port Vessels with their own gear and grabs at the Taboneo anchorage MBP’s floating cranes Balikpapan East Kalimantan Central Kalimantan Tanjung Kelanis Barge River Ter
Slide 19: PT Indonesia Bulk Terminal (IBT) – Coal Terminal Services
PT Indonesia Bulk Terminal (“IBT”) – Coal Terminal Services Coal Reserves Coal Mining Coal Hauling Coal Crushing Coal Barging Coal Loading Coal Port Balikpapan East Kalimantan Central Kalimantan Shell’s fuel terminal recently Kelanis Barge River Tanjung constructed at IBT’s facility Terminal Banjarm
Slide 20: Vertically Integrated from Pit to Port
Vertically Integrated from Pit to Port Strategy is centered on improving control and efficiency of the supply chain Kelanis River Terminal, Hauling Road 80 km, 60 Mt Strong control Crushing Plant, in excess of 50 Mt Medium control Controlling stake held by the Group PT Adaro Indonesia Coal Concessio
Slide 21: Investment highlights list
1 2 3 4 5 6 7 Exposure to Expanding Emerging Market Asia and Strong Thermal Coal industry The Best EBITDA Margin in indonesian Thermal Coal Substantial Total Shareholder Retums One of the Besi Track Records of Annual Organic Growth Our Exciting Strategy to Create Value Large Heserves of Envirocoal A
Slide 22: Exposure to Expanding Emerging Market Asia and Strong Thermal Coal Industry
1 Exposure to Expanding Emerging Market Asia and Strong Thermal Coal Industry 21 21
Slide 23: Exposure to Expanding Emerging Market Asia and Strong Thermal Coal Industry
1 Exposure to Expanding Emerging Market Asia and Strong Thermal Coal Industry Source: World Energy Outlook 2009 © OECD/International Energy Agency 2009, figure 1, p. 3 International Energy Agency forecasts: By 2030 world primary energy demand 40% higher than in 2007; Collectively, non-OECD countries
Slide 24: Changes in Primary Energy Demand and Electricity Demand
1 Exposure to Expanding Emerging Market Asia and Strong Thermal Coal Industry Changes in Primary Energy Demand (2007-2030) in Mtoe Fuel sources for incremental Global Demand for Electricity (2007- 2030) in TWh Others 8000 7000 Biomass 6000 Hydro 5000 OECD 4000 Nuclear Non-OECD 3000 Gas 2000 Oil 1000
Slide 25: Robust Industry Prospects: China's role in demand
1 Robust Industry Prospects China’s role in demand for fossil fuels Sharp increase in consumption of energy in China in the last R/P Oil Gas Coal decade has set a growth momentum for the Energy sector (in years) 10.00% 9.00% 8.00% 7.00% Global 45.7 62.8 119.0 6.00% 5.00% 4.00% 3.00% China 10.7 28.8
Slide 26: China's Urban Population to Reach One Billion
1 Exposure to Expanding Emerging Market Asia and Strong Thermal Coal Industry China’s Urban Population to Reach One Billion 25
Slide 27: Exposure to Expanding Emerging Market Asia
1 Exposure to Expanding Emerging Market Asia and Strong Thermal Coal Industry 26
Slide 28: Electricity Consumption and Energy Sources
1 Exposure to Expanding Emerging Market Asia and Strong Thermal Coal Industry Electricity Consumption vs GDP/Capita Source of Energy for Electricity (in Quadrillion Btu) India China World 2007 2035 2007 2035 2007 2035 18,000 Liquids 0.2 0.2 0.5 0.5 10.2 8.7 Canada Natural Gas 0.6 1.8 0.5 1.2 37.3 57
Slide 29: Cost of Generating Electricity
1 Exposure to Expanding Emerging Market Asia and Strong Thermal Coal Industry Cost of Generating Electricity – Cents/Kwh Gas Wind Gas High Coal Low Coal Nuclear Nuclear 0 5 10 15 0 2 4 6 8 10 Source- International Energy Agency; Nuclear Energy Agency Source – Update of the MIT 2003 Future of Nuclear
Slide 30: Global Thermal Coal Supply Demand
1 Exposure to Expanding Emerging Market Asia and Strong Thermal Coal Industry Global Thermal Coal Supply Demand 1000 900 930928 896 903 864 874 800 823 793 Mn tonnes 770 751 700 725 689689 685685 683 673673 600 638638 584584 500 400 300 2005 2006 2007 2008 2009 2010F 2011F 2012F 2013F 2014F 2015F De
Slide 31: The Best EBITDA Margin in Indonesian Thermal Coal
2 The Best EBITDA Margin in Indonesian Thermal Coal Adaro maintained the best EBITDA margin in Indonesian thermal coal at 33% in 2010, for the second year in a row, despite having a moderate heat value coal due to good cost control 30
Slide 32: The New Wara Mine
2 The Best EBITDA Margin in Indonesian Thermal Coal The New Wara Mine Initial commercial production started in the first quarter of 2010 Adaro delivered its first shipment to China in May 2010 31
Slide 33: Substantial Total Shareholders Return
3 Substantial Total Shareholders Return Total Shareholders Return (%) Fiscal Year % 2009 258 2010 49 2009-2010 431 Return of Adaro and Other Indices in 2010 Securities % Adaro 45.71 Jakarta Composite Index 43.80 Jakarta Mining Index 45.12 Dow Jones Industry Average 9.31 S&P 500 11.02 Bloomberg AP Mi
Slide 34: One of the Best Track Record of Annual Organic Growth
4 One of the Best Track Record of Annual Organic Growth Despite the record-setting high volume of rainfall and number of rain days in 2010, Adaro Energy recorded its 19th year of annual production growth, increasing coal production 4% to 42.2 Mt 2005 - 10 CAGR: 10% Start of US LBO of Adaro Financial
Slide 35: Our Exciting Strategy to Create Value
5 Our Exciting Strategy to Create Value Background Current status Adaro is looking into several IPP Adaro evaluated three IPP (Independent Power Producer) projects to (Independent Power Producer) move further downstream from “pit to projects located in Java and power”. Kalimantan. Moving into Power
Slide 36: Large Reserves of Envirocoal
6 Large Reserves The Coal Resources and Reserves of PT Adaro Indonesia are based on a report from Terence Willsteed & of Envirocoal Associates (TWA) dated 5 April 2011 and are estimated as at December 2010 as follows: 35
Slide 37: Large Reserves of Envirocoal: coal quality
6 Large Reserves of Envirocoal Coal 25 brands within global export trade Lowest ash content among coals produced for global export trade, providing consumers with significant cost savings 20 ASH % (adb) Ash 15 Content Blending Envirocoal with higher ash coal reduces the on-costs 1%-2.5% associated w
Slide 38: Acquisition to Increase Reserves of Indonesian Coal
7 Acquisition to Increase Reserves of Indonesian Coal • Closed a deal with BHP Billiton to buy 25% stake of the IndoMet Coal project in Central Kalimantan (undeveloped metallurgical and thermal coal resources of 774 Mt). • Adaro is currently considering 3-4 targets of undeveloped deposits in Kaliman
Slide 39: Bigger and Better
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Slide 40: Exceptional Access to Capital
9 Exceptional Access to Capital US$800 million 10 year, non call 5, Reg S/144A, Guaranteed Senior Notes • 7.625% coupon, semi-annual (431bp over 10 year Treasury) • No restriction on dividends • Quasi-investment-grade covenants • If one notch rating upgrade to investment grade, incurrence ratios rem
Slide 41: Exceptional Access to Capital
9 Exceptional Access to Capital Adaro has a track record of no default, rescheduling of debts nor breaching its financial covenants LBO: June 2005 December 2005 March 2007 December 2007 December 2008 December 2009 December 2010 US$570 US$200 US$190 US$750 US$680 US$570 US$488 million million million
Slide 42: Constantly Improving an Efficient Vertically Integrated Coal Supply Chain
10 Constantly Improving an Efficient Vertically Integrated Coal Supply Chain The Pulau Laut Fuel Terminal: To ensure a reliable and lower cost fuel supply for Adaro’s operations, and developing liquid bulk- based traffic. 2X30 MW Mine-mouth Power Plant: To power the overburden crushing and conveying
Slide 43: Proven Experts in Marketing Subbituminous Indonesian Coal
11 Proven Experts in Marketing Subbituminous Indonesian Coal 42
Slide 44: Proven Experts in Marketing Subbituminous Indonesian Coal
11 Proven Experts in Marketing Subbituminous Indonesian Coal Customer Type by Volume (FY10) Loyal long term customers Other 14% – Substantially all have relationship of > 5 years Cement – ~50% have relationship of > 9 years 6% Average length of coal supply agreements is 5 years Substantially all con
Slide 45: Our Supportive and Long-term Shareholders
12 Our Supportive and Long-term Shareholders Controlling Shareholders • Edwin Soeryadjaya • Teddy Rachmat • Garibaldi Thohir Together • Benny Subianto hold 63% • Sandiaga Uno Acclaimed Achievements Indonesia Entrepreneur of the Year – Best CEO in Asia – Long serving Executives of Astra International
Slide 46: Our Skilled and Professional Management
13 Our Skilled and Professional Management Strength of senior management team Average 11 More than 128 68 Combined 68 years with the Group 11 years with the Group 128 years of combined industry experience Key achievements of management team Grown the Group to become the largest single-site coal prod
Slide 47: Our People and How We are Structured
14 Our People and How We are Structured We are interested in excellence, team work and output. We believe our horizontal, debate-oriented, merit-based, respectful organization structure is key to our continued success 46
Slide 48: A Unique and Proven Approach to Corporate Social Responsibility
15 A Unique and Proven Approach to Corporate Social Responsibility Currently Adaro Indonesia and its sub-contractors employ over 15,000 personnel, in excess of 70% are of Kalimantan origin. Operating without use of any separate camp since operations began in 1992, Adaro endeavors to behave as a good
Slide 49: An Exemplary Record of Safety, Health and Environment
16 An Exemplary Record of Safety, Health and Environment Adaro has been awarded Green Level of the PROPER award given by the Ministry of the Environment for environmental rehabilitation excellence and is the only coal mining company to receive it each year since its inception in 2008 48
Slide 50: Creating Sustainable Value from Indonesian Coal
At Adaro Energy (IDX:ADRO), our overriding goal is to create maximum shareholder value. We do this by creating sustainable value from Indonesian coal. Since 2009, we have delivered some of the best shareholder returns in Creating Sustainable Value Indonesia. from Indonesian Coal With over 19 years o
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