Singapore November 2011

Transcription

1 On Track to Build a Bigger and Better Adaro Energy Morgan Stanley Annual Asia Pacific Summit Singapore November 2011

2 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 in these materials. The Company or any of its affiliates, advisers or representatives accepts no liability whatsoever for any loss howsoever arising from any information presented or contained in these materials. The information presented or contained in these materials is subject to change without notice and its accuracy is not guaranteed. These materials contain statements that constitute forward-looking statements. These statements include descriptions regarding the intent, belief or current expectations of the Company or its officers with respect to the consolidated results of operations and financial condition of the Company. These statements can be recognized by the use of words such as expects, plan, will, estimates, projects, intends, or words of similar meaning. Such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and actual results may differ from those in the forward-looking statements as a result of various factors and assumptions. The Company has no obligation and does not undertake to revise forward-looking statements to reflect future events or circumstances. These materials are for information purposes only and do not constitute or form part of an offer, solicitation or invitation of any offer to buy or subscribe for any securities of the Company, in any jurisdiction, nor should it or any part of it form the basis of, or be relied upon in any connection with, any contract, commitment or investment decision whatsoever. Any decision to purchase or subscribe for any securities of the Company should be made after seeking appropriate professional advice. 1

3 Agenda Recent Developments Adaro s Integrated Business Strategy Why Adaro Energy? 2

4 9M11 Adaro Energy s Operational and Financial Results 9M11 9M10 % Change OPERATIONAL Coal Produced (mt) % Coal Sold (mt) % Strip Ratio (x) ,925 1, % (1,919) (1,352) 42.0% % 31.1% 28.2% 2.9% % 1, % 35.8% 35.4% 0.3% 1,991 1, % % 1, % Net Debt to Equity (x) Net Debt to EBITDA (x) % FINANCIAL Net Revenue Cost of Revenue Operating Income Operating Margin (%) Net Income EBITDA EBITDA Margin (%) Interest Bearing Debt Cash and Cash Equivalents Net Debt Earnings Per Share (EPS) in US$ The numbers are in million USD except for the EPS Total $850m undrawn facilities 3

5 Agenda Recent Developments Adaro s Integrated Business Strategy Why Adaro Energy? 4

6 Adaro Indonesia A Snapshot Adaro Indonesia Highlights 9 Largest single-site coal producer in southern Production (10 year CAGR of 11%) hemisphere 9 Top 5 thermal coal exporter globally Sub-bituminous, medium calorific value, Envirocoal 9 Envirocoal among world s most Customers ~40 customers in 17 countries Major power generation companies Pricing All annual price negotiation or index-linked Adjustment for energy level JORC reserves / resources Reserves: 938 Mt as at end-2010(1) Resources: 4,428 Mt(2) Location South Kalimantan environmentally friendly 9 Vertically integrated business model ultra-low pollutants Trademark registered in many jurisdictions 9 Largest supplier to domestic market 9 One of the world s lowest cost coal producers 2009A: 40.6 Mt 2010A: 42.2 Mt (5-year CAGR of 10%) 9 Strong credit profile 9 High visibility of future earnings 9 Reputable and competent management and controlling shareholders License Parent company First generation Coal Cooperation Agreement valid until 2022 Market cap. as at 31 October 2011: Rp 64.8 trn (US$7.3 bn) (1) Proven and probable in situ reserves (2) Measured, indicated and inferred resources includes proven and probable reserves Adaro Indonesia is the largest single-site coal producer in the southern hemisphere and one of the world s largest thermal coal exporters, with one of the lowest cost structures 5

7 Adaro Energy - Vision To be a Leading Indonesian Mining and Energy Group 6

8 Creating Sustainable Value from Indonesian Coal Listed on IDX in July 2008 Adaro Energy 9M11: Revenue: US$2,925million EBITDA: US$1,046million PIT TO POWER INTEGRATION PT Adaro Energy Tbk Adaro Mining Services Simplified structure Alam Tri Abadi 100% 25% Adaro Indonesia IndoMet IndoMet Coal Coal Project Project Mustika Indah Permai Mining license holder - Coking Coal Mining license holder - Thermal Coal Mining license holder - Thermal Coal 75% 61.04% Bukit Enim Energi Mining license holder - Thermal Coal Adaro Logistics 100% 100% SIS JPI Mining and hauling contractor Conveyor System 95%-100%-100% 51.20% OML MBP HBI SDM Barging and ship loading Dredging Barito River mouth and water toll contractor Adaro Marketing 100% 85% 35% IBT IMPT Servo Meda Sejahtera Port Terminal Haul Road and Barge Loading Port Coal storage, blending, loading terminal and fuel facility 100% CTI Adaro Power 100% MSW Coal export Mine Mouth marketing and Power Plant trading The Group has consolidated its holdings in key subsidiaries SIS, OML and MSW 7 34% Bhimasena Power IPP

9 Balikpapan East Kalimantan Central Kalimantan Tanjung Kelanis Barge River Terminal Banjarmasin PT Adaro Indonesia South Kalimantan Taboneo Anchorage Domestic and Direct Barging South Pulau Laut Coal Terminal Coal and Fuel Storage Handling Port 8 8

10 PT Adaro Indonesia - Mining Coal Reserves Coal Mining Coal Hauling Coal Crushing Coal Barging Resources Wara Deposit Measured (Mt) Coal Loading Indicated (Mt) Inferred (Mt) Coal Port Total (Mt) Tutupan ,455 North Paringin Wara ,307 Wara ,518 1,410 1,500 4,428 Total ROM Reserves Probable (Mt) Proven (Mt) Total (Mt) Tutupan Wara Total Based on the Independent Statement on the Coal Reserves and Resources by Terence Willsteed & Associates (TWA) as of 31 Dec 2010 Tutupan Deposit 9

11 Largest single site coal mine in the southern hemisphere 10 10

12 Dedicated Coal Hauling Road Coal Reserves Coal Mining Coal Hauling Coal Crushing Coal Loading Coal Barging 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 Central Kalimantan Tanjung Kelanis Barge River Terminal Banjarmasin South Kalimantan Taboneo Anchorage Domestic and Direct Barging South Pulau Laut Coal Terminal 9 The hauling road is 100% owned by Adaro 11

13 Kelanis: One of World s Largest Inland Bulk Terminals Coal Reserves Coal Mining Coal Hauling Coal Crushing Coal Loading Coal Barging Coal Port Crushing Capacity: - 7 crushers with total capacity of 7,500 tph - Annual capacity of 55 Mt Stockpiling Capacity: 2 stockpiles with capacity of 250,000t Barge Loading Capacity: 2 load out conveyor systems each rated at 5,000 tph Balikpapan East Kalimantan Central Kalimantan Tanjung Kelanis Barge River Terminal Banjarmasin South Kalimantan Taboneo Anchorage Domestic and Direct Barging South Pulau Laut Coal Terminal 9 Crushing, stockpiling and barge loading facilities at Kelanis can easily be upgraded 12

14 PT Maritim Barito Perkasa ( MBP ) Barging Coal Reserves Coal Mining Coal Hauling Coal Crushing Balikpapan East Kalimantan Central Kalimantan Tanjung Kelanis Barge River Terminal Banjarmasin South Kalimantan Taboneo Anchorage Domestic and Direct Barging South Pulau Laut Coal Terminal 9 13 Coal Barging Coal Loading Coal Port

15 PT Sarana Daya Mandiri ( SDM ) Dredging/Water Tolling Coal Reserves Coal Mining Coal Hauling Coal Crushing Coal Loading Coal Barging Dredging was completed was started commercial operation on January 1, Subsequently, capacity of the Barito River has increased to 200mt per year Barges waiting at crossing from old channel Coal Port Adaro s Innovative Solution to River Bottleneck: - Adaro formed a joint venture, SDM, with central government port authority and South Kalimantan government - SDM hires Van Oord to dredge the river channel, on time and on budget - Maintenance of channel is East Kalimantan self-funded Central Kalimantan Balikpapan 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 LWS (old: -3 to -4.7 LWS) Tanjung Kelanis Barge River Terminal Banjarmasin South Kalimantan Taboneo Anchorage Five barges towing Adaro Indonesia s coal passing through new channel 14 Domestic and Direct Barging South Pulau Laut Coal Terminal 9

16 PT Maritime Barito Perkasa ( MBP ) Shiploading Coal Reserves Coal Mining Coal Hauling Coal Crushing Coal Loading Coal Barging Coal Port Vessels with their own gear and grabs at the Taboneo anchorage MBP s floating cranes Balikpapan East Kalimantan 9M11: Total Coal Loaded: 9.75 Mt Central Kalimantan Tanjung Kelanis Barge River Terminal - 6% increase compared to 9M10-98% of MBP s volume was Adaro s coal Banjarmasin South Kalimantan Taboneo Anchorage Domestic and Direct Barging South Pulau Laut Coal Terminal 15 9

17 PT Indonesia Bulk Terminal ( IBT ) Coal Terminal Services Coal Reserves Coal Mining Coal Hauling Coal Crushing Coal Barging Coal Loading Shell s fuel terminal recently constructed at IBT s facility Balikpapan East Kalimantan Central Kalimantan Tanjung Kelanis Barge River Terminal Banjarmasin South Kalimantan Taboneo Anchorage Domestic and Direct Barging South Pulau Laut Coal Terminal 9 16 Coal Port

18 Strong control Medium control River Provincial border Central Kalimantan IndoMet Coal project Kelanis River Terminal Tanjung Warukin airport East Kalimantan Barito River South Kalimantan Banjarmasin Taboneo Anchorage 17

19 Strategy Sustainable Growth and Diversification Coal Chain Integration Production Growth & Diversification Growth of Resources Current Strategy Action Plan Increase coal resources through exploration and acquisitions Diversify licenses, products and locations Drive production growth from existing concessions Strengthen vertical integration of coal chain to improve efficiency, reliability and reduce costs Diversify into power projects to reduce on site costs and expand market for new coal product E4000 (Wara Coal) Tap into Adaro Energy s operational expertise and shareholders contacts to identify high potential greenfield projects Increase of resources by 900 Mt to 4.4 Bt since December 2008 Prudent, methodical and disciplined approach to expansion, diversification and growth Coking Coal Develop metallurgic coal concession through ICP Grow production in existing concession Expand market for Wara Coal Build overburden crushing and conveying system Kelanis terminal expansion Mine mouth power plant Participate in domestic IPP projects alongside industry leaders 4th largest company globally and the global leader in resources PIT PORT Fortune 500 company and one of the leading electricity providers in Japan with global operations POWER Largest electric utility in Japan with worldwide reputation as a leading consulting firm in electric power development Remain a low cost producer Deliver sustainable growth Reinforce diversification objectives around products, location, customers and licenses 18

20 Group Operations and Coal Acquisitions Diversify Geography, Licenses and Products Adaro Indonesia, South Kalimantan (thermal coal; resources 4.4 Bt) 25% JV with BHP Billiton, IndoMet Coal project, Central Kalimantan (coking coal; resources 774 Mt). 75% stake in MIP, a greenfield coal project, South Sumatra (thermal coal; JORC study pending) 61.04% interest in BEE, greenfield coal project, South Sumatra (thermal coal; JORC study pending) 19

21 Agenda Recent Developments Adaro s Integrated Business Strategy Why Adaro Energy? 20

22 Why Adaro Energy? #7 Strong Corporate Governance, Reputable Shareholders, and Experienced Management Team with Proven Track Record #6 #1 Robust Industry Fundamentals and Outlook #2 Good Access to Capital Abundant Resources and Scale #5 Diversified and Loyal Customer Base with Well Accepted Products #3 #4 Low Cost Producer with High Margins 21 Benefit from the Fully Integrated Operations of Adaro Energy

23 1 Robust Industry Fundamentals and Outlook China s growth implications for Energy Sector 22

24 Robust Industry Fundamentals and Outlook 1 Electricity Demand - India, Indonesia still have long way to catch up.. Potential from Growth in Electricity Consumption Electricity Consumption (Kwh/Capita) Canada US Asia Korea Indonesia China Thailand Asia Japan France Russia Germany Brazil WORLD India GDP/Capita, at Current Price (US$) Source: IMF, International Energy Outlook 2010, Wood Mackenzie Despite being the largest consumer of coal, China still lags in electricity consumption. Other countries like India and Indonesia too have very lower electricity consumption/capita Chinese power generation may rise to 1,437 GW by 2015 and to 1,885 GW by 2020, translating to a growth of 80 GW per year India plans to install additional 79 GW of electricity power generation capacity by 2012 with 79% of this being coalfired generation Indonesia, as the largest exporter of thermal coal, is geographically well positioned to serve the growing Asian demand for coal 23

25 1 R/P Robust Industry Prospects China s role in demand for fossil fuels Oil Gas Coal (in years) Sharp increase in consumption of energy in China in the last decade has set a growth momentum for the Energy sector 10.00% 9.00% 8.00% Global % 6.00% 5.00% China % 3.00% 2.00% 1.00% Source- BP Statistical Review of World Energy % ¾ In the last 10 years, China has contributed 58.2% of Primary Energy consumption and India 8.8% (together, 67% or just above two-thirds) of global increase in primary consumption of energy; ¾ Coal is the longest surviving fossil fuel, with R/P of 118 years followed by Gas and Oil; ¾ China s energy demand, and its dependence on overseas supplies of fuel sources will drive global demand/supply balance of energy products While China will contribute substantial part of the global energy demand in the coming decades, its R/P for oil, gas and coal is lower than global average 24

26 1 Robust Industry Fundamentals and Outlook Strong Demand for Low CV Coal Demand for Adaro Indonesia s Coal Specifications is Expected to Grow Strongly Price (US$/tonne) 140 Asia is expected to make up 76% of total global seaborne trade in 2021 and contribute 82% of the growth from 2010 to 2021 India and China are expected to contribute over 50% of the growth from 2010 to 2021 and together will take up to 33.5% of total global sea-borne demand, an increase from 23.6% in Demand, 5105 Kcal/kg Source: Wood Mackenzie Demand, 4029 Kcal/kg 25

27 Robust Industry Fundamentals and Outlook 1 Indonesia s Advantage in the Midst of Tight Supply Environment Tight Supply Potential supply constraints include government policies and regulations in most export markets such as: South Africa: Export quota to satisfy Eskom domestic requirement; labor strike China: Potential government export quota Australia: Resource and Carbon Tax; labor strike Indonesia: DMO, land overlapping with protected forest Infrastructure bottlenecks are expected to remain in South Africa and Australia Unexpected extreme weather conditions could further impact supply in Indonesia and Australia 26

28 Robust Industry Fundamentals and Outlook 1 Tight Supply Environment Mn tonnes F 2011F 2012F 2013F 2014F 2015F Demand Supply Source: Australian Mineral Economics (AME), Nomura estimates 27

29 Abundant Resources and Scale 2 Reserves and Resources Evolution MT 2010 Largest Producing Mine in Southern Hemisphere (Mt) 5,000 4,500 4,000 3,500 3,000 3,490 2,500 2,554 2,000 1,500 1,865 1,920 2,427 Top 5 Global Thermal Coal Exporters (Mt) 1, Reserves Resources Xstrata Bumi Resources Anglo American 2011 Significant potential to increase resources through exploration of Wara and Paringin areas testing for potential extensions into West and North Tutupan BHP Billiton Adaro Energy 2015E Top 5 Domestic Supplier Market Share (2010) 28

30 3 Benefit from the Fully Integrated Operations of AE Detailed Planning and Execution of Operations Expansion and Integration Adaro Indonesia benefits from the vertically integrated operations of the Group. Each subsidiary is positioned to be an independent and competitive profit center allowing significant synergies and competitive advantages to capture growth opportunities along the chain Vertical Integration Mining Mining Contractor Conveyor 2010 Highlights 1982 Production: 42.2Mt Sales: 43.8 Mt Strip Ratio: 5.3x 100% Adaro Mt 100% ownership Clients include 72% SIS Storage & Terminal 86% SIS % SIS 51% SDM % Maruwai 75% MIP 61% BEE 100% SIS 6.2 Mt shipped 95 vessels loaded 12 Mt/yr capacity party coal sales: 1.39 Mt 95% OML-BP -HBI MW mine-mouth plants by 2012 Moving downsteam through stakes in IPP % SMS 100% Pulau Laut Fuel 100% IBT % Coal Trade 9 2x30 Power transit volume 200MT annual capacity Third Marketing & Trading 2008 Adaro, Berau, Indomining Plans for extra loading conveyor at each barge berth Installation of OPCC 68MT Transportation & Logistics % IPP Central Java 100% MSW 29 9

31 4 Low Cost Producer with High Margins EBITDA Margin (%) Adro 9M11 Source: Bloomberg *) the company has not published its 9M11 financial results Adaro stood amongst the best EBITDA margin in Indonesian thermal coal at 36% as of 9M11, despite having a moderate heat value coal due to good cost control 30

32 Highly Differentiated Product EnvirocoalTM Ash Content 1%-2.5% (adb) Lowest ash content among coals produced for global export trade, providing consumers with significant cost savings Blending Envirocoal with higher ash coal reduces the on-costs associated with ash disposal Coal brands within global export trade 25 ASH % (adb) Reduces deposition rates in boilers improving thermal efficiency and reducing maintenance costs 0 Nitrogen Content 0.9% (daf) Envirocoal is amongst the 10 lowest coals by nitrogen content Enables consumers to reduce the costs associated with removing nitrous oxides from the flue gases Results in more net power for sale and lower electricity production cost, which is particularly important in the US Nitrogen % (daf) Sulfur Content 0.1% (adb) Regulation of emissions of sulfur oxides has required some consumers to install flue gas desulfurization equipment or to reduce the sulfur content in the blend of coals Envirocoal s ultra low sulfur content enables consumers to meet regulated standards and delay capital expenditure, reducing the cost of plant operation 2.5 Total Sulfur % (adb) Source: Adaro Energy Annual report Envirocoal is one of the most environmentally friendly coals with extremely low ash, nitrogen and sulfur content 31

33 5 Diversified and Loyal Customer Base and High Earnings Visibility Customer type by volume (9M11) ` Loyal long term customers Mostly sovereign backed power companies More than 50% have relationship of > 10 years Average length of coal supply agreements is 5 years Substantially all contracts have annual price reset. ~55% are priced based on annual negotiation ~45% are prices based on index-linked formulas 10% 4% Power cement others 85% Geographical breakdown of customers (9M11) Malaysia 5% Others 11% Indonesia 22% Taiwan 6% Hongkong 7% India 11% America 8% China 9% Spain 10% Japan 11% During its production track record of 19 years, Adaro has cultivated long-term, diversified and loyal customer base 32

34 6 Exceptional Access to Capital 9 US$800 million 10 year, non call 5, Reg S/144A, Guaranteed Senior Notes Currently rated at Ba1 and BB+ 9 US$500 million 5 year, Amortizing Revolving Credit Facility 9 US$400 million 7 year, concluded with 12 banks Undrawn $100M 9 US$750 million 10 year bank loans club deals with key relationship banks Currently undrawn Group Lenders Large group of relationship banks and bond holders continue to be very supportive of Adaro At end of September 2011, Adaro Energy had approximately $850 million undrawn facilities 33

35 7 CSR Commitment has been Recognised Gold Category in Indonesian Corporate Social Responsibility Awards 2008 Presented by Ministry of Social Affairs, Republic of Indonesia Indonesian Corporate Social Responsibility Award 2008 First rank for Social and second rank for Environment and third rank for Economic. Presented by Minister of Social Affairs PROPER Green Award for the year 2006, 2008 and 2010 Adaro Indonesia received the green level PROPER award for environmental rehabilitation excellence. The only Indonesian mining company to receive this award for third consecutive times GKPM Awards in 2011 For Ensure Environmental Sustainability (Gold), Reduce Child Mortality (Gold) and Improve Maternal Health (Silver). Presented by Coordinating Minister for People s Welfare (Menko Kesra) Platts Top 250 Global Energy Awards in 2011 No 9 in Coal and Consumables Energy in Asia and No 12 in Coal and Consumable Energy Globally Primaniyarta Award in 2010 and 2011 Best performing exporters from the Ministry of Trade. Presented by Indonesia s Vice President Boediono. Adaro received similar award in 2007 Aditama Gold Award for the year 2010 and 2011 For environmental excellence in the coal sector. Presented by Director General of Mineral Coal and Geothermal (ESDM) Social Empowerment Award in 2007 Presented by Coordinating Minister for People s Welfare of the Republic of Indonesia Largest Taxpayer-2008 Presented by the Tax Office 34

36 7 Reputable Shareholders and Strong Corporate Governance Reputable and Supportive Shareholders Wide Recognition Across the Board Edwin Soeryadjaya Teddy Rachmat Boy Garibaldi Thohir Benny Subianto Sandiaga Uno Top Performing Listed Companies 2010 by Investor Magazine together hold 63% Strong Corporate Governance Structure in Line with International Best Practices International Coal Producer of the Year by McCloskey 3rd Fastest Growing Company in Asia by Platts Awarded the highest tax payer in Indonesia in 2008 PROPER Green Award for the 3rd consecutive time from Ministry of Environment Only coal company to ever receive the PROPER Green 9 1/3 of Board of Commissioners are independent Award commissioners 9 Audit Committee consists of 3 independent Best CEO in Mining 2010 by Ministry of Energy and Mineral Resources members 9 Conduct regular internal audit of operations 9 Disclosure aligned with international standards 35

37 Experienced Management Team with Proven Track Record 7 Management Team with Proven Track Record 9 Benefits from experience and active participation of key shareholders representatives 9 High operating and safety standards 9 Prudent financial policies 9 Strong corporate governance and regulatory More than 128 years of combined industry experience Combined 68 years with the Group Average 11 years with the Group compliance Leadership continuity is key to successful execution of Adaro Energy s strategy and navigating through challenging times CAGR: 10% LBO of Adaro Wara Tutupan Paringin Start of US Financial Crisis 40.6 Start of Asian Financial Crisis 34.4 Adaro begins commercial operations Period of Decentralization/Regional Autonomy

38 Thank you 37