Pt Alamtri Resources Indonesia Tbk · IDX:ADRO
Pt Alamtri Resources Indonesia Tbk — PT Adaro Energy — Investor Presentation (June 2014)
39 slides from Pt Alamtri Resources Indonesia Tbk's investor presentation, June 2014
Slide 1: Delivering Positive Energy
Delivering Positive Energy June 2014
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: Agenda
Agenda I. Corporate Information II. Adaro’s Strategy III. Industry Outlook IV. Appendix 3
Slide 4: I. Corporate Information
|. | Corporate Information Lae Coe = nS as Rig CSS Tes = es
Slide 5: Adaro Energy Snapshot
Adaro Energy Snapshot • Largest single-concession coal 2011A: 47.7 Mt producer in southern hemisphere Production 2012A: 47.2 Mt 2013A: 52.3 Mt • Top 5 thermal coal exporter globally Sub-bituminous, medium calorific value, ultra-low pollutants • Major supplier to domestic market Envirocoal Trademark
Slide 6: Significant Scale and Profitability
Significant Scale and Profitability 2013 Thermal Coal Production (Mt) 2013 Largest Producing Concessions in Southern Hemisphere (Mt) 220.0 53.5 52.3 33.7 30.0 29.6 95.7 83.1 23.4 72.0 67.6 15.1 52.3 29.4 15.1 Indonesia Kideco Arutmin KPC Loy Yang Berau Indominco Adaro PTBA Peabody BHP Bumi Glencore
Slide 7: Key Messages
Key Messages • On track to deliver on our long-term strategy to create sustainable value from Indonesian coal. • Resilient business focused on core assets, operational excellence, risk reduction and customers. • Maintain strong capital structure and margins. • Monitor and reduce expenses and capital
Slide 8: Resilient Business Model Creating Sustainable Value
Resilient Business Model Creating Sustainable Value Pit to Power Integration Adaro Energy (AE) Mining Assets Mining Services Logistics Power (ATA) Adaro Indonesia (AI) 100% Saptaindra 100% Maritim Barito Perkasa 100% Makmur Sejahtera 100% Coal mining, S Kalimantan Sejati (SIS) (MBP) Wisesa (MSW) Bal
Slide 9: Our Coal Supply Chain
Our Coal Supply Chain AE's coal all come from the deposits in South Kalimantan mined by AI. The physical mining and transporting of coal to customers is done by contractors appointed by AI. We tightly control this coal supply chain by using a subsidiary company at each stage as one of the dominant c
Slide 10: Recent Performance: On Track
Recent Performance: On Track • We achieved production volume in 1Q14 • Liquidity and our Balance Sheet remain of 14.0 Mt, 22% higher y-o-y. We are on strong with access to cash and undrawn track to hit our annual production target of long term fully committed credit facilities of 54 Mt to 56 Mt. mor
Slide 11: 2014 Guidance
2014 Guidance Production Volumes (Mt) Consolidated Planned Strip Ratio (bcm/t) 54-56* 47.7 47.2 52.3 40.6 42.2 5.9 6.4 5.78 5.0 5.5 5.75 2009A 2010A 2011A 2012A 2013A 2014F 2009A 2010A 2011A 2012A 2013A 2014F * Pending government approval Coal Cash Cost (ex-royalty, US$/t) 36 39 34.86 35-38 Operatio
Slide 12: Diversified Customer Base with Long-term Contracts
Diversified Customer Base with Long-term Contracts Customer type by % volume (FY13) Geographical breakdown of customers measured by revenue in US$ (FY13) Others*, 5% 11% Spain, 8% Indonesia, 21% 2% China, 10% Power Philippines, 4% Cement America, 3% Others Malaysia, 7% Japan, 14% Hong Kong, 7% 87% S
Slide 13: Exceptional Access to Capital
Exceptional Access to Capital Borrower Loan Type Year Secured Tenor Nominal Net Outstanding Undrawn as of (in million USD) 1Q14 1Q14 (in million USD) (in million USD AI and CTI Term & Revolver November 2007 8 years 750 162.5 - AI Guaranteed Sr October 2009 10 years 800 800 - SDM Term December 2009 5
Slide 14: II. Adaro's Strategy
Il. Adaro’s Strategy adaro#& 14
Slide 15: Our Strategy to Create Long-term Value
Our Strategy to Create Long-term Value ORGANIC IMPROVE INCREASE DEEPEN GROWTH EFFICIENCY RESERVES INTEGRATION from our current of our coal supply AND by moving reserve base chain and focus DIVERSIFY downstream into on cost control power generation • Organic growth in products, locations South Kalima
Slide 16: Proven Track Record of Production Growth
Proven Track Record of Production Growth 2014 2013 2012 Units Guidance Actual Actual Production volume Mt 54 – 56 52.3 47.2 60 E5000 Mt 18.0 36.0 39.5 450 54 - 56* E4900 Mt 29.0 – 31.0 *8.4 NA 52.3 E4000 Mt 7.0 7.9 7.6 400 50 Planned strip ratio bcm/tonne 5.8 5.8 6.4 47.7 47.2 350 *Production for E4
Slide 17: Improving Efficiency and Cost Control
Improving Efficiency and Cost Control Adaro has consistently engaged in cost-reduction projects, including sealing the haul road, dredging the Barito River channel and pioneering the Taboneo offshore anchorage Project Purpose Spend to 1Q14 Completion Overburden Crusher Conveyor Transport 34 Mbcm of
Slide 18: Adaro Energy Mining Assets
5 Adaro Energy Mining Assets 6 12 billion tonnes of coal resources are attributable to Adaro across 6 locations and 20 mining concessions, eight of which are CCA and CCoWs and the remaining IUPs. 1 2 3 4 1 2 3 4 5 6 Adaro Indonesia: Balangan: MIP: 75% stake BEE: 61.04% BEP: 10.22% IMC: 25% joint Exi
Slide 19: Balangan Acquisition
Balangan Acquisition JORC Compliant Coal Resources and Reserves (Millions of ROM Tonnes) Total Ash % Total Sulfur % Calorific Value Total (Mt) Moisture % (GAR) (GAR) (kcal/kg, GAR) Resources 172.3 31.9 1.9 0.08 4,436 • Purchased 75% for US$30.4 million enterprise value in 1Q13. • Strategically locat
Slide 20: Deepen Integration by Moving into Power
Deepen Integration by Moving into Power Bhimasena Power 2 x 1000 MW South Kalimantan 2 x 100 MW Stake Acquired 34% 65% Partner(s) J-Power (34%) and Itochu (32%) Korea EWP (35%) Location Central Java South Kalimantan • Commercially and financially attractive with solid IRR and low-cost long-term proj
Slide 21: III. Industry Outlook
Ill. Industry Outlook adaro#& 24
Slide 22: Key Themes – Market Still Awash with Coal
Key Themes – Market Still Awash with Coal • Slow supply contraction, thus oversupply likely to persist for at least another 12 to 18 months. • Not demand destruction: Demand in Asia remains strong but not robust enough to absorb excessive capacity. • China to influence international pricing, based o
Slide 23: Thermal Coal Prices Have Declined Since 2011
Thermal Coal Prices Have Declined Since 2011 McCloskey Newcastle Index 200 180 160 140 $131 120 100 80 $73 60 40 20 0 Jan-07 Sep-07 May-08 Jan-09 Sep-09 May-10 Jan-11 Sep-11 May-12 Jan-13 Sep-13 May-14 • The current weak coal price is mainly due to undisciplined supply growth on the back of excess l
Slide 24: Market Update - Prices
Market Update - Prices 30 May 2014 • Australian off-spec remained weak in the end of May 2014, Bituminous (US$/Tonne) staying at around US$64.00. This was driven by low Chinese gCN 73.89 domestic prices and abundant supply of Australian off-spec Aus Off-Spec (Platts) 64.00 materials in the seaborne
Slide 25: Global Cost Curve
Global Cost Curve Cash Cost for Global Seaborne Thermal Coal Supply (2013) 2011 - 2013 Average Seaborne Thermal Cash Cost 250 2011 Total 2012 Total 2013 Total Country cash cost cash cost cash cost Canada 87.11 93.56 87.68 200 Venezuela 86.54 82.57 81.47 Australia Mozambique 83.14 78.37 79.66 Cost (U
Slide 26: Supply and Demand Rebalancing
Supply and Demand Rebalancing (in Million Tonnes) DEMAND 2012 Y-O-Y Δ 2013 Y-O-Y Δ 2014E Asia & Pacific 730.2 60.0 790.2 23.0 813.2 China 181.0 21.0 202.0 5.0 207.0 Japan 132.5 5.0 137.5 4.0 141.5 India 105.0 28.0 133.0 8.0 141.0 South Korea 91.0 0.0 91.0 0.0 91.0 Indonesia - Domestic 71.0 5.0 76.0
Slide 27: Supply and Demand Rebalancing
Supply and Demand Rebalancing (in Million Tonnes) SUPPLY 2012 Y-O-Y Δ 2013 Y-O-Y Δ 2014E Indonesia 434.0 45.0 479.0 20.0 499.0 Australia 171.5 15.0 186.5 10.0 196.5 Russia 90.0 5.0 95.0 2.0 97.0 Colombia 81.0 -6.0 75.0 5.0 80.0 South Africa 75.0 -3.2 71.8 2.0 73.8 USA 48.0 -6.5 41.5 -4.0 37.5 Others
Slide 28: Coal Fired Capacity Growth in Asia
Coal Fired Capacity Growth in Asia Growth Y-o-Y (GW) Total Capacity (GW) Growth Y-o-Y Total Capacity (GW) 70 1400 Avg. 2011 – 2017: 60 50 GW 1200 Coal Fired Capacity 50 1000 Growth in Avg. 2018 – 2030: 40 26 GW 800 China 30 600 20 400 10 200 0 0 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Slide 29: Southeast Asia Coal Requirements for Electricity
Southeast Asia Coal Requirements for Electricity Imports Domestic (Indonesia) Domestic (Non-Indonesia) 700 Total 600 Mt 600 73 500 Total 400 360 Mt 259 300 Total 97 214 Mt 200 132 80 268 100 78 131 56 0 2013 2020 2030 Source: WoodMackenzie Energy Market Service, Adaro Analysis 29
Slide 30: Future of Coal in the Energy Mix
Future of Coal in the Energy Mix Coal demand in China might slow at some point in the next decade. However, that is the time when India’s energy requirements will peak, compensating any potential downfall. The emergence of ASEAN countries will play a major role in the energy picture in Asia due to t
Slide 31: Regulatory Environment
Regulatory Environment Indonesia IUP Royalty Increase • Issue: Royalty rate increase to 13.5% from the current 3% to 7% for IUP license holders • Impact to Adaro: Positive Indonesia Coal Export Verification • Issue: Coal must be verified or traced to producer by 3rd party before loaded for export •
Slide 32: Thank You
Thank You Delivering Positive Energy 32
Slide 33: IV. Appendix
IV. Appendix ~ Salis adaro#& 33
Slide 34: Adaro's Operational and Financial Highlights
Adaro’s Operational and Financial Highlights OPERATIONAL 1Q 2014 1Q 2013 % Change Production (Mt) 14.0 11.4 22% Sales (Mt) 13.9 11.2 23% OB removal (Mbcm) 68.2 62.3 10% FINANCIAL (US$ millions, unless indicated) 1Q 2014 1Q 2013 % Change Net revenue 845 741 14% Cost of revenue (599) (605) -1% Gross P
Slide 35: Supply Chain Vertical Integration
Supply Chain Vertical Integration Coal Mining Coal Hauling • Adaro Indonesia (AI) produced 52.3 Mt • 80km private paved haul road in 2013 from a single Coal Cooperation improved operational efficiency. Agreement (CCA) area in S Kalimantan. • 900 Mt of Reserves and 4.9 Bt of • More than 350 units of
Slide 36: Supply Chain Vertical Integration
Supply Chain Vertical Integration Coal Processing & Barge Loading Barging At Kelanis river terminal: • Supported by our subsidiary, • Completed the first stage of expansion in PT Maritim Barito Perkasa (MBP). 2013 (increase throughput capacity to 60Mt per year). The second stage of • 55 sets of tugs
Slide 37: Supply Chain Vertical Integration
Supply Chain Vertical Integration Barito River Channel Shiploading and Port • Sarana Daya Mandiri (SDM), dredged • Offshore loading at Taboneo: capacity the river channel in 2008, increasing up to 165,000 tonnes/day: floating capacity to 200 Mt per year and now cranes (15,000-20,000t/day), FTU manag
Slide 38: Corporate Milestones: Pre-LBO, LBO to Growth
Corporate Milestones: Pre-LBO, LBO to Growth Pre LBO LBO Growth 1982-2002 2005 2006 2007 2008 2009 2010 2011 2012 2013 1982: Coal Cooperation Infrastructure First ratings upgrade First venture out of Sole qualified Agreement signed developments by Moody’s to Ba2 South Kalimantan bidder for post LBO
Slide 39: Adaro Group – Journey from LBO
Adaro Group – Journey from LBO LBO (Jun '05) 2005 2006 2007 2008 2009 2010 2011 2012 2013 Revenue (US$m) - 951 1,383 1,512 1,869 2,591 2,718 3,987 3,722 3,285 EBITDA (US$m) 175 202 254 262 506 1,067 883 1,474 1,101 822 EBITDA Margin (%) - 21.2% 18.4% 17.4% 27.1% 41.2% 32.5% 37.0% 29.6% 25% Net Debt