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Jakarta, April 12th, 2018

Ministry of Energy and Mineral Resources

Keynote SpeechIndonesia Miner 2018

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0815

Mineral Added Value for

Maximum Benefit of Indonesia

51% Divestment is Obligatory

Encourage Smelter Development

Assuring Contribution for GOI

Operation Phase Certainty

INDONESIA MINING LANDMARK

Increasing the employment opportunities

National & Regional Economic Growth

Improving National role in Mining Business Process

Conducive Investment Climate for Investor

Increasing Mineral Refined Product Price

Coal & Mineral RegulationGov Reg No. 8/2018 jo. Gov Reg No. 1/2017 Concerning the fifth amendment of Gov Reg No.23/2010 Regarding

Coal & Mineral Mining Business Process

• Mining Permit/Special Mining Permit

Extension request minimum 5 years before termination

• Instruction of divestment phases until 51%

• Regulation of base selling price for mineral & coal

MEMR Reg No. 5/2017Regarding Added Value increment of mineral through Domestic Mineral

Refinery & Purification

• All mining permit holders (IUP OP, IUPK OP, and IUP Khusus Pengolahan

dan/pemurnian) must do refining & purification as minimum amount required

• Able to export the purified mineral when fulfil the minimum purification amount

required

• All mining permit holders are allow to export the concentrate commodities for 5

years with terms & condition

Have built the smelter or in progress

Do customs payment

The transformation from work contract into special mining permit (IUPK) is

obligatory

MEMR Reg No. 35/2017Regarding procedures & requirements of providing export

recommendation for refined & purified commodities

• Export recommendation is mandatory before collecting export approval

• Mineral export recommendation is the requirement to get the export approval

• Procedure & requirement for mineral export Recommendation

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Non Tax State Revenue (PNBP) of ESDM Sector

Rp27.15 T

Rp48.89T

Rp0.93 T

Rp2.98 T

Rp79.96T

Rp29.63 T

Rp86.11 T

Rp0.88 T

Rp2.08T

Rp118.71 T

Rp40.62 T

Rp88.56 T

Rp0.93 T

Rp1.88 T

Rp131.99T

Rp32.72 T

Rp76.67 T

Rp0.67 T

Rp1.20 T

Rp111.26T

Realization of PNBP 2017

119% of State Budget Revision 2017’s Target (APBN-P 2017)

Minerals &

Coal

Oil & Gas

NEW RENEWABLE

ENERGY

& ENERGY

CONSERVATION

Others

Total

Minerals &

Coal

reach Rp40.62 Trillion.

124% APBNP 2017’s target

Oil & Gas

reach Rp88.56 Trillion.

116% APBNP 2017’s target

Geothermal

reach Rp0.9 Trillion

140% APBNP 2017’s target

4

hectare

units units units units units

Realization Target

Progress of Mineral Processing & Refining Facilities Construction

Post Mining Reclamation Progress

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Investment Opportunity Per Phase

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Mineral Mining and Processing Opportunities Mining Permits Re-Evaluation | Clean and Clear / TOTAL Mining Permit (known as IUPs)

6,0006,370 6,202 6,565

10,643 10,339

9,370 9,074

2014 2015 2016 2017

IUP CnC

Total IUP

Since 2018 as many as 6,565 mining permits have

had legal status (almost 3,000 un-proper mining

permits freezed)

Government preparing mining working concession

bidding Opportunities:

1. Offering New Mineral Working Acreage

2. Mineral processing

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22.1%

3.2%2.2%2.1%

14.1%

3.0%

1.3%12.7%

21.4%

8.3%

2.2%

7.3%

US

Germany

Kazakhstan

Poland

Russian Federation

Ukraine

Middle East & Africa

Australia

China

India

Indonesia

Others

Based on BP Statistical Review of World Energy 2017 : Indonesia’s coal reserve accounts for 2.2% of world’s coal reserve

RESOURCES 128.06 Billion Tonnes (41 Bt U/G)RESERVES 28.45 Billion Tonnes

Source: BP Statistical Review of World Energy 2017

Source: Geological Agency of Indonesia 2016

Indonesia

Indonesia Coal Resources and Reserves

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Indonesia Economic Outlook Better than Global Trend

Source : • WEO Oct 2017 & Ministry of Finance of The Republic of Indonesia• Statistics Indonesia

Indonesia Developing CountryGlobal Developed Country

Forecasts of Economic Growth

Beside economic growth, The GOI also got stable currency, low inflation rate (

3.61% yoy), improve external balance demonstrated by trade surplus amount

ed to USD 11.8 billion, managable state budget deficit at 2.42% of GDP, as w

ell as gradually decreasing interest rate.

factors driving growth

DRIVING FACTORS

2016, Indonesia's economic growth has found a

momentum of recovery, when the global trend is

still slowing

Outlook, economic growth will continue the upw

ard trend among others supported by a healthy

domestic sector and government support on acti

vities that show productivity (e.g. infrastructure)

Global economic risk

remains to be wary so that the external sector is

conducive and confidence is maintained

2017, the consistent structural reforms carried

out by the government has shown material resul

ts reflected in 2017, with 5%-5.1% economic gro

wth

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Global Competitiveness Index 2017-2018

Indonesia Position #36.9 of 12 pillars has improved for example: Institution, infrastructure, macroeconomic, health and primary education, technological readiness, business sophistication

Galup World Poll

Indonesia along with Switzerland have gained The highest Public Trust level to The Government

Investment GradeEase of Doing Business 2018

Indonesia position up from #91 to #72, andbecame one of the Top Improvers.Currently Indonesia position higher than India, Brazil, and Phillipines

Up19

Ranks

#1Up5

Ranks

Acknowledgments of Indonesian ReformImprovement of creditworthiness, ease of doing business, trust to the government

In terms of sovereign credit ratings, Sta

ndard and Poor’s also upgraded Indon

esia’s rating from BB+ to BBB-; as suc

h, the three world’s biggest rating agen

cies have lifted Indonesia’s status to In

vestment grade. Fitch ratings even incr

eased Indonesia’s rating one notch hig

her from BBB- to BBB with a stable out

look

Moody’s S&P Fitch

Baa1 BBB+ BBB+

Baa2 BBB BBB

Baa3 BBB- BBB-

Source : World Bank

Source : World Economic Forum

Source : Moody’s, S&P, Fitch

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Oil & Gas Mineral & Coal Electricity NRE & EC

According to the President’s Directive,MEMR has revamp permits & bureaucracy to create Friendly Investment Climate, to encourage Economic Growth & Create Jobs”

“Ignasius JonanMinister of Energy and Mineral Resources

Permit & Regulation Hampered Investment, Should be Reduce

Revoke Period

90 Regulations

96 Permits (Licences, Recomendations,etc)

JAN

201811 Regulations

Feb-I

2018

30 Regulations

2 Permits

Feb-II

2018

45 Regulations

72 Permits

Mar

2018

4 Regulations

22 Permits

Impact of Deregulation are simplified & revamp process business

Arcandra TaharVice Minister of Energy and Mineral Resources

MEMR

18 Regulations23 Permits

SKK Migas

12 Regulations

BPH Migas

3 Regulations

32 Regulations64 Permits

20 Regulations 9 Regulations5 Permits

186 Regulations/Permints were revoked

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March 2018

Coal Production (Million Tonnes) Coal DMO (Million Tonnes)

RealizationTarget

Contract Amendment

*Note: • 18 coal contract of work (PKP2B) has signed

as targeted on 2018• 3 contract of work (KK) is on progress

Year

Mining Business Permit Re-evaluation

6,565 Mining Permit stated as CnC in 2018 as

a result of Intensive verification (involving KPK, Regional Gov, & Related Stakeholders)

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“Several Areas Still Shortage of Electricity Infrastructure”

95.35%Electrification ratio 2017

Electrification Ratio(%)

TargetRealization

50 -70

<50

INFORMASI

> 70

INFORMATION

ACEH99.80 SUMUT

99.90 KEPRI77.96

BENGKULU98.81

LAMPUNG94.54

SUMBAR91.63

SUMSEL90.67

BANTEN99.99

JABAR99.99

DIY99.99

DKI 99.99

JATENG99.48

BALI99.91

JATIM95.19

KALBAR91.93

NTB86.40

NTT61.02

PAPUA62.10

PABAR96.77

MALUKU89.09

MALUT97.42

SULTRA82.89

SULSEL99.99

KALSEL94.34

KALTENG81.96

KALTARA84.79

KALTIM99.99

SULBAR96.32

GORONTALO88.70

SULTENG81.25

SULUT97.36

RIAU96.35

JAMBI95.67

BABEL99.99

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AFFORDABLE ELECTRICITY FOR PUBLIC

PROMOTING MINE MOUTH COAL POWER PLANT (REDUCE FUEL LOGISTIC)Ministerial Regulation No. 19 Year 2017**REGARDING THE UTILIZATION OF COAL FOR POWER GENERATION AND THE PURCHASE OF EXCESS POWER

MINE MOUTH POWER PLANT MINE MOUTH POWER PLANT REGULAR COAL FIRED POWER PLANT (CFPP)Combined cycle power plant in which it’s coal supply was guaranteed

by the mining company based on PPA

ADVANTAGES :

EFFICIENT: Power plant’s location is parallelwith coal mine’s location thus cutting distribution & transportation cost

ENVIRONMENTAL FRIENDLY: Transportation infrastructure (roads & river) are exempted from damage and reduced air pollution

Power purchase can be directly appointed

PT PLN & Power Generation Company are obliged to ensure coal supply based on PPA

PPA is implemented for 30 years since COD (BOOT Scheme)

PPA is implemented for 30 years since COD (BOOT Scheme)

Electricity Purchase Price : Electricity Purchase Price :

If local BPP ≤ national BPP average the ceiling price is 75% of local BPP

If local BPP > national BPP average the ceiling price is 75% of national BPP

Electricity purchase price is set (assumption of 80% generating capacity)

Larger than 100 MW

If local BPP

If local BPP

Capacity up to 100 MW

National BPPthe ceiling price is based on local BPP

*BPP = Biaya Pokok Penyediaan(Electricity Production Cost)

National BPPthe ceiling price is based on national BPP

National BPPthe ceiling price is based on local BPP

National BPPthe ceiling price is based on auction or B2B process

Electricity purchase price is set(assumption 80% generating capacity)

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Coal Dominate Power Generation Source

Coal57.22%

Gas24.82%

Oil5.81%

Geothermal and Others RE5.09%

Hydro7.06%

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Global Commodity Price

Coal Price for Power Generation

US$ 70 per Ton (Calorie 6,322 GAR)if the price < US$ 70, referring to Coal Price Reference

Coal Price Reference(US$/Ton)

Maintaining affordable Electricity

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Thank You&

Follow Us

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21.717.9

12.710.2*

16.8

3.08.1

8.29.1

12.2**0.6 1.0

1.61.3

2.08.2 5.3

7.26.1

6.2

2014 2015 2016 2017 2018

Realization and Investment TargetEnergy and Mineral Resources Sector

33.532.3

29.726.7

* Upstream Investment US$ 9.33 Downstream Investment US$ 0.85

** Source RUPTL 2018 - 2027

Oil&Gas

Electricity

Coal & Mining

NRE

miliar US$

Target

37.2

MEMR focus On: Delete regulations and

permits that hampered investment

Investment facilitation Taking Decision Rapidly