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indonesian continued • • Adaro Energy's South Kalimantan operations include barging to a deep water transfer station. social and community support, and completing engineering and geological studies. These programs are required to be finished before significant capital expenditures are made. The current development plan is to bring the BEP concessions into production in 2014. Adaro has full control of the management, operations and funding of BEP from the date of signing on May 28, 2012. Electric Power Development Co. Ltd. (J-Power), Itochu Corp. and PT Adaro Power established PT Bhimasena Power Indonesia (BPI) in July 2011. On October 6, 2011, BPI and state-owned electricity company PLN signed a 25-year power purchase agreement, which includes construction of a 2,000 mw coal-fired power plant in Central Java. BPI expected to achieve financial closure by the end of 2012, but due to challenges related to land acquisitions, the Central Java power plant project will be delayed. It is not expected to be a lengthy delay nor will it harm the project or sponsors. Adaro said the challenges are not insurmountable and it will deliver this key project as soon as possible, bringing significant ben- efit to all stakeholders and helping build the nation. Most parties agree Indonesia cannot achieve its potential without increasing the country's power generation capacity and Adaro intends to help Indonesia achieve its full potential. Competitive Advantages Adaro Energy and its subsidiaries have numerous competitive advantages: • Unlike most conglomerate businesses, Adaro is controlled by five families that collectively hold 63%. Adaro believes the natural checks and balances that exist in this ownership structure ensure all decisions are made in the best interest of the company and long-term value creation. • Low cost producer—The location and characteristics of the major deposit, as well as the operating strategy and execution create the capacity to produce coal at a low-cost level. • Large operation—Adaro Energy and subsidiaries are the second largest coal producer in Indonesia, own and operate the largest coal mine in Indonesia, and have the largest single location open-pit mine • • • • • in the southern hemisphere and the fourth largest in the world. Unique coal—Adaro Energy's environmentally friendly coal is trademarked around the world as Envirocoal. Growing concern for the environment, as well as understanding Envirocoal's other benefits, such as lower operating costs, will ensure demand for Envirocoal remains firm. Highly skilled work force with many years of experience—A large and varied work force and management, made up of people with decades of experience from Indonesia and around the world. Many consider Adaro responsible for establishing the international market for subbituminous environmental coal. Diversified loyal blue chip customer base—Adaro and its subsidiaries sell Envirocoal to a geographically diverse customer base of 41 companies in 17 different countries. Most have been customers for years and substantially all are power companies. Not restricted by infrastructure— Adaro's existing infrastructure gives the company the capacity to increase production rapidly with minimal capital expenditure and to quickly adjust production volume based on market demand and conditions. A collection of integrated profit centers— Adaro Energy's forward thinking plan enables each subsidiary, while fully integrated into the Adaro coal supply chain, to become an independent profit center. Profit from subsidiaries assists the group's overall income growth. Each subsidiary may become publicly listed. Experienced subsidiaries—Adaro Energy's strategic business units are experienced in the sectors of mining, trading, mining contractor service, and infrastructure and logistics. High quality assets—As well as the 3.5 billion mt of coal reserves and resources, Adaro has a complete production fleet in the form of equipment and facilities for crushing, stockpiling, transportation, loading, production and other supporting roles. Consistent Growth Reclamation work at the Paringin coal mine is part of the Adaro project in South Kalimantan. 48 www.coalage.com There are several factors that have contributed to Adaro Energy's consistent growth: • Demand for its coal is increasing every year. • Coal mining contractors perform well in terms of meeting annual targets. • The company has sufficient equipment July 2013