Adaro’s history begins with the
global oil shocks of the 1970. They caused the Indonesian Government to
revise its energy policy, until then focused on oil and gas, to include
coal as a fuel for domestic use.
With this increased focus on coal, in
1976 the Mines Department divided East and South Kalimantan into eight
coal blocks and invited tenders for these blocks.
Spanish Government company Enadimsa bid
for Block 8 in the Tanjung district of South Kalimantan, as coal was
known to be present in the district from outcrops mapped by Dutch
geologists in the 1930 and from intersections at depth in oil wells
drilled by Pertamina in the 1960.
No other company bid for this block; at that time it was regarded as being too far inland and the coal of low quality.
The name Adaro was chosen as the
company name by Enadimsa to honor the famous Adaro family, which had
been involved in Spanish mining for several centuries, and PT Adaro
Indonesia came into existence.
Adaro Indonesia Coal Cooperation
Agreement (CCA) was signed on Nov. 2, 1982. Enadimsa conducted
exploration work in the agreement area from 1983 to 1989, when a
consortium of Australian and Indonesian companies purchased 80% of Adaro
Indonesia from Enadimsa.
During the first half of 1990 a
feasibility study was carried to lay the groundwork for project
development. Of key importance was selecting a transport route for coal
haulage, and the decision was made to build an 80km coal haul road west
to the Barito river, rather than a 130km road east to Adang Bay on the
Kalimantan coast because it would be quicker and cheaper, especially as
it would avoid traversing the Meratus mountains.
It was also decided to start production
from the Paringin deposit as it had a slightly higher heat value than
the Tutupan deposit and also because it had overburden that contained a
burnt mudstone, a harder rock suitable in road construction. This mine
development was fast-tracked in order to get the coal to the market as
quickly as possible to develop a customer base.
Decisions were made to integrate with
the community as much as possible, with all staff, expatriate or
national, living in the local towns, and a recruitment focus on hiring
from the local population with the attendant commitment to major
training programs. Use of contractors to the maximum extent possible was
also made a focus for the operations, particularly local contractors
and local suppliers if available.
The first step in development of the
coal deposit was to raise funds, and in May 1990 a number of banks were
approached for project finance of US$28 million. However, all of the
banks declined to provide funds on the grounds of perceived issues that
related to the quality of the coal because Adaro’s type of
sub-bituminous coal had not been traded internationally before in any
significant volumes and because the domestic market was relatively
small.
There were also doubts about the
feasibility of the haul road construction primarily due to the fact the
last 27 kilometers of the proposed road was through swamps which even if
technically feasible, would mean a high cost of construction.
Banks were reluctant to fund the project
over worries about the coal quality: Adaro’s type of sub-bituminous
coal had not been traded internationally before. So the shareholders put
up US$20 million development funds at commercial financial rates for
the construction and development of Adaro’s operation with the
requirement that any further funding come from cashflow.
Mining Begins
Construction of the coal haul road
started in September 1990 and took about a year due to difficulties
laying road over 27km of swampland at the Barito river end. Construction
of a two-million tonne per year crushing, stockpiling and barge loading
system at Kelanis on the river began in March 1991.
Opening up of the Paringin pit with its
single 30 meter thick seam started in March 1991 using local
contractors, and the first coal was tested in stockpile conditions and
was sent to Australia for combustion testing; the results came back with
positive indications for its use in commercial boilers, and an official
opening of the Paringin mine was held in August 1991.
During 1990 a marketing program had been
developed that focused on potential markets where Adaro’s ultra-low
sulphur and ash coal would have benefit. To aid marketing it was decided
to adopt a brand name for the coal that would reflect these qualities
and after the merits of “aquacoal” had been discussed and rejected, the
name “envirocoal” was selected.
The first sale of Adaro’s coal was to
Krupp Industries of Germany who were interested in its environmental
qualities. The company’s vessel, MV Maersk Tanjong, self-loaded with its
own gear and grabs and sailed to Europe on October 22nd with 68,750
tonnes of Envirocal.
After further coal testing, shipments
were made in 1992 to a range of potential customers and with the
completion of construction of the mine and infrastructure and the
establishment of a customer base, Adaro was declared to be in commercial
production on October 22, 1992.
Since those early days, the Tabalong
mine has grown to be the southern hemisphere’s largest single-mine site,
and production has grown from an initial 1 million tonnes in 1992, with
some years recording extraordinary growth. In 2006, for example, Adaro
Indonesia increased production by more than 28% from the previous year
to 34.4 million tonnes.
Through to today, Adaro Indonesia’s
production & sales have kept a steady upward trend, and in 2018
stood at 54 million tonnes each. Adaro Energy (ADRO) History
Financial Media & Capital Market:
Mahardika Putranto Hadikusumo
Head of Corporate Secretary and Investor Relations Division
mahardika.putranto@adaro.com
Mahardika Putranto Hadikusumo
Head of Corporate Secretary and Investor Relations Division
mahardika.putranto@adaro.com
Public & General Media:
Febriati Nadira
Head of Corporate Communication Division
febriati.nadira@adaro.com
Febriati Nadira
Head of Corporate Communication Division
febriati.nadira@adaro.com
