COAL BUSINESS

Company’s core business is in the coal production and distribution domestically and overseas, having coal mine projects located in Indonesia as its base for coal production and distribution activities. In addition, the Company has ocean freight transport service business in Singapore to effectively support and manage coal transport for distribution in the Country or delivery to other countries.

DOMESTIC COAL BUSINESS
The Company imports coal from the joint venture coal mining projects in Indonesia and from other sources for distribution in the domestic market by either direct delivery or for inventory and processing before delivery to the customers. Coal inventory and processing are operated at Ayutthaya Coal Center, located in Nakornluang District, Ayutthaya Province on an area of 31 rai and 29 square wah, which can support over 200,000 tons of coal inventory. The Company’s domestic coal market share in 2011 was approximately 3.79 percent.
The majority of domestic coal consumption in 2011 was mainly by the cement industry at around 35.92 percent with remaining 64.08 percent by electricity production and other industries. It is expected that the consumption of coal, with lower cost per heat unit than other types of fuel, will continue to increase in the future. Especially with the rising price of oil, more industrial operators will turn to utilize coal as the source of energy for their production activities.
OVERSEAS COAL BUSINESS
For more than twelve years, the Company has invested in joint venture coal mining projects in Indonesia, of which coal is imported for distribution to the domestic customers and exported to other countries especially in the Asia region market, such as India, Japan, South Korea, Taiwan and Hong Kong, etc. Coal produced by the Company has good quality with reputable brand and trusted by both domestic and overseas customers. The Company is one highly regarded and reliable coal company in the Asia region.
(1) PT. Lanna Harita Indonesia, a subsidiary company registered in Indonesia with Lanna Resource Public Co., Ltd. holding shares at 55 percent of the paid-up capital, conducts coal mining business operation in Samarinda district, Kutai Regency, in East Kalimantan, having received the coal mining concession (Coal Contract of Work) from the Indonesian Government for coal production and distribution for a period of 30 years (from 2001 to 2031). According to the Australasian Code for Reporting Mineral Resources Standards, or “JORC Code”, the assessment reveals that the proven and probable coal reserves are estimated at 64 million tons. Currently, the production capacity is approximately 3 million tons per year.
(2) PT. Singlurus Pratama, a subsidiary company registered in Indonesia, with Lanna Resources Public Co., Ltd. holding shares at 65 percent of the paid-up capital, conducts coal mining business operation in Kutai Regency, East Kalimantan, having received the coal mining concession (Coal Contract of Work) from the Indonesian Government for coal production and distribution for a period of 30 years (from 2009 to 2039). Mineable coal reserves have been estimated at the minimum of 45 million tons. Currently, the full coverage assessment is being carried out according to according to the Australasian Code for Reporting Mineral Resources Standards, or “JORC Code.” Currently, the production capacity is approximately 3 million tons per year.
(3) PT Lanna Mining Services, a subsidiary company registered in Indonesia with Lanna Resources Public Co., Ltd. holding shares at 99.95 percent of the paid-up capital and United Bulk Shipping Pte. Ltd. holding shares at 0.05 percent of the paid-up capital – conducts coal trading business, sourcing coal from coal resources in Indonesia. Also, the Company intends to invest in the future coal concessions via this company.
COAL INVESTMENT POLICY AND DIRECTION
(1) PT. Lanna Harita Indonesia (LHI), a subsidiary company registered in Indonesia, with Lanna Resources Public Co., Ltd. holding 55 percent of paid-up capital, has been granted the Coal Contract of Work (“CCOW”) from the government of Indonesia for exploration, mining, and selling of coal in Samarinda City and Kutai Regency, East Kalimantan, with a total exploration area of approximately 30,018 hectares for a concession period of 30 years. The concession has 19 years remaining, or until 2031.
(2) PT. Singlurus Pratama (SGP), a subsidiary company registered in Indonesia, with Lanna Resources Public Co., Ltd. holding 65 percent of paid-up capital, has been granted the Coal Contract of Work (“CCOW”) from the government of Indonesia for exploration, mining and selling of coal in Kutai Regency, East Kalimantan, with total exploration area of approximately 24,760 hectares for a concession period of 30 years. The concession has 27 years remaining, or until 2039.
The Company has planned the investment to expand the production capacity of the above two mining concessions in the next five years (2012 – 2016) as follows.
 

Subsidiary CompaniesProduction Capacity per Year (Unit: Million Metric Tons)
20122013201420152016
PT. Lanna Harita Indonesia3.03.33.63.83.8
PT. Singlurus Pratama2.53.75.06.06.0