MEC USD 1 Billion Infrastructure Investment Plan

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MEC PUSHES AHEAD WITH US 1 BILLION
INFRASTRUCTURE INVESTMENT PLAN

• Madhu Koneru
• Executive Vice Chairman

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MEC PUSHES AHEAD WITH US 1 BILLION
INFRASTRUCTURE INVESTMENT PLAN
Jakarta 27 July, 2009 In a clear vote of
confidence in Indonesias future following the
recent terror attack in Jakarta, MEC (Minerals.
Energy. Commodities) reiterated its support for
the country by pushing ahead with its US 1
billion infrastructure development program for
East Kutai Regency in East Kalimantan
Province. Comprising a 130 km railway - the
first private railway project ever in Indonesia
-connecting coal mines in the Muara Wahau area to
a high-capacity coal loading terminal at
Bengalon, the infrastructure program is expected
to lead to the development of an industrial zone
that will create jobs, contribute to local
government revenues, raise the skills and
training of the people and improve the
communities access to opportunities. MECs
executive vice chairman, Madhu Koneru, who was in
Jakarta as part of the companys sponsorship of
the Indonesia President Invitational 2009 golf
tournament, said, There is every reason for MEC
to proceed with its plans in Indonesia. Whilst
there may be disruptions, as seen last week,
Indonesia is fundamentally very sound, with
political and economic
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MEC PUSHES AHEAD WITH US 1 BILLION
INFRASTRUCTURE INVESTMENT PLAN
stability resulting from the competent leadership
of President Susilo Bambang Yudhoyono. We remain
undeterred by last weeks event and have absolute
confidence in Indonesias future and the clear
growth potential for the coal industry. Indones
ia is the place to be when it comes to major
league coal production because it has vast and
largely untapped coal resources which benefit
from a strategic location in relation to China
and India - the worlds two major epicenters for
coal demand. In fact, Indonesia's largest coal
reserves are found in Kalimantan. However,
having large reserves of coal is just half the
story. The right infrastructure must co-exist in
order for there to be true economies of scale so
that coal can be brought to market at the best
quality and the best price. From that
perspective, the development of the railway and
the loading terminal in East Kutai is critical,
and must continue, said Madhu Koneru.
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MEC PUSHES AHEAD WITH US 1 BILLION
INFRASTRUCTURE INVESTMENT PLAN
In line with its mission to harness coal
resources in remote, inaccessible regions to
empower the lives of thousands in the surrounding
communities, MEC operates a 12,000 hectare coal
concession in East Kutai. Production from this
site, which has an estimated two billion metric
tons in coal reserves, is expected to come on
stream at the end of 2009 with an initial
production capacity of two million metric tons
annually, reaching 32 million metric tons
annually by 2019. Its mining operation in East
Kutai is part of MECs overall goal to support
the global demand for sustainable and
cost-effective energy resources. MEC is also
exploring strategic investments in coal assets
and coal-related infrastructure and industries.
Specifically in Indonesia, the company is focused
on developing energy resources that are driven by
integrated infrastructure investments for
long-term economic growth. In addition to its
investment commitments in developing coal assets
and coal-related infrastructure, the company also
recently entered into an agreement with Indias
National Aluminium Company (NALCO) to invest up
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MEC PUSHES AHEAD WITH US 1 BILLION
INFRASTRUCTURE INVESTMENT PLAN
to US 4 billion for the construction of an
aluminium smelter and a 1,250-megawatt coal-fired
power plant in East Kalimantan. Both of these are
scheduled to be competed in 2013. Naveen
Chandralal, chief executive officer of MEC, said,
By any measure, these are significant
investments. Beyond its size, however, the
investment reflects the enormous potential we see
in Indonesia and East Kalimantan. More important,
the investment underscore our view that the right
infrastructure must be in place in order for
long-term success. Between the railway, the
smelter and the power plant, we expect about
3,000 jobs to be created for members of the local
communities. Madhu Koneru continued, To
effectively and successfully develop large coal
assets, investments in infrastructure must go
beyond just connecting mines to market but also
connect people and communities to opportunities
so that they can attain their full potential. For
MEC in Indonesia, this means investing in
public-private partnership infrastructure to
realise a world-class transportation
infrastructure that
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MEC PUSHES AHEAD WITH US 1 BILLION
INFRASTRUCTURE INVESTMENT PLAN
supports the creation of opportunities not just
for our business but equally so for the larger
community in which we operate. This approach
underscores a new model for the coal industry
where we build the business on a solid program of
infrastructure investment and sustainable social
development instead of the other way
around. Echoing his sentiments, Gita Wirjawan,
co-chairman of Ancora Capital Management Ltd., an
international Syariah-based private equity firm
specializing in natural resources and mining,
said, Our view is that infrastructure
development is key to spurring growth in
Indonesia. Sadly, this is an area where Indonesia
has fallen behind in comparison to countries like
China which will be spending billions on
highways, bridges, ports and airports over the
next two years. For example, since 1990, China
has built built tens of thousands kilometers of
toll roads while Indonesia has built just a
fraction of it in the same period. This
disparity, of course, represents significant
potential for investors who take the long term
view and who want to be part of Indonesias
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MEC PUSHES AHEAD WITH US 1 BILLION
INFRASTRUCTURE INVESTMENT PLAN
transformation into a global powerhouse by 2050,
from an Asean giant as it is today, said Mr.
Wirjawan. Ancora Capital currently manages funds
from Islamic countries including those from the
Middle East.