The Company's thermal coal mining operations are carried out through several of its subsidiaries engaged in mining. The Company's subsidiaries currently operate 1 (one) IUPK-KOP through PT Adaro Indonesia (“AI”) (consisting of the Tutupan and Wara mines) and 4 (four) IUPs, consisting of PT Semesta Centramas (“SCM”), PT Laskar Semesta Alam (“LSA”), and PT Paramitha Cipta Sarana (“PCS”) (under Balangan Coal (“BCC”)), as well as PT Mustika Indah Permai (“MIP”). 

In conducting mining operations, the Company's group observes the principles of Good Mining Practice as stipulated in the Decree of the Minister of Energy and Mineral Resources Number 1827 K/30/MEM/2018 concerning Guidelines for Implementing Good Mining Technical Principles as partially amended by the Decree of the Minister of Energy and Mineral Resources of the Republic of Indonesia Number: 111.K/MB.01/MEM.B/2024 concerning Guidelines for Application, Evaluation, and Approval of Reopening of Reclaimed Areas in Mineral and Coal Mining Activities.

This business segment produces sub-bituminous coal products of moderate calorific value with the advantage of extremely low ash and sulfur content, and produces nitrogen oxides on a relatively low scale during combustion. The main coal product of the Company's group is widely known under the Envirocoal trademark.

The Company's group supplies coal for domestic and international needs, both directly and through intermediaries. The majority of customers are power generation companies, along with other sectors such as cement and metal smelting.

The following map shows the location of the Group's mining concessions:

CONCESSION AREA

The Company's subsidiaries hold mining assets consisting of 1 (one) IUPK-KOP area and 4 (four) IUP areas with a total mining concession area of 33,442 hectares that have been in operation for mining activities:

Further Information on the Company's Group Coal Mines

The following is a summary of the Company's Group coal mines:

AI Mine

AI produces thermal coal of moderate calorific value with low pollutant content, which is widely used for coal-fired power plants (PLTU) as well as for industrial purposes, such as the metal smelting and cement industries in Indonesia and several importing countries. AI mines are located in Tabalong and Balangan, South Kalimantan, operated under a Special Mining Business License as a Continuation of Contract/Agreement Operations (IUPK-KOP) covering an area of approximately 23,942 hectares.

AI commenced commercial production in 1992. AI's total reserves reached 616.87 million tonnes and total resources reached 3,370 million tonnes at the end of December 2024. The coal reserves within AI's concession area are of moderate-calorific sub-bituminous thermal type in the range of 4,000 kcal/kg to 5,000 kcal/kg GAR, with extremely low sulfur and ash content. Due to these characteristics, AI's products are marketed under the Envirocoal brand, which has been developed into several distinct categories to meet customer needs.

In 2024, AI produced 50.80 million tonnes with total overburden removal reaching 227.40 million bcm, or an increase of 3.65% from 219.39 million bcm in the same period in 2023, resulting in a strip ratio of 4.48x. The following is a summary of AI's coal production and sales for the 6 (six) month period ended June 30, 2025, and for the years ended December 31, 2022, 2023, and 2024:

Balangan Coal (BC) Mine

BCC consists of SCM, LSA, and PCS. The Company holds a 75% ownership interest in each of these companies, which each have an IUP area of 2,500 ha, bringing the total IUP concession area of BCC to 7,500 ha. These three IUPs form an important part of the Group's coal mining portfolio by providing an additional source of sub-bituminous thermal coal.

This concession contains coal with a calorific value ranging from 4,200 kcal/kg to 4,400 kcal/kg (GAR) and shares similar characteristics with AI's Envirocoal product, namely low ash and extremely low sulfur of less than 0.1%. BCC has total reserves of 123 million tonnes and resources of 344 million tonnes as of the end of June 2024. As an essential part of the Group's coal portfolio, BCC continues to improve infrastructure quality and capacity, including hauling roads, stockpiles, offices, warehouses, and mine water treatment.

As of YTD June 30, 2024, the BCC concession produced 4.44 million tonnes of coal with total overburden removal of 19.48 million bcm, or an increase of 34% from 14.53 million bcm in the same period in 2023, resulting in a strip ratio of 4.39x.

MIP Mine

MIP was acquired by the Company in 2011 with a 75% ownership interest. MIP holds an IUP for a 2,000-hectare concession in Lahat, South Sumatra, which contains sub-bituminous thermal coal of moderate calorific value with relatively low ash and sulfur content, making it suitable for coal-fired power plants.

MIP commenced commercial production in 2019 and has developed its position in both domestic and export markets. MIP has total coal reserves of 152 million tonnes and coal resources of 361 million tonnes at the end of June 2024, with an average in-situ calorific content of 4,300 kcal/kg (GAR).

As of YTD June 30, 2024, MIP produced 2.61 million tonnes of coal with total overburden removal reaching 5.12 million bcm, a 10% decrease from 5.66 million bcm in the same period in 2023, resulting in a strip ratio of 1.96x. The following table presents a summary of MIP's coal production and sales for the 6 (six) month period ended June 30, 2024, and for the years ended December 31, 2021, 2022, and 2023:

Reserves

Based on the JORC Reserves Report of June 2024 prepared by PT Quantus Consultants Indonesia (QCI), the JORC Code 2012 compliant coal reserves estimate for the AI, BCC, and MIP concessions is as follows:

Products

AAI's subsidiaries produce sub-bituminous coal marketed under the 'Envirocoal' trademark thanks to its low sulfur, ash, and other contaminant content. Several key variables of sub-bituminous coal quality are calorific value and rank. In particular, AI's Envirocoal is one of the coals with the lowest sulfur and ash content in the international coal market. These more environmentally friendly characteristics distinguish AAI's subsidiaries' products from those of competitors. 

1. Envirocoal produced by the Subsidiary in Kalimantan
   • Ash content of 2% - 3% (adb)

     Coal with low ash content is more efficient in generating heat and reducing maintenance costs as it produces lower boiler slagging. Consequently, the subsidiaries' coal, recognized as one of the lowest ash coals in the global market, offers significant cost savings to consumers. Ash disposal issues, due to volume and chemical content, have caused problems in some countries, such as Japan, which faces difficulties handling combustion ash due to land limitations. In terms of chemical content in ash, many countries worldwide focus on trace elements in combustion ash. 

   • Nitrogen content of 0.9% - 1.0% (daf)

     Envirocoal is one of the coal products with the lowest nitrogen content in the world market. During combustion, nitrogen reacts with oxygen to form NOx. Low nitrogen content automatically reduces pollutant formation. In addition, low nitrogen content allows consumers to lower costs associated with removing nitrogen oxides from exhaust gas, or even eliminate them, resulting in more power generated. According to McCloskey, the nitrogen content of Envirocoal is among the lowest in the world, comparable only to US Powder River Basin coal.

   • Sulfur content of 0.1 - 0.25% (adb)

     Sulfur oxide emission regulations require consumers to install desulfurization equipment in exhaust pipes or lower the sulfur content in the coal blend. Low sulfur content allows consumers to meet required standards and lower capital expenditure, as well as operational costs.

2. Coal produced by the Subsidiary in Sumatra (MIP)

   

   • Ash content of 5% (adb), with extremely low Ferric Oxide (Fe2O3) ash chemistry value

     MIP coal has an ash content of approximately 5% adb. Despite having ash content slightly higher than Envirocoal, MIP coal has excellent ash chemistry, with Ferric Oxide (Fe2O3) content of only 6%. This has positive implications in combustion, where using coal with low Ferric Oxide can help prevent boiler slagging and fouling.

   • Nitrogen content of 0.9% - 1.0% (daf)

     MIP coal's nitrogen content is also low, similar to Envirocoal from Kalimantan, classifying MIP coal as environmentally friendly with low NOx emissions.

   • High Ash Fusion Temperature with Initial Deformation Temperature of 1,330°C

     Ash fusion temperature is the temperature describing the melting characteristics of inorganic residues left after coal combustion, namely ash. Too low an ash fusion temperature causes ash to melt at boiler operating temperatures, risking slagging and fouling on boiler walls and exhaust pipes. Ash fusion temperature starts from Initial Deformation Temperature, Softening Temperature, Hemispherical Temperature, and Fluid Temperature. Initial Deformation Temperature is the temperature at which ash starts softening and changing shape. MIP coal has an Initial Deformation Temperature of 1,330°C, which is quite high. This means ash will only soften and change shape at temperatures well above operating levels, ensuring efficiency and avoiding slagging and fouling.

Resources

From time to time, the subsidiaries engage independent consultants to estimate and assess coal resources from the 5 (five) operating mines: AI, SCM, LSA, PCS, and MIP.

Based on the JORC Resources Report of June 2024 prepared by PT Quantus Consultants Indonesia (QCI), the JORC Code 2012 compliant coal resources estimate for the AI, BCC, and MIP concessions is as follows: