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July 12, 2018

Supply Chain Services Strategy Becomes a Mainstay in ABM Investama’s Effort to Strengthen Coal Mining Business

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Jakarta, July 12, 2018 - To optimize the momentum of global market price increases and demand for coal, PT ABM Investama Tbk (ABM) in 2018 is set to increase its coal production to 9 million tons. The increase in coal production is also supported by an efficiency strategy through strengthening the integration of subsidiaries into the leading Supply Chain Services coal business in Indonesia.

ABM President Director Andi Djajanegara said the positive trend in the coal industry over the past two years provides an opportunity for ABM to strengthen its business. One of the successful strategies of the company is to integrate seven subsidiaries to support the strengthening of both its mining business and coal sales.

"As a company that has DNA in the coal mining business, ABM continues to innovate to strengthen its competitiveness in the industry. We are grateful that ABM's breakthroughs, particularly in building coal supply chains, provide very positive results for the company,” Andi said at a halal-bi-halal event with reporters in Jakarta, Thursday (12/7).

According to Andi, ABM’s seven subsidiaries formed a service synergy from upstream to downstream or end-to-end services with a better level of operational efficiency than industry standards. ABM's success prevailed and succeeded in running the business more efficiently when the coal industry was facing challenging times in 2012 until early 2016, proving that the company's strategy works well.

"It was not easy to survive in a turbulent coal business climate that spanned worldwide. However, we succeeded in building a better business model through the synergy and integration of subsidiaries that are focused on the mining industry,” Andi added.

The seven subsidiaries directly under the auspices of the company are: PT Cipta Kridatama (CK) which conducts mining contracting business activities; mining and trading of coal products by PT Reswara Minergi Hartama (Reswara); electricity services developed by PT Sumberdaya Sewatama and PT Anzara Janitra Nusantara (AJN); integrated logistics services by PT Cipta Krida Bahari (CKB Logistics); engineering and manufacturing services by PT Sanggar Sarana Baja; and the latest is PT prima Wiguna Parama (PWP) which engages in fuel trading services.

ABM Investama Finance Director Adrian Erlangga explained that ABM's coal supply chain system successfully curtailed the cost of coal production. ABM has done this in the management of coal mines through PT Tunas Inti Abadi (TIA) in South Kalimantan. With coal production of 5 million tons per year, EBITDA from this mine reaches US $ 108 million.

"We can say that the achievement of TIA in Kalimantan is far above the coal industry’s average. With the developed system, we can monitor production and financing. With a qualified system, business process, and human resources, ABM is certainly capable of robust performance," said Adrian.

Adrian is optimistic that in 2018 ABM’s performance will continue to improve. In addition to being propped by an increase in coal mine production, coal prices are expected to stabilize at such high prices as the present. Moreover, supply chain systems and business integration involving subsidiaries have given ABM the ability to manage costs better.

"In business we are optimistic to grow better than the previous year. Therefore, ABM will strengthen the fundamentals by increasing coal reserves in order to ramp up future production. The export market is still widely untapped and ABM has a strong network with access to the market, "Adrian concluded.