Risk of terminated or revoked coal mining rights by the Government

2. Risk of new legislation enactment whether in the field of mining, environment, seaport, shipping, finance, forestry, as well as in other fields or there might be an interpretation or implementation of such legislation which can negatively impact business activities and licensing owned by the subsidiaries. The Company and its Subsidiaries requires permits and approvals other than PKP2B and IUP, to run its business. The Company cannot confirm the possibility of changed regulations relating andor affecting the mining industry in Indonesia in the future. Changes of legislation limiting mining operations in the concessions territory including those that cause failure of the Company in obtaining permits and renewal of approvals could adversely affect the financial condition, results of operations and business prospects of the Company and its subsidiaries. In the environmental sector, BIB is the holder of Environmental Impact Assessment AMDAL for the implementation of mining activities in the area of PKP2B, and the holder of Environmental Management and Monitoring Plan UKL-UPL for the implementation of special port activities which is in the process of evaluation within the framework of the Mandatory Environmental Audit in accordance with Article 49 paragraph 1 Law No.32 Year 2009 on Environmental Protection and Management. KIM, KCP, TBBU, BBU, BHBA, BNP, MAL, NIP and TKS are AMDAL andor UKL-UPL holders for the implementation of mining activities in each IUP area. The AMDAL and UKL-UPL might be evaluated in the framework of Mandatory Environmental Audit, which enable subsidiaries to renew AMDAL and UKL-UPL, which has been owned. Termination or revoked or limitation of AMDAL andor UKL- UPL with respect to the results of evaluation in the framework of Mandatory Environmental Audit may cause negatif impacts on the business activities, financial condition, results of operations and business prospects of the Company. 3. Risk of dependence on the ability of subsidiaries to obtain, maintain and renew all permits and approvals required. The Company requires various permits and approvals from central and local government agencies to conduct mining operations that include general business permits, mining permits, investment permits, labor permits, compliance to environmental provisions, land utilization permits, forestry permits and other permits. Most of these permits have varying expiration from 6 months up to 30 years from the date of issuance of such permits. Thus, the Company must renew each permits and approvals when it is expired and obtain new permits and approvals if necessary. The Company cannot ensure that the Government either central or local level will issue or extend the permits and give approvals in estimated time period. Negligence or failure to obtain or extend any permit or approval required for the Companys operation could be materially detrimental to business activities, financial conditions, results of operations and prospects of the Company.

4. Risk of illegal mining

Illegal coal mining is a problem that often occurs in Indonesia that can cause disruption to the activities of mining companies and loss due to decreased reserves and increased rehabilitation costs on related concession areas. The subsidiaries have experienced and also have overcome small-scale coal theft in PKP2B areas. It cannot be ensured that illegal coal mining within their territories will not happen anymore or whether it will increase in the future and whether the illegal coal mining in the future does not have a negative impact on the financial condition, results of operations and business prospects of the Company.

5. Risk associated with the local population in mining areas

Problems with the local residents around the operation areas of related subsidiaries may arise as a result of the companys business activities which include among others are land acquisition problem, land overlapping, relocation of residents and work accidents. These issues may cause protests which can disrupt business activities of the Company and its subsidiaries. Failure to resolve the problems of local residents can cause negative impacts on financial condition, results of operations and business prospects of the Company. 6. Risk of negligence to comply with applicable legislation in forestry and environmental sectors Coal contains a variety of chemical elements, including sulfur, mercury, chlorine and other compounds, most of which are released into the air during combustion. More stringent regulations in environment sector related to the emissions from the power plant using coal fuel and other coal user industries, may increase the cost of using coal. This can reduce the demand for coal as an energy source and cause negative impacts on coal sales volume and prices of the Company and its subsidiaries, which in turn can negatively impact financial condition, results of operations and business prospects of the Company. Indonesia and more than 16 other countries have signed the United Nations Framework Convention on Climate Chance “UNFCC” in 1992 which had the purpose to limit or restrain emissions of greenhouse gases like carbon dioxide. On December 1997, in Kyoto, Japan, the UNFCC signatories set the emission target which was binding some developed countries the Kyoto