KPC SDR07 EngPrint8102008
MORE THAN MINING
SUSTAINABLE
DEVELOPMENT
REPORT
2007
Creed•“KPC believe in honesty, fairness, dignity and trust as the basis of all its actions.”KPC’SVISION•KPC
is a team of confident and enthusiastic people who take real pride in their company and the excellence of its products. They share a common
vision of the future, in which KPC’s commercial success will be based on its reputation with all customers as a consistent supplier of quality
products and on its preferred supplier status. The company will fully satisfy the reasonable expectations of its shareholders and will be the
benchmark to which its competitors aspire.•KPC’s leaders strongly encourage self-empowerment for all employees and the development
of the skills and talents to allow competent decision taking at the lowest effective level within the company. The leaders understand that an
empowered workforce which is confident and fiercely proud of KPC and its achievements will ensure that the company adapts to whatever
challenges may present themselves in an uncertain and competitive world. • All employees will be the intensely involved in and fully
committed to the business improvement process. They will accept that there is always a better way of doing things and will embrace rather
than react against change, including the use of new proven technology.•The drive for ever increasing improvement in performance will
strongly motivate all KPC employees and will be the basis of the reward and recognition system. Increased performance however will be
measured as much by improved safety and loss control and environmental protection as by productivity gains and profit. The KPC team
will fully understand the interlocking of these important and complementary goals. • The role of the KPC organization is to serve the
company’s core business and technical processes. KPC encourages growth of local businesses and major supplier partners as providers
of essential support services to KPC and through the creation of mutual value, all will enjoy long term, prosperous and interdependent
relationships.•KPC will exist in harmony with the local communities and will continue to support them whilst fostering the same attitudes
of self-reliance, self-worth and responsibility it seeks inside the company. • KPC respects and seeks the respect of the Indonesian
GovernmentatalllevelsandwillbeseenasanoutstandingmodelforthedevelopmentofIndonesianresources.•Inalltheirdealingswith
the outside world as well as with each other, KPC employees strive to embody the values enshrined in their creed.
SUSTAINABLE
DEVELOPMENT
REPORT
2007
PUBLISHED BY : PT Kaltim Prima Coal
PATRON : Endang Ruchijat (Chief Executive Officer)
ADVISORS : KPC EXECUTIVES, R. Utoro(ChiefOperatingOfficer)•Ashok Mitra (Chief Financial Officer)
•Rod Bridges/ Bambang Saptono(MiningOperation)•Shane Bennett (Development)
•M. Sumali(Processing&Infrastructure)•Richard Schloss(MiningSupport)•Pratikto
(Commercial)•Herlan Siagian(Marketing)•Yulianti Subian(Finance)•Sam Alwi Alkaaf
(HumanResources)•Khudori(Health,Safety&Environment)•Ilda Harmyn (Contract Mining)
•Simon Scott(Procurement)•Chris Lauritzen (Planning and Development)
EDITOR IN CHIEF : Harry Miarsono, GM External Affairs & Sustainable Development
EDITORS : Danny K. Wardhana(SuperintendentProjectMonitoring&Control•Zulfatun Mahmudah
(SupervisorMedia&PublicCommunication)•Hernowo Bayu S/Ricky Santana (Reporting
Consultant)• Louise G. Pessireron(ManagerProjectManagement&Evaluation)•Wijayono
Sarosa, Manager Community Empowerment
PROOFREADER : Shane Bennet
CREATIVE & LAY OUT : Parjo (Specialist Desktop Publishing)
CONTRIBUTORS : Danny K. Wardhana(SuperintendentProjectMonitoring&Control)• Elistyandari (Senior
EngineerEnvironment)•Imanuel Manege(ManagerEnvironment)•Posman Sirait (Manager
LearningDevelopmentHR)•Dewi Rachmayanti(SpecialistTrainingHR)• Hendy Ferdian
(Senior Business Analyst) • Heru Mashudi (Supervisor Purchasing) • Ikhsan Yuzarly
(SafetyStatistician)•Haryadi Wardono(ManagerOccupational,Health&Safety)•Priono
Saptawan(SuperintendentReporting&Analysis–MiningOptimization)•Louise G Pessireron
(ManagerProjectManagement&Evaluation)•Wawan Setiawan (Superintendent Community
Supports)•Yuliana Datu Bua(SuperintendentCommunityHealth&Education)•Nurul Karim
(SuperintendentAgribusinessandConservation)•Ubaedillah Sirri (Superintendent Public
Communications)•Pramono Triwahyudi(SuperintendentLocalBusinessDevelopment)•
Kusuma Sari(SuperintendentHealthSafetyandEnvironment–TechnicalAffairs)•Rio Supin
(ManagerAccounting&Tax)•Juli Transtuti(SuperintendentFinancialReporting)•Tulus
Siregar(ManagerCompensation&Benefits)•Makin Perdana Kusuma (Human Resources
Manager)•Suriadi(SuperintendentEmployeeCommunication)•Jamik Yulianto (Specialist
MarketingAdministration)• Djoko Soelistiono (Superintendent Export Marketing)
INTERNAL AUDITOR : Tim Internal Audit Sustainable Report KPC
TRANSLATOR : PA CSR Consultant
EXTERNAL REVIEWER : PA CSR Consultant
EXTERNAL AUDITOR : SGS Indonesia
EDITORIAL ADDRESS : External Affairs & Sustainable Development
PT Kaltim Prima Coal
M2 Building, Mine Site
Sengata, Kutai Timur, Kalimantan Timur
Indonesia
Telp.62549521451•Fax.62549521701
PRINTED BY : Subur Printing Network, Jakarta
WAKAROROS. A unique painting of Dayak Basap, atribefromEastKutai.Itisalsocalled“Sitting
BanyanTree”.Thispaintingrepresentsloweredtreesorcreepingrootswhoselowerswillattractbees
because of their plentiful flower essence, so it will result into abundant honey.
TABLE OF CONTENTS
Page
iii
Foreword from the Chief Executive Officer
1
About this Report
Goal of Formulating this Report
Approach tothe Reporting System
Report Assurance
Basic Guidelines
Scope of the Report
Independent Verification
3
3
4
5
5
5
5
2007 Awards
6
About KPC
KPC Management
Strategy and Approach of Sustainable Development
Stakeholder Engagement
Our Mining Operation
Our Coal Product
Coal Market
Health and Work Safety
Employee’s Benefit
Land Provision and Obserrvation
Post Mining Program
7
7
8
9
12
12
16
17
19
21
22
Our Product Quality
Product Responsibility
Customer Satisfaction
Marketing Communication Program
Breach of Customer’s Privacy
23
23
23
24
24
Corporate Governance
Division in charge of Sustainable Development
Monthly Board Meeting
Executive Committee
HSE Forum
HRCR Forum and HR Network
Health, Work Safety , and Environment Management System
MSH CSR Forum
25
25
26
26
26
26
27
27
Economic Performance
Contribution to National Economic Development
Effect of Rainfall on Production
Supplier’s Engagement
KPC’s impact towards East Kutai’s economy
28
28
28
28
29
Social Performance
Community Empowerment Policy
Agribusiness Development
Community Health
32
32
32
34
i
PTKALTIMPRIMACOAL•SustainableDevelopmentReport2007
Notes from the Editors
PTKALTIMPRIMACOAL•SustainableDevelopmentReport2007
Page
ii
Education and Training
Development of Cooperatives, Small and Medium Business
Development of Community Infrastructure
Donation to the Community
Nature and Cultural Conservation
Empowerement of the Community and Government’s Capacity
Handling of Complaints and External Communication
Monitoring and Evaluation
35
37
37
38
38
39
41
41
Environmental Performance
Environmental Policy
Environmental Management Responsibility
Training
Monitoring and Follow-Up
Environmental Indiators
Land Clearing and Reclamation of Mined Areas
Biodiversity Project for Reclamation Area
Aquatic Biota Diversity
Preservation of Flora and Fauna
Orangutan Relocation
Acid Rock Drainage Management
Used Materials by Volume
Emission, Effluent, and Waste
Management of Green House Gases and Ozon Depleting Substances
The Role of Biomass Production for CO 2 Absorption in Reclamation Areas
Impact of Mine Waste Water
Compliance Points of Mine Waste Water
Oil Spill Management
Hazardous Waste
Total Expenditure for Environmental Management
42
42
43
43
43
44
45
46
47
48
49
49
50
50
52
52
52
52
53
54
56
Labor Performance
Employees
Industrial Relations
Training and Development
Management Development Program
Career Opportunities
Employee’s Performance Demonstration
Retention and Development Program
Attracting Potential People
57
57
58
59
60
61
61
61
62
Human Rights Performance
Discrimation
Freedom of Association
Child Labor
Forced Labor
Security Practice
Local Inhabitants
Health and Work Safety
63
63
63
64
64
64
64
64
GRI Cross Reference
66
Glossary of Abbreviation
71
NOTES FROM THE EDITORS
“More than Mining”isthesustainabledevelopmentreportforPT.KaltimPrimaCoal(KPC).It
provides a summary of our performance in the production of coal from the 1st of January to the 31st
of December 2007. As in the previous year’s report, this report also provides data and information
that might be useful for stakeholders to get to know and learn about the company’s performance
in more detail.
We deliberately chose the title “More than Mining” to emphasize that KPC’s activities are not
just about mining and producing coal, but also cover activities in the economic, social and
environmentalspheres.Thismaybemorewidelyknownas“goodminingpractice”becausewe
firmly believe that our mining activities should lead to direct and indirect benefits to the community
around the mining area. Direct benefits derive from KPC community development activities,
whereas indirect benefits come from the economic multiplier effect of regional activities, such as
local purchases and taxes paid, development of local business, domestic procurement, employee
salaries and others.
In formulating this year’s report, we have followed the Global Reporting Initiative (GRI) that we
have used as guidelines since 2003. The difference is that for this year we have used version 3.0,
known as G-3. To ensure that a high level of accuracy, accountability, and transparency have been
maintained, KPC requested an external review to be conducted by PA CSR Consultant; also an
external audit that was conducted by the independent verification and certification body SGS. This
report incorporates SGS inputs from our previous annual reports, and additional indicators within
the framework of G-3 that are in line with the scope of a mining company.
This sustainable development report was completed in the middle of the second quarter of 2008
to fulfill the principle of timeliness and to reduce the number of Report Amendment Request (RAR)
and Outstanding Information Requests (OIR). This is part of our improvement efforts, in line with
SGS’ recommendations over the previous year’s report.
iii
Lastly, we would like to thank all stakeholders who have supported KPC’s sustainable development
program for their inputs, suggestions, ideas and criticisms. We would also like to thank all the
contributors for their efforts to complete this report.
External Affairs & Sustainable Development Division
PT. Kaltim Prima Coal
M2 Building – Mine Site
Sengata, East Kutai,
East Kalimantan 75611
INDONESIA
Tep. +62 549 521451
Fax. +62 549 521701
e-mail : info@kpc.co.id
website: www.kaltimprimacoal.co.id
We wish you a pleasant read.
The Editors
PTKALTIMPRIMACOAL•SustainableDevelopmentReport2007
If you have any criticisms, comments, suggestions or questions regarding the data and information
provided in this report, please address them to:
FOREWORD FROM THE CHIEF
EXECUTIVE OFFICER
We offer our prayers and thanks to the Almighty God who has given His blessings to us
so that we passed the year 2007 well. The safety was marred as the beginning of the year a single
fatality accident occurred resulting in the loss of one of our mining partners.
As in the previous year, weather at the beginning of 2007 was unvaforable for production activities.
Heavy rainfall contributed to a failure to achieve production targets, both in terms of overburden
removal and coal production. However, the amount of coal stock was quite high at the end of 2006;
therefore our shipments and sales activities ran well.
The hope that the weather would improve during the middle and second half of 2007 as in previous
years did not materialize. The heavy rainfall persisted well into the third quarter which contributed
to the low level production in that quarter. The weather improved at the beginning of the fourth
quarter and we managed to catch up with the overburden removal and coal production. This could
be seen in the increased stockpile tonnages at the Pit, ROM or port.
Overall there were a number of achievements in 2007. In the field of health, work safety and the
environment there was an improvement in performance compared to 2006 in which the LTIFR was
0.45. During 2007, the LTIFR per million hours worked was 0.27 with only 12 LTI (but included
one fatality).
In December 2007, the audit to obtain OHSAS 18001: 2007 certification was completed with a
satisfactory result. KPC is the first mining company to obtain this certification from SGS. In the
environmental sector we also obtained an extension of our ISO 14001certification.
The total production of overburden in 2007 was around 1.4% below the planned target despite the
fact that production level from KPC and its contractors in Sengata were above target. This deficit
was caused by the performance of PT Darma Henwa in Bengalon which was well below plan.
1
Coal sales were 7.6% below target (sales were 39.7 million tonnes compared with the plan of 43.0
million tonnes). In 2007, the sales of Prima coal, Pinang coal, and Melawan coal were 26.5%, 5.1%
and 11.1% below plan respectively.
In 2007 we managed to complete the negotiation between the management and the Workers Unions
of the Prima Perkasa or Collective Labor Agreement for the period of 2007 to 2009. A process to
select a strategic partner was also completed during the year, with Tata Power Company (Tata)
of India becoming a strategic partner, with a share ownership of 30% in PT Arutmin Indonesia
(Arutmin) and PT Kaltim Prima Coal (KPC) assets. This resulted in a change of membership
in the Boards of Directors (BoD) and Board of Commissioners (BoC), where Tata now has two
representatives in both the BoD and BoC. Tata’s management also placed one Chief Financial
Officer (CFO) at Arutmin and at KPC.
In an effort to reduce costs and to remain competitive in the coal mining industry, several relocations
of contractors took place. Thiess moved from Pit J to Melawan, while Pama moved from Bendili to
Pelikan, with KPC taking over the mining at the vacated locations. The shiploader upgrade process
has also been started with the expectation that it will be operational by the second quarter of
2009. The tender process for the Melawan Crushing Plant/Western OLC and new power plant with
systems expansion has also been approved by the BoD.
Another important event that occurred in 2007 was the scarcity of tires for medium sized trucks
(100 to 150 tonnes). It was found that even when the goods were available in the market, the price
had increased drastically. In addition, the price of diesel for mining industry has increased this
year.
PTKALTIMPRIMACOAL•SustainableDevelopmentReport2007
Coal productions from KPC, PT Pamapersada Nusantara and PT Darma Henwa were slightly below
plan, whereas coal production from Thiess was on track. Total production of coal in 2007 reached
36.3 million tons or 12.6% below the target of 41.6 million tons.
PTKALTIMPRIMACOAL•SustainableDevelopmentReport2007
Activities to maintain and improve good relations with the regional government and local
community around the operation area are conducted continuously. KPC’s programs for sustainable
development have given benefit and improved the economic, social, and environmental outlook for
more than 10,000 people. Farmers, fishermen, breeders, teachers, students, craftsmen, business
people, house wives, and other community members have all benefited.
As in previous years, these programs are a form of Corporate Social Responsibility which
covers seven program fields. These fields are: agribusiness development, education and
training, community health and sanitation, Koperasi (Co-Op) and small business development,
infrastructure improvement, nature and culture preservation, and improvement local institutions.
Efforts have also been made to get involved in a global program of Millenium Development Goals
(MDGs). The implementation of this program has been performed by a third party. The results
were reflected in awards given by the Coordinating Minister for Social Welfare of the Republic of
Indonesia, the Indonesian Institute of Accountant, and Metro TV.
The company has also been paying close attention to the improvement of the skills of its employees
in order to maintain an efficient operation. This is done through training programs held internally
and externally. The end goal of all of these efforts is ensuring that the company can remain
competitive especially with the challenges likely in years to come, more so than those experienced
in 2007.
All results that we have achieved are of course thanks to the hard work of all employees and staffs.
Therefore, on behalf of the leadership team, I would like to thank everyone for their contributions.
Let us continue to improve our performance within a safe working environment to ensure the
success of KPC in facing an even more challenging year of 2008.
2
Endang Ruchijat
ABOUT THIS REPORT
More Than Mining is the theme of the 2007 Sustainable Development Report. This report does
not only present the company’s commitment and performance in operating the coal mine, but
also explains about how the company has provided social, economic, and environmental benefits
through partnership with the community and other stakeholders throughout the year. Operational
performance is enhanced through the implementation of the Good Corporate Governance principles
and mining practices that consistently refer to high health and workplace safety standards. In
addition to this, the company is committed to implementing a sustainable community development
program by actively implementing all activities in line with the programs planned in 2007. The
program originates from the efforts to fulfil the mandate of the 2005 Environmental Impact
Assessment (AMDAL) in the social and economic sectors. Furthermore, the implementation is
also incorporated into the long term strategic plan for the the community around the mining area,
in particular with regards to the potential mine closure in 2021.
Three key points of sustainability are:
• Thenetbeneitofeconomicactivitiesmusttakeintoaccountasaconsequencesofthesocial
relations and environmental impact that will emerge;
• In utilizing resources, the company must take into account the needs and expectations of
future generations;
• The government, industries and members of the society must work together to harmonize
these needs.
By continuing to implement high safety, work health, environmental and community health
standards, and forming partnerships with the government and local community, KPC is trying to
establish long term economic and social development.
This report portrays KPC, including its mining locations, production activities, marketing, health,
work safety, environment as well as the level of engagement and participation of stakeholders
in those production activities. It also portrays the policies and social programs that have been
and will be conducted. All data presenting in this report reflects our efforts towards sustainable
development.
3
This report aims to show our commitment as one of the biggest coal mining companies in
Indonesia to the stakeholders and the community. It also demonstrates the transparency of our
company’s performance in the economical, social and environmental sectors. The report also
shows changes that occurred throughout 2007. The report is based around the principles of
accuracy, completeness and reliability. Through the process of internal and external audits we aim
to guarantee that those three principles are embedded in this report which is written in line with
the 2006 Global Reporting Initiatives (GRI) standard.
Besides the fulfillment of the important parameter indicators in the GRI G-3 standards, the
company’s commitment in preparing the 2007 sustainable development report is reflected in the
company staff’s training in the use of this reporting system. The training in GRI standards helped
to form a solid data contribution team with support from the company’s top management. The
staff, who are also contributors, were given additional understanding about reporting principals
and explanations about indicator parameters which were their references in the production of this
report.
An external party assured the validity of the content of this report in order to present accurate and
reliable data.
We hope this report can be easily understood, clearly portrays our performance and will be of
benefit to the readers.
PTKALTIMPRIMACOAL•SustainableDevelopmentReport2007
Goal of Formulating this Report
Approach to the Reporting System
PTKALTIMPRIMACOAL•SustainableDevelopmentReport2007
This year’s report gives more emphasis on the reporting of the performance of our programs in
achieving sustainable development. The data required in the GRI indicators is still presented in
statistical form.
Structure of the Sustainability Report
This sustainability report is formulated in the following sequence:
Relevant departments
provide data of
production, environmental, social and
finance performance
• Collectionofperformancedatafor2007
• Collecteddataveriiedbymanagertoensureaccuracy
• Teamofeditorsanalyzethedataandformulatethedraftreport
Report writing
• DraftreporteditedbyEditorinChief
• Report observation by external reviewer to observe the level of compatibility of the report
compared to GRI’s regulations
Editing Draft
External Review
Final Draft
Internal Audit
• Editorseditthereport
• Editedreportsentbacktothecontributor
• Internalauditisconducted
• Findingsfrominternalauditfollowed-upforthereport’sinaldraft
External Audit
• Reportsubmittedtoindependentassurorforaudit
Final Repoprt
What we report:
• Economic, social and environmental performance as required in the GRI indicators. This
year’s report only presents main parameters that are relevant to KPC’s mining activity,
4
• Changesthatoccurredin2007.
• OperationalactivitiesasrequiredintheGRIindicators.
• Operationalactivitiesthatareregulatedbythelaworotherregulations.
• AdditionalindicatorsinGRI.
• IndicatorsinGRIMiningandMetalSectorSupplement.
GRI
indicator
KPC Sustainable
Development
Report
KPC
Objectives Quarterly
& Targets Report
Monthly
Report
External
External
(Limited) (stakeholder)
Scale of issues
related to KPC Operation
Internal
Picture1.ApproachtoReportingSystem
Report Assurance
As in the case of our previos reports, the 2007 report was also audited based on second level
scoring by an indepent party to improve the realibility of our report. The second level scoring
covers:
1. Evaluation on the accuracy of the report;
2. Gap analysis against GRI parameters;
3. Assessment by means of a scoring system/percentage system with regards to GRI
requirements
Improvements requested by the audit team in the previous year’s report have been made. It is
believed that this GRI 2007 report would be graded at the level of B+.
Basic Guidelines
This report was developed by referring to the 2006 Global Reporting Initiative (GRI) version 3.0 or
also known as the G3 Reporting Standard. References showing compliance towards GRI guidelines
can be seen on page 66 to 70.
Scope of Report
This report covers all aspects of the operational performance in KPC’s mining areas and the
changes that have occured throughout 2007, including a change in ownership of the company’s
shares, financial concerns and production result. As we have mentioned previously, this report
refers to the 2006 Global Reporting Initiative version 3.0.
Independent Verification
5
The contents of this report have been verified by SGS Indonesia, an international company
that specializes in handling environmental, social and sustainability reporting certification and
verification. SGS Group is a pioneering company in the field of inspection, testing and verification
and operates in 140 countries.
PTKALTIMPRIMACOAL•SustainableDevelopmentReport2007
Their statement of verification on the accuracy and transparency of this report is included on the
last page of this report.
2007 AWARDS
PTKALTIMPRIMACOAL•SustainableDevelopmentReport2007
During 2007, KPC was given a number of awards from both government and non governmental
organizations in the fields of work health and safety, the environment and community development.
The awards are as follows:
Work Health and Safety:
• OHSAS18001:2007certiicationforWorkplaceHealthandSafetyManagementSystemfrom
the SGS Certification Body
• Zero Accident Award from the Minister of Labor and Transmigration (for ESD, HSE, and
Commercial Divisions)
Environment:
• ExtensionoftheISO14001CertiicateuntilSeptember24th 2010 by SGS Certification Body
• TheBestEnvironmentOrganizerAwardfromtheGovernorofEastKalimantanandProvincial
Assembly in January 9 th 2007.
• “ProperEmas”(GoldLevelforEnvironment)fromtheGovernorofEastKalimantaninJune
20 th2007(Sengatasite)whichistheeighth“ProperEmas”inarowsince2000.
• “ProperBiru”fromtheGovernorofEastKalimantan(Bengalonsite)inJune20 th 2007.
• PrimeCertiicateforCoalMiningActivity-ReclamationImplementationField
Community Development:
• ACommunityEmpowermentAwardfromtheCoordinatingMinisterforSocialWelfareofthe
Republic of Indonesia in May 24 th 2007.
• MilleniumDevelopmentGoals(MDGs)awardforthecategoryoferadicationofHIV/AIDSand
other infectious diseases from the UN Special Representative for the Millenium Development
Goals.
6
• The Best Sustainability Reporting award in the 2007 Indonesian Sustainability Reporting
Award organized by the Indonesian Institute of Accountant.
• ReceivedAppreciationAwardforCustomerAwarenessfromPLN(NationalElectricCompany)
on July 16 th 2007, category: helping PLN to overcome electricity power crisis.
Picture2SertiikatOHSAS18001:2007
Picture3.KPCCEOreceivedMDGsAward
ABOUT KPC
KPC is a mining company located in East Kutai Regency, established with notary act No.
28 on March 9, 1982 and legalized by the Justice Minister of the Republic of Indonesia by Decision
Letter No. Y.A.5/208/25 on March 16, 1982 and announced in the State Gazette of the Republic of
Indonesia on July 30, 1982 No. 1 Supplement No. 967. At the start of the operation in 1992, KPC
was a foreign investment company owned by the British Petroleum International Ltd. (BP) and
Conzinc Rio Tinto of Australia Ltd. (Rio Tinto) with a 50% share ownership each. Following Act No.
9 dated August 6, 2003 and the Proof of Reporting from the Justice and Human Rights Minister of
the Republic of Indonesia No. C-UM. 02 01.12927 dated August 11, 2003, shares in KPC owned by
BP and Rio Tinto were diverted to Kalimantan Coal Ltd. and Sengata Holding Ltd. On October 18,
2005, in line with Notary Act No. No 3 dated October 18, 2005, these companies were acquired by
PT. Bumi Resources Tbk. Under Notary Act No. 34 dated May 4, 2007; shareholders of PT. Kaltim
Prima Coal diverted 30% of their shares to Tata Power (Mauritius) Ltd.
Under on the Coal Contract of Work Agreement (PKP2B) signed on April 8, 1982, the government
granted permission for KPC to conduct exploration, production and marketing of coal from the
agreement area until 2021. The contract of work area covers a 90,960 Ha area in East Kutai
Regency, in the province of East Kalimantan.
KPC’s Management
The mining operation is supported by a management team of professionals who are competent
in their own field and have more than ten years experiences in the relevant fields. There is no
independent member in KPC management’s member. The structure of KPC’s management team at
the time of writing was as follows:
Chief Executive Officer
Chief Operating Officer
Chief Financial Officer
GM Development/Planning & Development Division
GM Human Resources Division
GM External Affairs & Sustainable Development Division
GM Contract Mining Division
GM Marketing Division
GM Finance Division
GM Mining Operation Division
GM Health, Safety & Environment Division
GM Mining Support Division
GM Processing and Infrastructure Division
GM Procurement/Supply Chain Division
Endang Ruchijat
R. Utoro
Ashok Mitra
Chris Lauritzen/Shane Bennet
Sam Alwie Alkaaf
Harry Miarsono
Ilda Harmyn
Herlan Siagian
Yulianti Subian
Rod Bridges / Bambang Saptono
Khudori
Richard Schloss
M. Sumali
Simon Scott/Pratikto
PTKALTIMPRIMACOAL•SustainableDevelopmentReport2007
7
PTKALTIMPRIMACOAL•SustainableDevelopmentReport2007
Company Profile until December 31st 2007
8
Type of
concession
license
Coal Contract of Work
Shareholders
Agreement (PKP2B
Contract No.J2/i.D4/16/82)
65% PT. BUMI Resources
30%, Tata Power
Company, 5% Kutai Timur
Energi
Date of signing
8 April 1982
Permanent employees
(3659), ‘Fixed term’
employees (164), ‘Fixed
term’ non establishment
employees (23)
Activity stage
Production operation
Coal production
(SK Penciutan Produksi
No.940.K/20.01/DJP/1999
dated December 24th 1989)
36,34 million tons
Prima: 18.76%
Pinang: 61.89%
Melawan: 19.35%
Mineral
Coal
Net sales
USD 1,285 million
Effective period 30 years since production
stage approved (January
1st 1992)
Royalty paid in
2007
USD 228,95 million
Total area
90.938 Ha
(D4KW96PB0363)
Community
expenditure
commitment
5,000,000 USD
Location/
Address of
Head Office
PT. Kaltim Prima Coal,
Mine Site Building,
Sengata, Kabupaten Kutai
Timur, Kalimantan Timur
Environmental
cost
19,060,005 USD
Work force
Strategy and Approach of Sustainable
Development
KPC’s Sustainable Development Approach is conducted by following the motto “More than
Mining”.Thisistheinspirationbehindtheimplementationofsustainablecommunitydevelopment
programs which are envisaged to continue as post mining activities. More than Mining has become
a way to approach social, economic, and environment programs conducted by the company to
guarantee that KPC’s mining operation is not just extracing non-renewable natural resources, but
also conducting environmental impact mitigation efforts and providing a renewable resource (the
community) by maintaining good relationship with stakeholders. The programs are conducted with
the objective of improving society, community and government institutions abilities, by increasing
their efforts and by working on the cultural atmosphere for the benefit of the community in the KPC
operational surrounding.
KPC’s business challenge of achieving its vision as a world-class coal supplier is not only limited
by how to determine how coal production can fulfill the market (and world) coal demand, but
also on how KPC performs and is actively involved in conducting its social responsibilities by
preserving the environment and building up the independency of the local economy. This is a very
important issue because the level of dependency of the East Kutai community on the coal mining
sector is still quite high (data from East Kutai’s Statistical Agency shows a dependency level of
82%). Upon realizing this fact, KPC initiated programs that will support the independence of the
local community economy in line with the mine closure program. It is expected that with guided
program implementation, the community’s dependency on the mines can be reduced to 5% by
2025 (seePicture4 ). Therefore, the concept of local economic development is geared towards the
principles of partnership, community participation, and empowerment.
2005-2010
2010-2015
2015-2020
2021-2025
Agriculture
development study
Study
implementation
Agriculture development
Intensive training
Agriculture
development
Fisheries industry
Development of
agriculture
industry
Services
Services
Development of
agribusiness
technology
Development of
agribusiness
export
Fisheries study
Land identification
Utilization of
rehab land
Spatial study
Agriculture
development
Potential analysis
Mining 65%
Non Mining 35%
Mining 50%
Mining 35%
Non Mining 50%
Non Mining 65%
Mining 5%
Non Mining 95%
Picture4.KPC’sLongTermSustainableDevelopmentImplementationStrategicPlanning
Within the boundaries of the first stage in the five-year planning process KPC is conducting
a program to identify land and spatial planning options as well as review the development of
agriculture and fisheries in locations within and outside the mining area. This review and associated
studies are being conducted to understand the community’s support capacity and to identify the
potential for the development of renewable resources.
As a world class coal supplier, KPC continuously conducts environmental projects to minimize
the environmental impact of the mining operation. The environmental preservation program is
integrated with the Environmental Management System (SML), in line with ISO 14001. All potential
impacts are identified to develop operational control from planning through to mine closure. Aside
from the need to minimise the environmental impacts around the mining area, KPC also conducts
various environmental programs on a larger scale, through the TNK (Kutai National Park) partner
program, and the Tree Bank in cooperation with the Ministry of Environment.
Stakeholders Engagement
We understand that KPC’s success to date is not determined solely on the basis of production, but
also by the participation and engagement of the company’s stakeholders. KPC always attempts
to be a good neighbor for the community around KPC’s mining area. Being a good neighbor can
be seen as KPC’s wish to become a partner that is able and ready to help the community in
finding answers over problems related to the fulfillment of requirements of the community around
the current mining area as well as for future generations, so that independence and a better
quality of life for the local community can be achieved. This strong commitment is incorporated
in the company’s HSE and Sustainable Development Policy signed by KPC’s President Director.
Cooperation with stakeholders is conducted with different approaches, adjusted to the interests of
the company and the stakeholders themselves.
9
PTKALTIMPRIMACOAL•SustainableDevelopmentReport2007
KPC’s commitment to become a development partner for the community and the government has
been welcomed in a positive manner. Through existing public organizations, the community and
the government have entrusted the company’s representatives to take part in the development of
public policies. Such organizations include: the Indonesian Farming Group Association (HKTI),
the Indonesian National Sports Committee (KONI), the Indonesian Youth National Committee
(KNPI), the Chamber of Commerce and Industry (KADIN), the Regional Research Council, the
Regional Agribusiness Development Program (GERDABANGAGRI), and the Multi Stakeholders
Forum for Corporate Social Responsibility (MSH-CSR). In addition, KPC is also an active member
of the Corporate Forum on Community Development (CFCD), the Indonesian Business Link (IBL),
the Indonesian Mining Association (API), and the Indonesian Coal Mining Association (APBI).
PTKALTIMPRIMACOAL•SustainableDevelopmentReport2007
HEALTH, SAFETY, ENVIRONMENTAL
AND SUSTAINABLE DEVELOPMENT POLICY
PT Kaltim Prima Coal’s management and employees are committed to achieving excellent performance and continual
improvement in the areas of Occupational Health, Safety, Environment (HSE) and Sustainable Development (SD).
In doing this, Kaltim Prima Coal (KPC) commits to:
• Comply with all applicable Government legislation and other requirements.
• Meet the requirements of all stakeholders, including employees, the local community, Government, shareholders
and customers.
• Plan, measure and report on HSE objectives and targets.
• Review and update HSE targets on a regular basis.
• Commission regular independent audits of HSE performance.
• Achieve continual improvement in all aspects of HSE management.
• Implement SD concepts through its involvement with the local communities.
• Continue to support corporate social responsibility efforts based on inter-dependency and sustainability.
• Establish and maintain good relationships with the local communities and government based on transparency,
mutual trust and mutual respect.
HEALTH AND SAFETY MANAGEMENT
KPC commits to provide a working environment in which KPC and contractor employees can perform their work
free from serious injury and illness. Management will implement a safety management system that provides the
means to continually identify, control, and reduce the risk of serious injury or illness from work related tasks.
10
Safety must be given priority in all aspects of the company’s operations. All parties, including KPC and contractor
employees, have a shared responsibility to work in a safe manner in accordance with KPC occupational health and
safety standards and procedures. They also have a responsibility to develop and motivate safe behavior.
ENVIRONMENTAL MANAGEMENT
KPC commits to effectively manage the environmental impacts resulting from its operations. This includes:
• Preventing pollution.
• Returning all mined areas to a safe, stable and productive state.
• Maintaining biodiversity
Environmental impacts must be considered in all aspects of the company’s operations, and all KPC and contractor
employees must act in an environmentally responsible manner. To achieve these outcomes, KPC will implement an
environmental management system that includes management plans, standards and procedures that apply equally to
KPC and its contractors.
SUSTAINABLE DEVELOPMENT POLICY
KPC actively participates in sustainable development initiatives which are based on the integration and balance of
economic, environmental and social priorities. To achieve this KPC will:
• Remain the supplier of affordable energy and a contributor to the alleviation of poverty, improved health, and
better quality of life.
• Perform community empowerment programs to encourage regional economic development based on local potential.
• Build and maintain partnerships with local communities, governments and other stakeholders using mutual trust
and mutual respect principles.
The management of KPC commits to providing the leadership, resources and support to achieve these HSE and
Sustainable Development outcomes.
NALIN RATHOD
President Director
01 September 2007
KPC Policy 2006 � 1/BR/Information System/M3
Picture5.HSEandSustainableDevelopmentPolicy
ENDANG RUCHIJAT
Chief Executive Officer
01 September 2007
Interaction with stakeholders is conducted to identify economic, social, and environment problems
which have impacts on mining process. Local community (religious/community/youth figure):
by conducting social mapping, study of socio-economic and environment impacts, consultation
forum, local labor development. Local Entrepreneurs: training, business consultation with
Kadin, Hipmi, and local contractor. Academic: study/research, seminar/discussion, consultation
with Mulawarman University, ITB, UGM, IPB, and ANU. Research Institution: research
activity and consultation in farming development with Lolit Jeruk, Balitro. NGOs (local, national,
international): cooperation in community development, health service with PMI, Indonesian
BusinessLink,Wawasan,GTZ,InterplastInternational,UpliftInternational,SkyJuiceFoundation
Australia, International Chambers of Commerce, and Asian Accountant Institute. International
donor institution: cooperation in area development with Ford Foundation, British Council,
Unicef, World Bank, International Chamber of Commerce, and AusAID. Government (regional,
province, and center): consultation with related government’s agencies in regional and provincial
government, related department (ESDM, KLH, BKPM, Fund, etc), permit application, discussion
about development concept. Contractors/Suppliers: Bid and contract process, performance
review with custodian, HSE introduction, ISO 14001 audit, OHSAS 18001, consultation and
discussion. Customers: Site visit for RFP(Request for Proposal), coal requirements, bid process,
market analysis. Employee: performance evaluation, satisfaction survey, ISO 14001socialization,
safety, OHSAS 18001, social and sports activity, health and education program, consultation with
union. Investor: inviting for site visit, and conducting road show customers’ countries.
Due to the importance of the engagement of stakeholders in KPC’s operations, various formal
and informal communication forums have been created and conducted. Through these meetings,
efficient and effective communication is enabled allowing KPC’s strategic vision and mission in
sustainable community development to be realized and to accomplish the targets. Communication
forums with stakeholders can be seen in table1.
Table 1. Communication Approach with Stakeholders
No Stakeholder
Communication Approach
Frequency
Result
Every four months,
or as required
One Gate Policy on local work force, blasting
socialization, and mine water treatment management
1
Religious figures, local Religious and community
elders and community elders forum and participation
around the mining area
2
Regional government
Partnership Team
Every four months,
or as required
Formulation of: 2005 Community Development
program, activities implementation mechanism,
monitoring, evaluation and reporting system,
organization of sustainable development program, and
networking between agencies at the regional
government level to support the implementation of
programs that have been developed.
3
Central government
Informal meeting
As required
- Approval from the Central Government regarding
permit/license
- Discussion on Government Regulation in Lieu of
Law (Perpu)
4
Mining contractors
KPC-Contractor Forum for
HRCR (Human Resources &
Community Relations)
Every two months
- Anti Poaching Agreement
- Standard Recruitment Procedure
- Synergy of community empowerment programs
5
Union
Bi-party Cooperation Agency
(LKS)
As required
Improvement of bonus scheme and annual salary
increase
6
Buyers
Coal Trans Forum
Annualy
Update of latest information on world coal market
PTKALTIMPRIMACOAL•SustainableDevelopmentReport2007
11
Our Mining Operation
PTKALTIMPRIMACOAL•SustainableDevelopmentReport2007
In its 15 years of operations, PT KPC has combined its financial strength with operational expertise
and strong commitment to protect the environment in order to provide long-term benefits for the
regional community.
During 2007 KPC mined coal from eight open pits, seven from the Sengata region and one in
the Bengalon region. Four pits were mined by KPC and four others by contractors – PT Thiess
Contractors Indonesia, PT Pamapersada Nusantara and PT Darma Henwa. Thiess operated in the
West Melawan Pit while Pama operated the Bendili Pit before moving to Pelikan. Darma Henwa
operated the Bengalon Pit A. Mining activities in Sengata and Bengalon operational areas produced
around 352.3 MBCM overburden and 38.2 million tonnes of coal in 2006
In the Coal Mining Contract of Work Agreement (PKP2B) the government granted permission for
KPC to conduct exploration, produce and market coal from an agreed area of 90,938 Ha in the East
Kutai Regency, in the province of East Kalimantan (seepicture6 ).
EAST KALIMANTAN PROVINCE
West
Kalimantan
East
Kalimantan
East Kutai
Regency
EAST KUTAI REGENCY
BONTANG
SAMARINDA
BALIKPAPAN
Central
Kalimantan
South
Kalimantan
12
BONTANG
PT Kaltim Prima Coal
Lease Area = 90,938 Ha
Picture6.KPC’sMiningOuthorityArea
Our Coal Production
KPC produces three main qualities of coal – Prima, Pinang and Melawan. In 2007, overall coal
production reached 36.34 million tonnes.
Prima Coal is one of the highest quality coals being traded on the international market. This coal
is a highly volatile bituminous coal with high calorific value, very low ash content, moderate sulfur
content, and relatively low total moisture level. Prima Coal is also a bright and lustrous coal with
high vitrinite content.
Pinang Coal is similar to Prima Coal, but has a higher moisture level and lower energy. Melawan
Coal is an ultra-clean sub-bituminous coal with very low sulfur and ash content. Prima and
Melawan Coal are produced in Sengata, whereas Pinang Coal is produced in both Sengata and
Bengalon pits.
The quality of each type of coal can be seen in the following tables.
Table 2. Prima Coal Quality
PRIMA INDICATIVE COAL QUALITY
Tipical
TOTAL MOISTURE % as received
10.5
PROXIMATE ANALYSIS % air dried basis
Moisture
Ash
Volatile Matter
Fixed Carbon
5.0
5.0
41.0
49.0
CALORIFIC VALUE kcal/kg
Air dried
Gross as received
Net as received
46
ULTIMATE ANALYSIS (daf) %
Carbon
Hydrogen
Nitrogen
Sulfur
Oxygen
80.0
5.50
1.60
0.67
12.2
SULFUR (adb) %
CHLORINE (adb) %
PHOSPHORUS (db in coal) %
0.60
SUSTAINABLE
DEVELOPMENT
REPORT
2007
Creed•“KPC believe in honesty, fairness, dignity and trust as the basis of all its actions.”KPC’SVISION•KPC
is a team of confident and enthusiastic people who take real pride in their company and the excellence of its products. They share a common
vision of the future, in which KPC’s commercial success will be based on its reputation with all customers as a consistent supplier of quality
products and on its preferred supplier status. The company will fully satisfy the reasonable expectations of its shareholders and will be the
benchmark to which its competitors aspire.•KPC’s leaders strongly encourage self-empowerment for all employees and the development
of the skills and talents to allow competent decision taking at the lowest effective level within the company. The leaders understand that an
empowered workforce which is confident and fiercely proud of KPC and its achievements will ensure that the company adapts to whatever
challenges may present themselves in an uncertain and competitive world. • All employees will be the intensely involved in and fully
committed to the business improvement process. They will accept that there is always a better way of doing things and will embrace rather
than react against change, including the use of new proven technology.•The drive for ever increasing improvement in performance will
strongly motivate all KPC employees and will be the basis of the reward and recognition system. Increased performance however will be
measured as much by improved safety and loss control and environmental protection as by productivity gains and profit. The KPC team
will fully understand the interlocking of these important and complementary goals. • The role of the KPC organization is to serve the
company’s core business and technical processes. KPC encourages growth of local businesses and major supplier partners as providers
of essential support services to KPC and through the creation of mutual value, all will enjoy long term, prosperous and interdependent
relationships.•KPC will exist in harmony with the local communities and will continue to support them whilst fostering the same attitudes
of self-reliance, self-worth and responsibility it seeks inside the company. • KPC respects and seeks the respect of the Indonesian
GovernmentatalllevelsandwillbeseenasanoutstandingmodelforthedevelopmentofIndonesianresources.•Inalltheirdealingswith
the outside world as well as with each other, KPC employees strive to embody the values enshrined in their creed.
SUSTAINABLE
DEVELOPMENT
REPORT
2007
PUBLISHED BY : PT Kaltim Prima Coal
PATRON : Endang Ruchijat (Chief Executive Officer)
ADVISORS : KPC EXECUTIVES, R. Utoro(ChiefOperatingOfficer)•Ashok Mitra (Chief Financial Officer)
•Rod Bridges/ Bambang Saptono(MiningOperation)•Shane Bennett (Development)
•M. Sumali(Processing&Infrastructure)•Richard Schloss(MiningSupport)•Pratikto
(Commercial)•Herlan Siagian(Marketing)•Yulianti Subian(Finance)•Sam Alwi Alkaaf
(HumanResources)•Khudori(Health,Safety&Environment)•Ilda Harmyn (Contract Mining)
•Simon Scott(Procurement)•Chris Lauritzen (Planning and Development)
EDITOR IN CHIEF : Harry Miarsono, GM External Affairs & Sustainable Development
EDITORS : Danny K. Wardhana(SuperintendentProjectMonitoring&Control•Zulfatun Mahmudah
(SupervisorMedia&PublicCommunication)•Hernowo Bayu S/Ricky Santana (Reporting
Consultant)• Louise G. Pessireron(ManagerProjectManagement&Evaluation)•Wijayono
Sarosa, Manager Community Empowerment
PROOFREADER : Shane Bennet
CREATIVE & LAY OUT : Parjo (Specialist Desktop Publishing)
CONTRIBUTORS : Danny K. Wardhana(SuperintendentProjectMonitoring&Control)• Elistyandari (Senior
EngineerEnvironment)•Imanuel Manege(ManagerEnvironment)•Posman Sirait (Manager
LearningDevelopmentHR)•Dewi Rachmayanti(SpecialistTrainingHR)• Hendy Ferdian
(Senior Business Analyst) • Heru Mashudi (Supervisor Purchasing) • Ikhsan Yuzarly
(SafetyStatistician)•Haryadi Wardono(ManagerOccupational,Health&Safety)•Priono
Saptawan(SuperintendentReporting&Analysis–MiningOptimization)•Louise G Pessireron
(ManagerProjectManagement&Evaluation)•Wawan Setiawan (Superintendent Community
Supports)•Yuliana Datu Bua(SuperintendentCommunityHealth&Education)•Nurul Karim
(SuperintendentAgribusinessandConservation)•Ubaedillah Sirri (Superintendent Public
Communications)•Pramono Triwahyudi(SuperintendentLocalBusinessDevelopment)•
Kusuma Sari(SuperintendentHealthSafetyandEnvironment–TechnicalAffairs)•Rio Supin
(ManagerAccounting&Tax)•Juli Transtuti(SuperintendentFinancialReporting)•Tulus
Siregar(ManagerCompensation&Benefits)•Makin Perdana Kusuma (Human Resources
Manager)•Suriadi(SuperintendentEmployeeCommunication)•Jamik Yulianto (Specialist
MarketingAdministration)• Djoko Soelistiono (Superintendent Export Marketing)
INTERNAL AUDITOR : Tim Internal Audit Sustainable Report KPC
TRANSLATOR : PA CSR Consultant
EXTERNAL REVIEWER : PA CSR Consultant
EXTERNAL AUDITOR : SGS Indonesia
EDITORIAL ADDRESS : External Affairs & Sustainable Development
PT Kaltim Prima Coal
M2 Building, Mine Site
Sengata, Kutai Timur, Kalimantan Timur
Indonesia
Telp.62549521451•Fax.62549521701
PRINTED BY : Subur Printing Network, Jakarta
WAKAROROS. A unique painting of Dayak Basap, atribefromEastKutai.Itisalsocalled“Sitting
BanyanTree”.Thispaintingrepresentsloweredtreesorcreepingrootswhoselowerswillattractbees
because of their plentiful flower essence, so it will result into abundant honey.
TABLE OF CONTENTS
Page
iii
Foreword from the Chief Executive Officer
1
About this Report
Goal of Formulating this Report
Approach tothe Reporting System
Report Assurance
Basic Guidelines
Scope of the Report
Independent Verification
3
3
4
5
5
5
5
2007 Awards
6
About KPC
KPC Management
Strategy and Approach of Sustainable Development
Stakeholder Engagement
Our Mining Operation
Our Coal Product
Coal Market
Health and Work Safety
Employee’s Benefit
Land Provision and Obserrvation
Post Mining Program
7
7
8
9
12
12
16
17
19
21
22
Our Product Quality
Product Responsibility
Customer Satisfaction
Marketing Communication Program
Breach of Customer’s Privacy
23
23
23
24
24
Corporate Governance
Division in charge of Sustainable Development
Monthly Board Meeting
Executive Committee
HSE Forum
HRCR Forum and HR Network
Health, Work Safety , and Environment Management System
MSH CSR Forum
25
25
26
26
26
26
27
27
Economic Performance
Contribution to National Economic Development
Effect of Rainfall on Production
Supplier’s Engagement
KPC’s impact towards East Kutai’s economy
28
28
28
28
29
Social Performance
Community Empowerment Policy
Agribusiness Development
Community Health
32
32
32
34
i
PTKALTIMPRIMACOAL•SustainableDevelopmentReport2007
Notes from the Editors
PTKALTIMPRIMACOAL•SustainableDevelopmentReport2007
Page
ii
Education and Training
Development of Cooperatives, Small and Medium Business
Development of Community Infrastructure
Donation to the Community
Nature and Cultural Conservation
Empowerement of the Community and Government’s Capacity
Handling of Complaints and External Communication
Monitoring and Evaluation
35
37
37
38
38
39
41
41
Environmental Performance
Environmental Policy
Environmental Management Responsibility
Training
Monitoring and Follow-Up
Environmental Indiators
Land Clearing and Reclamation of Mined Areas
Biodiversity Project for Reclamation Area
Aquatic Biota Diversity
Preservation of Flora and Fauna
Orangutan Relocation
Acid Rock Drainage Management
Used Materials by Volume
Emission, Effluent, and Waste
Management of Green House Gases and Ozon Depleting Substances
The Role of Biomass Production for CO 2 Absorption in Reclamation Areas
Impact of Mine Waste Water
Compliance Points of Mine Waste Water
Oil Spill Management
Hazardous Waste
Total Expenditure for Environmental Management
42
42
43
43
43
44
45
46
47
48
49
49
50
50
52
52
52
52
53
54
56
Labor Performance
Employees
Industrial Relations
Training and Development
Management Development Program
Career Opportunities
Employee’s Performance Demonstration
Retention and Development Program
Attracting Potential People
57
57
58
59
60
61
61
61
62
Human Rights Performance
Discrimation
Freedom of Association
Child Labor
Forced Labor
Security Practice
Local Inhabitants
Health and Work Safety
63
63
63
64
64
64
64
64
GRI Cross Reference
66
Glossary of Abbreviation
71
NOTES FROM THE EDITORS
“More than Mining”isthesustainabledevelopmentreportforPT.KaltimPrimaCoal(KPC).It
provides a summary of our performance in the production of coal from the 1st of January to the 31st
of December 2007. As in the previous year’s report, this report also provides data and information
that might be useful for stakeholders to get to know and learn about the company’s performance
in more detail.
We deliberately chose the title “More than Mining” to emphasize that KPC’s activities are not
just about mining and producing coal, but also cover activities in the economic, social and
environmentalspheres.Thismaybemorewidelyknownas“goodminingpractice”becausewe
firmly believe that our mining activities should lead to direct and indirect benefits to the community
around the mining area. Direct benefits derive from KPC community development activities,
whereas indirect benefits come from the economic multiplier effect of regional activities, such as
local purchases and taxes paid, development of local business, domestic procurement, employee
salaries and others.
In formulating this year’s report, we have followed the Global Reporting Initiative (GRI) that we
have used as guidelines since 2003. The difference is that for this year we have used version 3.0,
known as G-3. To ensure that a high level of accuracy, accountability, and transparency have been
maintained, KPC requested an external review to be conducted by PA CSR Consultant; also an
external audit that was conducted by the independent verification and certification body SGS. This
report incorporates SGS inputs from our previous annual reports, and additional indicators within
the framework of G-3 that are in line with the scope of a mining company.
This sustainable development report was completed in the middle of the second quarter of 2008
to fulfill the principle of timeliness and to reduce the number of Report Amendment Request (RAR)
and Outstanding Information Requests (OIR). This is part of our improvement efforts, in line with
SGS’ recommendations over the previous year’s report.
iii
Lastly, we would like to thank all stakeholders who have supported KPC’s sustainable development
program for their inputs, suggestions, ideas and criticisms. We would also like to thank all the
contributors for their efforts to complete this report.
External Affairs & Sustainable Development Division
PT. Kaltim Prima Coal
M2 Building – Mine Site
Sengata, East Kutai,
East Kalimantan 75611
INDONESIA
Tep. +62 549 521451
Fax. +62 549 521701
e-mail : info@kpc.co.id
website: www.kaltimprimacoal.co.id
We wish you a pleasant read.
The Editors
PTKALTIMPRIMACOAL•SustainableDevelopmentReport2007
If you have any criticisms, comments, suggestions or questions regarding the data and information
provided in this report, please address them to:
FOREWORD FROM THE CHIEF
EXECUTIVE OFFICER
We offer our prayers and thanks to the Almighty God who has given His blessings to us
so that we passed the year 2007 well. The safety was marred as the beginning of the year a single
fatality accident occurred resulting in the loss of one of our mining partners.
As in the previous year, weather at the beginning of 2007 was unvaforable for production activities.
Heavy rainfall contributed to a failure to achieve production targets, both in terms of overburden
removal and coal production. However, the amount of coal stock was quite high at the end of 2006;
therefore our shipments and sales activities ran well.
The hope that the weather would improve during the middle and second half of 2007 as in previous
years did not materialize. The heavy rainfall persisted well into the third quarter which contributed
to the low level production in that quarter. The weather improved at the beginning of the fourth
quarter and we managed to catch up with the overburden removal and coal production. This could
be seen in the increased stockpile tonnages at the Pit, ROM or port.
Overall there were a number of achievements in 2007. In the field of health, work safety and the
environment there was an improvement in performance compared to 2006 in which the LTIFR was
0.45. During 2007, the LTIFR per million hours worked was 0.27 with only 12 LTI (but included
one fatality).
In December 2007, the audit to obtain OHSAS 18001: 2007 certification was completed with a
satisfactory result. KPC is the first mining company to obtain this certification from SGS. In the
environmental sector we also obtained an extension of our ISO 14001certification.
The total production of overburden in 2007 was around 1.4% below the planned target despite the
fact that production level from KPC and its contractors in Sengata were above target. This deficit
was caused by the performance of PT Darma Henwa in Bengalon which was well below plan.
1
Coal sales were 7.6% below target (sales were 39.7 million tonnes compared with the plan of 43.0
million tonnes). In 2007, the sales of Prima coal, Pinang coal, and Melawan coal were 26.5%, 5.1%
and 11.1% below plan respectively.
In 2007 we managed to complete the negotiation between the management and the Workers Unions
of the Prima Perkasa or Collective Labor Agreement for the period of 2007 to 2009. A process to
select a strategic partner was also completed during the year, with Tata Power Company (Tata)
of India becoming a strategic partner, with a share ownership of 30% in PT Arutmin Indonesia
(Arutmin) and PT Kaltim Prima Coal (KPC) assets. This resulted in a change of membership
in the Boards of Directors (BoD) and Board of Commissioners (BoC), where Tata now has two
representatives in both the BoD and BoC. Tata’s management also placed one Chief Financial
Officer (CFO) at Arutmin and at KPC.
In an effort to reduce costs and to remain competitive in the coal mining industry, several relocations
of contractors took place. Thiess moved from Pit J to Melawan, while Pama moved from Bendili to
Pelikan, with KPC taking over the mining at the vacated locations. The shiploader upgrade process
has also been started with the expectation that it will be operational by the second quarter of
2009. The tender process for the Melawan Crushing Plant/Western OLC and new power plant with
systems expansion has also been approved by the BoD.
Another important event that occurred in 2007 was the scarcity of tires for medium sized trucks
(100 to 150 tonnes). It was found that even when the goods were available in the market, the price
had increased drastically. In addition, the price of diesel for mining industry has increased this
year.
PTKALTIMPRIMACOAL•SustainableDevelopmentReport2007
Coal productions from KPC, PT Pamapersada Nusantara and PT Darma Henwa were slightly below
plan, whereas coal production from Thiess was on track. Total production of coal in 2007 reached
36.3 million tons or 12.6% below the target of 41.6 million tons.
PTKALTIMPRIMACOAL•SustainableDevelopmentReport2007
Activities to maintain and improve good relations with the regional government and local
community around the operation area are conducted continuously. KPC’s programs for sustainable
development have given benefit and improved the economic, social, and environmental outlook for
more than 10,000 people. Farmers, fishermen, breeders, teachers, students, craftsmen, business
people, house wives, and other community members have all benefited.
As in previous years, these programs are a form of Corporate Social Responsibility which
covers seven program fields. These fields are: agribusiness development, education and
training, community health and sanitation, Koperasi (Co-Op) and small business development,
infrastructure improvement, nature and culture preservation, and improvement local institutions.
Efforts have also been made to get involved in a global program of Millenium Development Goals
(MDGs). The implementation of this program has been performed by a third party. The results
were reflected in awards given by the Coordinating Minister for Social Welfare of the Republic of
Indonesia, the Indonesian Institute of Accountant, and Metro TV.
The company has also been paying close attention to the improvement of the skills of its employees
in order to maintain an efficient operation. This is done through training programs held internally
and externally. The end goal of all of these efforts is ensuring that the company can remain
competitive especially with the challenges likely in years to come, more so than those experienced
in 2007.
All results that we have achieved are of course thanks to the hard work of all employees and staffs.
Therefore, on behalf of the leadership team, I would like to thank everyone for their contributions.
Let us continue to improve our performance within a safe working environment to ensure the
success of KPC in facing an even more challenging year of 2008.
2
Endang Ruchijat
ABOUT THIS REPORT
More Than Mining is the theme of the 2007 Sustainable Development Report. This report does
not only present the company’s commitment and performance in operating the coal mine, but
also explains about how the company has provided social, economic, and environmental benefits
through partnership with the community and other stakeholders throughout the year. Operational
performance is enhanced through the implementation of the Good Corporate Governance principles
and mining practices that consistently refer to high health and workplace safety standards. In
addition to this, the company is committed to implementing a sustainable community development
program by actively implementing all activities in line with the programs planned in 2007. The
program originates from the efforts to fulfil the mandate of the 2005 Environmental Impact
Assessment (AMDAL) in the social and economic sectors. Furthermore, the implementation is
also incorporated into the long term strategic plan for the the community around the mining area,
in particular with regards to the potential mine closure in 2021.
Three key points of sustainability are:
• Thenetbeneitofeconomicactivitiesmusttakeintoaccountasaconsequencesofthesocial
relations and environmental impact that will emerge;
• In utilizing resources, the company must take into account the needs and expectations of
future generations;
• The government, industries and members of the society must work together to harmonize
these needs.
By continuing to implement high safety, work health, environmental and community health
standards, and forming partnerships with the government and local community, KPC is trying to
establish long term economic and social development.
This report portrays KPC, including its mining locations, production activities, marketing, health,
work safety, environment as well as the level of engagement and participation of stakeholders
in those production activities. It also portrays the policies and social programs that have been
and will be conducted. All data presenting in this report reflects our efforts towards sustainable
development.
3
This report aims to show our commitment as one of the biggest coal mining companies in
Indonesia to the stakeholders and the community. It also demonstrates the transparency of our
company’s performance in the economical, social and environmental sectors. The report also
shows changes that occurred throughout 2007. The report is based around the principles of
accuracy, completeness and reliability. Through the process of internal and external audits we aim
to guarantee that those three principles are embedded in this report which is written in line with
the 2006 Global Reporting Initiatives (GRI) standard.
Besides the fulfillment of the important parameter indicators in the GRI G-3 standards, the
company’s commitment in preparing the 2007 sustainable development report is reflected in the
company staff’s training in the use of this reporting system. The training in GRI standards helped
to form a solid data contribution team with support from the company’s top management. The
staff, who are also contributors, were given additional understanding about reporting principals
and explanations about indicator parameters which were their references in the production of this
report.
An external party assured the validity of the content of this report in order to present accurate and
reliable data.
We hope this report can be easily understood, clearly portrays our performance and will be of
benefit to the readers.
PTKALTIMPRIMACOAL•SustainableDevelopmentReport2007
Goal of Formulating this Report
Approach to the Reporting System
PTKALTIMPRIMACOAL•SustainableDevelopmentReport2007
This year’s report gives more emphasis on the reporting of the performance of our programs in
achieving sustainable development. The data required in the GRI indicators is still presented in
statistical form.
Structure of the Sustainability Report
This sustainability report is formulated in the following sequence:
Relevant departments
provide data of
production, environmental, social and
finance performance
• Collectionofperformancedatafor2007
• Collecteddataveriiedbymanagertoensureaccuracy
• Teamofeditorsanalyzethedataandformulatethedraftreport
Report writing
• DraftreporteditedbyEditorinChief
• Report observation by external reviewer to observe the level of compatibility of the report
compared to GRI’s regulations
Editing Draft
External Review
Final Draft
Internal Audit
• Editorseditthereport
• Editedreportsentbacktothecontributor
• Internalauditisconducted
• Findingsfrominternalauditfollowed-upforthereport’sinaldraft
External Audit
• Reportsubmittedtoindependentassurorforaudit
Final Repoprt
What we report:
• Economic, social and environmental performance as required in the GRI indicators. This
year’s report only presents main parameters that are relevant to KPC’s mining activity,
4
• Changesthatoccurredin2007.
• OperationalactivitiesasrequiredintheGRIindicators.
• Operationalactivitiesthatareregulatedbythelaworotherregulations.
• AdditionalindicatorsinGRI.
• IndicatorsinGRIMiningandMetalSectorSupplement.
GRI
indicator
KPC Sustainable
Development
Report
KPC
Objectives Quarterly
& Targets Report
Monthly
Report
External
External
(Limited) (stakeholder)
Scale of issues
related to KPC Operation
Internal
Picture1.ApproachtoReportingSystem
Report Assurance
As in the case of our previos reports, the 2007 report was also audited based on second level
scoring by an indepent party to improve the realibility of our report. The second level scoring
covers:
1. Evaluation on the accuracy of the report;
2. Gap analysis against GRI parameters;
3. Assessment by means of a scoring system/percentage system with regards to GRI
requirements
Improvements requested by the audit team in the previous year’s report have been made. It is
believed that this GRI 2007 report would be graded at the level of B+.
Basic Guidelines
This report was developed by referring to the 2006 Global Reporting Initiative (GRI) version 3.0 or
also known as the G3 Reporting Standard. References showing compliance towards GRI guidelines
can be seen on page 66 to 70.
Scope of Report
This report covers all aspects of the operational performance in KPC’s mining areas and the
changes that have occured throughout 2007, including a change in ownership of the company’s
shares, financial concerns and production result. As we have mentioned previously, this report
refers to the 2006 Global Reporting Initiative version 3.0.
Independent Verification
5
The contents of this report have been verified by SGS Indonesia, an international company
that specializes in handling environmental, social and sustainability reporting certification and
verification. SGS Group is a pioneering company in the field of inspection, testing and verification
and operates in 140 countries.
PTKALTIMPRIMACOAL•SustainableDevelopmentReport2007
Their statement of verification on the accuracy and transparency of this report is included on the
last page of this report.
2007 AWARDS
PTKALTIMPRIMACOAL•SustainableDevelopmentReport2007
During 2007, KPC was given a number of awards from both government and non governmental
organizations in the fields of work health and safety, the environment and community development.
The awards are as follows:
Work Health and Safety:
• OHSAS18001:2007certiicationforWorkplaceHealthandSafetyManagementSystemfrom
the SGS Certification Body
• Zero Accident Award from the Minister of Labor and Transmigration (for ESD, HSE, and
Commercial Divisions)
Environment:
• ExtensionoftheISO14001CertiicateuntilSeptember24th 2010 by SGS Certification Body
• TheBestEnvironmentOrganizerAwardfromtheGovernorofEastKalimantanandProvincial
Assembly in January 9 th 2007.
• “ProperEmas”(GoldLevelforEnvironment)fromtheGovernorofEastKalimantaninJune
20 th2007(Sengatasite)whichistheeighth“ProperEmas”inarowsince2000.
• “ProperBiru”fromtheGovernorofEastKalimantan(Bengalonsite)inJune20 th 2007.
• PrimeCertiicateforCoalMiningActivity-ReclamationImplementationField
Community Development:
• ACommunityEmpowermentAwardfromtheCoordinatingMinisterforSocialWelfareofthe
Republic of Indonesia in May 24 th 2007.
• MilleniumDevelopmentGoals(MDGs)awardforthecategoryoferadicationofHIV/AIDSand
other infectious diseases from the UN Special Representative for the Millenium Development
Goals.
6
• The Best Sustainability Reporting award in the 2007 Indonesian Sustainability Reporting
Award organized by the Indonesian Institute of Accountant.
• ReceivedAppreciationAwardforCustomerAwarenessfromPLN(NationalElectricCompany)
on July 16 th 2007, category: helping PLN to overcome electricity power crisis.
Picture2SertiikatOHSAS18001:2007
Picture3.KPCCEOreceivedMDGsAward
ABOUT KPC
KPC is a mining company located in East Kutai Regency, established with notary act No.
28 on March 9, 1982 and legalized by the Justice Minister of the Republic of Indonesia by Decision
Letter No. Y.A.5/208/25 on March 16, 1982 and announced in the State Gazette of the Republic of
Indonesia on July 30, 1982 No. 1 Supplement No. 967. At the start of the operation in 1992, KPC
was a foreign investment company owned by the British Petroleum International Ltd. (BP) and
Conzinc Rio Tinto of Australia Ltd. (Rio Tinto) with a 50% share ownership each. Following Act No.
9 dated August 6, 2003 and the Proof of Reporting from the Justice and Human Rights Minister of
the Republic of Indonesia No. C-UM. 02 01.12927 dated August 11, 2003, shares in KPC owned by
BP and Rio Tinto were diverted to Kalimantan Coal Ltd. and Sengata Holding Ltd. On October 18,
2005, in line with Notary Act No. No 3 dated October 18, 2005, these companies were acquired by
PT. Bumi Resources Tbk. Under Notary Act No. 34 dated May 4, 2007; shareholders of PT. Kaltim
Prima Coal diverted 30% of their shares to Tata Power (Mauritius) Ltd.
Under on the Coal Contract of Work Agreement (PKP2B) signed on April 8, 1982, the government
granted permission for KPC to conduct exploration, production and marketing of coal from the
agreement area until 2021. The contract of work area covers a 90,960 Ha area in East Kutai
Regency, in the province of East Kalimantan.
KPC’s Management
The mining operation is supported by a management team of professionals who are competent
in their own field and have more than ten years experiences in the relevant fields. There is no
independent member in KPC management’s member. The structure of KPC’s management team at
the time of writing was as follows:
Chief Executive Officer
Chief Operating Officer
Chief Financial Officer
GM Development/Planning & Development Division
GM Human Resources Division
GM External Affairs & Sustainable Development Division
GM Contract Mining Division
GM Marketing Division
GM Finance Division
GM Mining Operation Division
GM Health, Safety & Environment Division
GM Mining Support Division
GM Processing and Infrastructure Division
GM Procurement/Supply Chain Division
Endang Ruchijat
R. Utoro
Ashok Mitra
Chris Lauritzen/Shane Bennet
Sam Alwie Alkaaf
Harry Miarsono
Ilda Harmyn
Herlan Siagian
Yulianti Subian
Rod Bridges / Bambang Saptono
Khudori
Richard Schloss
M. Sumali
Simon Scott/Pratikto
PTKALTIMPRIMACOAL•SustainableDevelopmentReport2007
7
PTKALTIMPRIMACOAL•SustainableDevelopmentReport2007
Company Profile until December 31st 2007
8
Type of
concession
license
Coal Contract of Work
Shareholders
Agreement (PKP2B
Contract No.J2/i.D4/16/82)
65% PT. BUMI Resources
30%, Tata Power
Company, 5% Kutai Timur
Energi
Date of signing
8 April 1982
Permanent employees
(3659), ‘Fixed term’
employees (164), ‘Fixed
term’ non establishment
employees (23)
Activity stage
Production operation
Coal production
(SK Penciutan Produksi
No.940.K/20.01/DJP/1999
dated December 24th 1989)
36,34 million tons
Prima: 18.76%
Pinang: 61.89%
Melawan: 19.35%
Mineral
Coal
Net sales
USD 1,285 million
Effective period 30 years since production
stage approved (January
1st 1992)
Royalty paid in
2007
USD 228,95 million
Total area
90.938 Ha
(D4KW96PB0363)
Community
expenditure
commitment
5,000,000 USD
Location/
Address of
Head Office
PT. Kaltim Prima Coal,
Mine Site Building,
Sengata, Kabupaten Kutai
Timur, Kalimantan Timur
Environmental
cost
19,060,005 USD
Work force
Strategy and Approach of Sustainable
Development
KPC’s Sustainable Development Approach is conducted by following the motto “More than
Mining”.Thisistheinspirationbehindtheimplementationofsustainablecommunitydevelopment
programs which are envisaged to continue as post mining activities. More than Mining has become
a way to approach social, economic, and environment programs conducted by the company to
guarantee that KPC’s mining operation is not just extracing non-renewable natural resources, but
also conducting environmental impact mitigation efforts and providing a renewable resource (the
community) by maintaining good relationship with stakeholders. The programs are conducted with
the objective of improving society, community and government institutions abilities, by increasing
their efforts and by working on the cultural atmosphere for the benefit of the community in the KPC
operational surrounding.
KPC’s business challenge of achieving its vision as a world-class coal supplier is not only limited
by how to determine how coal production can fulfill the market (and world) coal demand, but
also on how KPC performs and is actively involved in conducting its social responsibilities by
preserving the environment and building up the independency of the local economy. This is a very
important issue because the level of dependency of the East Kutai community on the coal mining
sector is still quite high (data from East Kutai’s Statistical Agency shows a dependency level of
82%). Upon realizing this fact, KPC initiated programs that will support the independence of the
local community economy in line with the mine closure program. It is expected that with guided
program implementation, the community’s dependency on the mines can be reduced to 5% by
2025 (seePicture4 ). Therefore, the concept of local economic development is geared towards the
principles of partnership, community participation, and empowerment.
2005-2010
2010-2015
2015-2020
2021-2025
Agriculture
development study
Study
implementation
Agriculture development
Intensive training
Agriculture
development
Fisheries industry
Development of
agriculture
industry
Services
Services
Development of
agribusiness
technology
Development of
agribusiness
export
Fisheries study
Land identification
Utilization of
rehab land
Spatial study
Agriculture
development
Potential analysis
Mining 65%
Non Mining 35%
Mining 50%
Mining 35%
Non Mining 50%
Non Mining 65%
Mining 5%
Non Mining 95%
Picture4.KPC’sLongTermSustainableDevelopmentImplementationStrategicPlanning
Within the boundaries of the first stage in the five-year planning process KPC is conducting
a program to identify land and spatial planning options as well as review the development of
agriculture and fisheries in locations within and outside the mining area. This review and associated
studies are being conducted to understand the community’s support capacity and to identify the
potential for the development of renewable resources.
As a world class coal supplier, KPC continuously conducts environmental projects to minimize
the environmental impact of the mining operation. The environmental preservation program is
integrated with the Environmental Management System (SML), in line with ISO 14001. All potential
impacts are identified to develop operational control from planning through to mine closure. Aside
from the need to minimise the environmental impacts around the mining area, KPC also conducts
various environmental programs on a larger scale, through the TNK (Kutai National Park) partner
program, and the Tree Bank in cooperation with the Ministry of Environment.
Stakeholders Engagement
We understand that KPC’s success to date is not determined solely on the basis of production, but
also by the participation and engagement of the company’s stakeholders. KPC always attempts
to be a good neighbor for the community around KPC’s mining area. Being a good neighbor can
be seen as KPC’s wish to become a partner that is able and ready to help the community in
finding answers over problems related to the fulfillment of requirements of the community around
the current mining area as well as for future generations, so that independence and a better
quality of life for the local community can be achieved. This strong commitment is incorporated
in the company’s HSE and Sustainable Development Policy signed by KPC’s President Director.
Cooperation with stakeholders is conducted with different approaches, adjusted to the interests of
the company and the stakeholders themselves.
9
PTKALTIMPRIMACOAL•SustainableDevelopmentReport2007
KPC’s commitment to become a development partner for the community and the government has
been welcomed in a positive manner. Through existing public organizations, the community and
the government have entrusted the company’s representatives to take part in the development of
public policies. Such organizations include: the Indonesian Farming Group Association (HKTI),
the Indonesian National Sports Committee (KONI), the Indonesian Youth National Committee
(KNPI), the Chamber of Commerce and Industry (KADIN), the Regional Research Council, the
Regional Agribusiness Development Program (GERDABANGAGRI), and the Multi Stakeholders
Forum for Corporate Social Responsibility (MSH-CSR). In addition, KPC is also an active member
of the Corporate Forum on Community Development (CFCD), the Indonesian Business Link (IBL),
the Indonesian Mining Association (API), and the Indonesian Coal Mining Association (APBI).
PTKALTIMPRIMACOAL•SustainableDevelopmentReport2007
HEALTH, SAFETY, ENVIRONMENTAL
AND SUSTAINABLE DEVELOPMENT POLICY
PT Kaltim Prima Coal’s management and employees are committed to achieving excellent performance and continual
improvement in the areas of Occupational Health, Safety, Environment (HSE) and Sustainable Development (SD).
In doing this, Kaltim Prima Coal (KPC) commits to:
• Comply with all applicable Government legislation and other requirements.
• Meet the requirements of all stakeholders, including employees, the local community, Government, shareholders
and customers.
• Plan, measure and report on HSE objectives and targets.
• Review and update HSE targets on a regular basis.
• Commission regular independent audits of HSE performance.
• Achieve continual improvement in all aspects of HSE management.
• Implement SD concepts through its involvement with the local communities.
• Continue to support corporate social responsibility efforts based on inter-dependency and sustainability.
• Establish and maintain good relationships with the local communities and government based on transparency,
mutual trust and mutual respect.
HEALTH AND SAFETY MANAGEMENT
KPC commits to provide a working environment in which KPC and contractor employees can perform their work
free from serious injury and illness. Management will implement a safety management system that provides the
means to continually identify, control, and reduce the risk of serious injury or illness from work related tasks.
10
Safety must be given priority in all aspects of the company’s operations. All parties, including KPC and contractor
employees, have a shared responsibility to work in a safe manner in accordance with KPC occupational health and
safety standards and procedures. They also have a responsibility to develop and motivate safe behavior.
ENVIRONMENTAL MANAGEMENT
KPC commits to effectively manage the environmental impacts resulting from its operations. This includes:
• Preventing pollution.
• Returning all mined areas to a safe, stable and productive state.
• Maintaining biodiversity
Environmental impacts must be considered in all aspects of the company’s operations, and all KPC and contractor
employees must act in an environmentally responsible manner. To achieve these outcomes, KPC will implement an
environmental management system that includes management plans, standards and procedures that apply equally to
KPC and its contractors.
SUSTAINABLE DEVELOPMENT POLICY
KPC actively participates in sustainable development initiatives which are based on the integration and balance of
economic, environmental and social priorities. To achieve this KPC will:
• Remain the supplier of affordable energy and a contributor to the alleviation of poverty, improved health, and
better quality of life.
• Perform community empowerment programs to encourage regional economic development based on local potential.
• Build and maintain partnerships with local communities, governments and other stakeholders using mutual trust
and mutual respect principles.
The management of KPC commits to providing the leadership, resources and support to achieve these HSE and
Sustainable Development outcomes.
NALIN RATHOD
President Director
01 September 2007
KPC Policy 2006 � 1/BR/Information System/M3
Picture5.HSEandSustainableDevelopmentPolicy
ENDANG RUCHIJAT
Chief Executive Officer
01 September 2007
Interaction with stakeholders is conducted to identify economic, social, and environment problems
which have impacts on mining process. Local community (religious/community/youth figure):
by conducting social mapping, study of socio-economic and environment impacts, consultation
forum, local labor development. Local Entrepreneurs: training, business consultation with
Kadin, Hipmi, and local contractor. Academic: study/research, seminar/discussion, consultation
with Mulawarman University, ITB, UGM, IPB, and ANU. Research Institution: research
activity and consultation in farming development with Lolit Jeruk, Balitro. NGOs (local, national,
international): cooperation in community development, health service with PMI, Indonesian
BusinessLink,Wawasan,GTZ,InterplastInternational,UpliftInternational,SkyJuiceFoundation
Australia, International Chambers of Commerce, and Asian Accountant Institute. International
donor institution: cooperation in area development with Ford Foundation, British Council,
Unicef, World Bank, International Chamber of Commerce, and AusAID. Government (regional,
province, and center): consultation with related government’s agencies in regional and provincial
government, related department (ESDM, KLH, BKPM, Fund, etc), permit application, discussion
about development concept. Contractors/Suppliers: Bid and contract process, performance
review with custodian, HSE introduction, ISO 14001 audit, OHSAS 18001, consultation and
discussion. Customers: Site visit for RFP(Request for Proposal), coal requirements, bid process,
market analysis. Employee: performance evaluation, satisfaction survey, ISO 14001socialization,
safety, OHSAS 18001, social and sports activity, health and education program, consultation with
union. Investor: inviting for site visit, and conducting road show customers’ countries.
Due to the importance of the engagement of stakeholders in KPC’s operations, various formal
and informal communication forums have been created and conducted. Through these meetings,
efficient and effective communication is enabled allowing KPC’s strategic vision and mission in
sustainable community development to be realized and to accomplish the targets. Communication
forums with stakeholders can be seen in table1.
Table 1. Communication Approach with Stakeholders
No Stakeholder
Communication Approach
Frequency
Result
Every four months,
or as required
One Gate Policy on local work force, blasting
socialization, and mine water treatment management
1
Religious figures, local Religious and community
elders and community elders forum and participation
around the mining area
2
Regional government
Partnership Team
Every four months,
or as required
Formulation of: 2005 Community Development
program, activities implementation mechanism,
monitoring, evaluation and reporting system,
organization of sustainable development program, and
networking between agencies at the regional
government level to support the implementation of
programs that have been developed.
3
Central government
Informal meeting
As required
- Approval from the Central Government regarding
permit/license
- Discussion on Government Regulation in Lieu of
Law (Perpu)
4
Mining contractors
KPC-Contractor Forum for
HRCR (Human Resources &
Community Relations)
Every two months
- Anti Poaching Agreement
- Standard Recruitment Procedure
- Synergy of community empowerment programs
5
Union
Bi-party Cooperation Agency
(LKS)
As required
Improvement of bonus scheme and annual salary
increase
6
Buyers
Coal Trans Forum
Annualy
Update of latest information on world coal market
PTKALTIMPRIMACOAL•SustainableDevelopmentReport2007
11
Our Mining Operation
PTKALTIMPRIMACOAL•SustainableDevelopmentReport2007
In its 15 years of operations, PT KPC has combined its financial strength with operational expertise
and strong commitment to protect the environment in order to provide long-term benefits for the
regional community.
During 2007 KPC mined coal from eight open pits, seven from the Sengata region and one in
the Bengalon region. Four pits were mined by KPC and four others by contractors – PT Thiess
Contractors Indonesia, PT Pamapersada Nusantara and PT Darma Henwa. Thiess operated in the
West Melawan Pit while Pama operated the Bendili Pit before moving to Pelikan. Darma Henwa
operated the Bengalon Pit A. Mining activities in Sengata and Bengalon operational areas produced
around 352.3 MBCM overburden and 38.2 million tonnes of coal in 2006
In the Coal Mining Contract of Work Agreement (PKP2B) the government granted permission for
KPC to conduct exploration, produce and market coal from an agreed area of 90,938 Ha in the East
Kutai Regency, in the province of East Kalimantan (seepicture6 ).
EAST KALIMANTAN PROVINCE
West
Kalimantan
East
Kalimantan
East Kutai
Regency
EAST KUTAI REGENCY
BONTANG
SAMARINDA
BALIKPAPAN
Central
Kalimantan
South
Kalimantan
12
BONTANG
PT Kaltim Prima Coal
Lease Area = 90,938 Ha
Picture6.KPC’sMiningOuthorityArea
Our Coal Production
KPC produces three main qualities of coal – Prima, Pinang and Melawan. In 2007, overall coal
production reached 36.34 million tonnes.
Prima Coal is one of the highest quality coals being traded on the international market. This coal
is a highly volatile bituminous coal with high calorific value, very low ash content, moderate sulfur
content, and relatively low total moisture level. Prima Coal is also a bright and lustrous coal with
high vitrinite content.
Pinang Coal is similar to Prima Coal, but has a higher moisture level and lower energy. Melawan
Coal is an ultra-clean sub-bituminous coal with very low sulfur and ash content. Prima and
Melawan Coal are produced in Sengata, whereas Pinang Coal is produced in both Sengata and
Bengalon pits.
The quality of each type of coal can be seen in the following tables.
Table 2. Prima Coal Quality
PRIMA INDICATIVE COAL QUALITY
Tipical
TOTAL MOISTURE % as received
10.5
PROXIMATE ANALYSIS % air dried basis
Moisture
Ash
Volatile Matter
Fixed Carbon
5.0
5.0
41.0
49.0
CALORIFIC VALUE kcal/kg
Air dried
Gross as received
Net as received
46
ULTIMATE ANALYSIS (daf) %
Carbon
Hydrogen
Nitrogen
Sulfur
Oxygen
80.0
5.50
1.60
0.67
12.2
SULFUR (adb) %
CHLORINE (adb) %
PHOSPHORUS (db in coal) %
0.60