PT Adaro Energy Indonesia Tbk : ADRO QAR 2Q23

PT ADARO ENERGY INDONESIA TBK (IDX: ADRO) 1H23 ACTIVITIES REPORT

President Director and Chief Executive Officer, Mr. Garibaldi Thohir commented:

"Our achievements in 1H23 put us on track to reach the company's 2023 targets and sustainable business growth in the long-term. Despite market fluctuations, demand for our products remained strong - emphasizing Adaro's reputation as a reliable partner to our customers. Furthermore, the financial close for our aluminum smelter and related ancillary facilities is a milestone in our business expansion to minerals processing."

"We strive to reach the optimum balance between shareholder returns and business expansion. This quarter we extended our share buyback program, whilst demonstrating our commitment to dividends."

1H23/2Q23 HIGHLIGHTS

• Production volume of ADRO and its subsidiaries (Adaro Group) reached 33.41 Mt in H123, corresponding to a 19% increase from 1H22. Sales volume in the period of 32.62 Mt was 19% higher than in 1H22. We are tracking our FY23 sales volume target of 62 - 64 Mt.
• Sales of metallurgical coal through subsidiary PT Adaro Minerals Indonesia Tbk (ADMR) were up by 42% to 1.82 Mt in 1H23. ADMR is maintaining its sales volume target of 3.8 - 4.3 Mt in FY23.
• Overburden removal reached 129.83 Mbcm in 1H23, 27% higher than in 1H22. Our strip ratio reached 3.89x, 7% higher than in 1H22 and in line with our target of 4.2x for FY23.
• Indonesia remains our largest market, accounting for approximately 25% of our thermal coal sales in 1H23. While quarterly sales to the domestic market may fluctuate, our annual volume-based contracts keep us on target to contribute more than 25% of sales to the domestic market.
• We achieved financial close for our aluminum smelter and related ancillary facilities in May 2023, securing a total of $1.585 billion and Rp 2.5 trillion.

1

Historical Quarterly Production Volume (Mt)

Historical Quarterly Sales Volume (Mt)

20.0

Sales Volume (Mt)

		15.4 15.9							16.7 17.2	16.9
16.0	15.5 15.1	14.5 14.4						15.3	15.7
	13.4	13.6	13.4		13.2
	12.9		12.6	13.1	12.7 12.2
				12.7
12.0	10.9
8.0
4.0
-

Historical Quarterly Overburden Removal Volume and Strip Ratio

2

SUMMARY OF 1H23 OPERATIONS

ADARO GROUP SALES BY DESTINATION IN 1H23

Thermal Coal Sales

India

11%

Indonesia

25%

Northeast Asia

19%

Southeast Asia

23%

China 23%

3

Sales of ADMR'S Metallurgical Coal (for steelmaking)

Korea

8%

Indonesia

10%

Japan

35%

China

20%

India

28%

ADARO ENERGY PILLAR

1. MINING

PT Adaro Indonesia (AI)

• AI's production volume in 1H23 reached 24.98 Mt, 9% higher than in 1H22. Sales volume in the period reached 28.86 Mt, 14% higher than in 1H22.
• Total overburden removal from AI's three pits reached 102.00 Mbcm, up 19% from 1H22, resulting in a strip ratio of 4.08x in 1H23.

	Units	2Q23	1Q23	2Q23 vs.	2Q22	2Q23 vs.	1H23	1H22	1H23 vs.
	1Q23	2Q22	1H22
Overburden Removal	Mbcm	57.02	44.98	27%	44.53	28%	102.00	85.38	19%
Production Volume	Mt	13.17	11.81	12%	13.06	1%	24.98	22.88	9%
Sales Volume	Mt	14.79	14.06	5%	14.23	4%	28.86	25.27	14%

Balangan Coal Companies (BCC)

• Balangan Coal Companies produced 4.04 1H22. Total overburden removal of 14.54 resulted in a strip ratio of 3.59x in 1H23.

Mt of coal in 1H23, 61% higher than in Mbcm was 22% higher from 1H22, this

	Units	2Q23	1Q23	2Q23 vs.	2Q22	2Q23 vs.	1H23	1H22	1H23 vs.
	1Q23	2Q22	1H22
Overburden Removal	Mbcm	8.27	6.27	32%	6.52	27%	14.54	11.92	22%
Production Volume	Mt	2.15	1.89	14%	1.36	58%	4.04	2.51	61%

4

PT Mustika Indah Permai (MIP)

• MIP recorded a 67% increase in production volume vs 1H22, reaching 1.84 Mt. 1H23 sales volume reached 1.95Mt, an increase of 107% vs 1H22.
• Overburden removal volume in 1H23 of 5.75 Mbcm was 360% higher than in 1H22. MIP's overburden removal increased on the back of increased physical availability of heavy equipment and higher heavy equipment utilization supported by good weather condition. Strip ratio in 1H23 increased to 3.12x.
• MIP continues to grow its market share in the region, and during the quarter MIP added Malaysia as one of its customers. China was its largest export destination in the period, followed by The Philippines and India.

	Units	2Q23	1Q23	2Q23 vs.	2Q22	2Q23 vs.	1H23	1H22	1H23 vs.
	1Q23	2Q22	1H22
Overburden Removal	Mbcm	3.84	1.91	101%	0.76	407%	5.75	1.25	359%
Production Volume	Mt	1.08	0.77	40%	0.53	104%	1.84	1.11	68%
Sales Volume	Mt	1.14	0.81	41%	0.37	211%	1.95	0.94	108%

Kestrel Coal Mine (Kestrel)

• In 1H23, Kestrel recorded saleable coal production volume of 2.52 Mt, 21% lower than in 1H22. Kestrel's sales volume in 1H23 were 2.24 Mt, 29% decline from 1H22.
• The saleable production during 1H23 was less than forecast due to lower processing capacity as a result of high clay or dilution content in stocks being processed in the plant. This condition affected 1H23 performance and may result in FY saleable production being slightly lower than initially forecasted.
• Kestrel's sales destinations are dominated by customers in major Asian markets. Japan was Kestrel's largest sales destination in 1H23 followed by India and Korea. Adaro Capital Limited (48%), a subsidiary of ADRO, and EMR Capital Ltd (52%) own 80% of interest in Kestrel.

	Units	2Q23	1Q23	2Q23 vs.	2Q22	2Q23 vs.	1H23	1H22	1H23 vs.
	1Q23	2Q22	1H22
Saleable Production	Mt	1.34	1.19	13%	1.42	-5%	2.52	3.19	-21%
Sales Volume	Mt	1.10	1.14	-3%	1.53	-28%	2.24	3.18	-29%

5