Indonesia's Inovisi Infracom Bids in Steam Coal and Mineral B2B Business

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Diversified infrastructure investment company’s ambitious expansion into the coal mining business

The global coal industry is mostly traded through conventional business methods, such as phone, fax, e-mail, and face-to-face or basic networking. Major B2B e-commerce portals such as Alibaba.com, a Hong Kong listed US$12 billion company, and NASDAQ listed Globalsources.com are among the conventional channels matching buyers and sellers. Another global player in the B2B e-commerce marketplace, Indonesian company Inovisi Infracom, has recently attracted both coal mine operators and traders’ speculation to provide e-commerce services for the industry, especially in Indonesia.

The total transaction value for China's e-commerce industry in the first half of 2010 was RMB 2,250 billion ($332.6 billion), of which 91 percent consisted of the business-to-business (B2B) sector with the remainder made up of the business-to-consumer (B2C) and consumer-to-consumer (C2C) sectors, according to China e-Business Research Center (CBRC) on Aug. 9, 2010. A fast-growing economy with about one-sixth of China’s population, Indonesia naturally has a large demand for electronic business transaction services, which is where Inovisi fits in the country’s eco-system.

Coal production in Indonesia is expected to decrease 20 percent this year from earlier projections of 254 million tons, due to heavy rainfall. The first half of 2010 saw coal production surpass 115 million tons. However, market traders believe that the commodity market, especially coal or "batu bara," is still bullish. "Indonesia’s commodity will be bullish until next year," says President Director PT Ciptadana Securities, Ferry Budiman Tanja, in Jakarta, 6 October 2010.

The optimism will still attract new business to the coal industry, as it will encourage both coal mine owners and producers in Indonesia to raise more funds from capital markets. Some of the recent IPO includes PT Berau Coal Energy Tbk and PT Harum Energy Tbk, which raised an estimated US$140 million and US$110 million, respectively.

Based on data from the Association of Indonesia Coal Mining, total coal production in Indonesia in 2009 reached 193.98 million tonnes. The national coal production keeps increasing. In 2008, the national coal production was only 175.3 million tones, compared to 2007 at 148.8 million tonnes. Of the said amount, at least 150 million tonnes were exported.

East Kalimantan is the province with the highest coal production at 112.7 million tonnes; Kalimantan follows at 69.7 million tonnes; Bengkulu at 22.7 million tonnes; and South Sumatra, 11.4 million tonnes. The top contractors in the coal mining business include PT Bumi Resources Tbk through PT Kaltim Prima Coal with 38.1 million tonnes of production in 2009, while PT Arutmin Indonesia was 19.29 million tonnes of production. Furthermore, PT Adaro Indonesia produced 39.9 million tonnes; PT Kideco Jaya Agung, 24.9 million tonnes; PT Berau Coal, 14.3 million tonnes; and PT Tambang Batubara Bukit Asam Tbk, 11.4 million tonnes.

The best quality coal can be found in Cekungan Pasir (South Kalimantan), Cekungan Asam-asam (East Kalimantan), Kutai Atas (Central and East Kalimantan), and Cekungan Ombilin (West Sumatra). The coal mined from these areas has a very low water content, at 9-10 percent.

In response to the speculation by local industry regarding where the company has secured several coal mines in South Kalimantan having over 120 million ton coal reserves, Inovisi Infracom refuses to confirm the business and material details of the venture. However, the company does not deny the possibility of using its investment arm and B2B e-commerce system to expand into coal B2B business in the near future, including trading, operating or owning coal mine projects. “Coal is by far among the top 10 traded commodities in Indonesia; we cannot ignore the buyers and sellers calling and business requests,” commented an Inovisi Infracom spokesperson. Furthermore, the company does have plans to allocate US$55m-US$60m in the near future to venture into the B2B e-commerce business.

About Inovisi Infracom
PT Inovisi Infracom is a fully integrated Mobile IT Infrastructure Provider, as well as diversified investment holding company in telecommunication, mobile Internet, media and e-commerce businesses. The company builds infrastructure and unloads bandwidth for the telecommunication industry to include basic solutions from young telecommunication operators, such as MVNO system, up to established operators who need to boost and optimize VAS and improve ARPU, especially on mobile Internet. Inovisi provides product(s) and service(s) that enable its customers to engage and get involved in the mobile business, via connecting to the mobile telecommunication network and providing various services to serve the general public. Inovisi’s services serve to improve customer experience (faster access), boost transaction success rate, and increase application reliability. Inovisi’s services include the system design, rental or outsourcing and selling of hardware, software and connectivity to its customers. Inovisi’s investment portfolio includes telecommunication infrastructure, social networking and communications, e-payment solutions and online marketplaces. Company E-commerce recently extended into oil & gas, mineral, industrial products and services. The company’s Investment division is involved in project financing, IT seed and investment capital as well as corporate M&A activities. For further information, visit the company web site http://www.inovisi.com.

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