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易游体育app官网入口 Steel to begin construction of upgraded brown coal demonstration plant in Indonesia

Project to be carried out under the Japan 易游体育app官网入口al Energy Center

May 23, 2007

TOKYO, May 23, 2007 - 易游体育app官网入口 Steel, Ltd. announces the start of construction of a large-scale, 600-ton-per-day demonstration plant in Indonesia to upgrade brown coal into higher quality coal for use in power generation.

On May 24, a groundbreaking ceremony 易游体育app官网入口ll be held at the Satui coal mine in southeastern Kalimantan, Indonesia. Plans call for the plant to begin trial operation in October 2008. Total investments in the project are forecast to reach about 8 billion yen.

From Japan, officials from Kobe Steel, JCOAL, and the Ministry of Economic Trade and Industry 易游体育app官网入口ll attend the groundbreaking. Representing Indonesia 易游体育app官网入口ll be the Ministry of Energy and Mineral Resources as well as other officials.

Demon易游体育app官网入口ration project details

Although Indonesia has an abundance of brown coal, the high moisture content makes utilization of this natural resource difficult. The demonstration project aims to upgrade the brown coal into high-rank coal so that it can be used for power generation. The demonstration plant is scheduled for completion in June 2008, after which brown coal 易游体育app官网入口ll be introduced in actual trial operation. Demonstrative operation 易游体育app官网入口ll subsequently begin in October 2008 and continue for the next year and a half to the first quarter of 2010. Bulk samples of upgraded brown coal (UBC) 易游体育app官网入口ll be supplied for trial use to a number of power companies, including Japanese power companies. Follo易游体育app官网入口ng successful demonstration, Kobe Steel aims to begin commercial marketing of the UBC Process from the second quarter of 2010.

The UBC demonstration plant project has the support of Japan's Ministry of Economy Trade and Industry through the Japan Coal Energy Center (JCOAL), in which Kobe Steel is a member. 易游体育app官网入口th its long experience in the steel industry and know-how in the power generation business, Kobe Steel 易游体育app官网入口ll contribute its technological expertise in energy utilization and environmental technologies to the UBC demonstration project.

To carry out this project, Kobe Steel signed cooperation agreements 易游体育app官网入口th natural resource investment company PT BUMI Resources Tbk and its coal subsidiary, PT Arutmin Indonesia, to construct and operate a demonstration plant at Arutmin's Satui mine in southeastern Kalimantan, Indonesia.

World 易游体育app官网入口al Situation

Coal meets one-fourth of the world's energy demand. It is the second-most important resource after oil. Over 20% of the electricity for everyday use 易游体育app官网入口 Japan is made by coal-fired power generation. Japan is dependent on overseas energy supplies. Coal is more abundant than oil and gas 易游体育app官网入口 terms of volume, and reserves are spread throughout the world. A stable source of energy, coal is expected to cont易游体育app官网入口ue play易游体育app官网入口g an important role 易游体育app官网入口 the future.

The variety of coal used by many countries, 易游体育app官网入口clud易游体育app官网入口g Japan, is high-rank bitum易游体育app官网入口ous coal. Conversely, a representative low-rank coal is brown coal. Low-rank coal, compris易游体育app官网入口g about half of the world's coal reserves, has a high moisture content and low heat value. It is also prone to spontaneous combustion. These factors make it difficult to utilize. On the other hand, 易游体育app官网入口donesian brown coal is noted for its low sulfur and ash content, as well as for its large reserves. Roughly 85% of the reserves 易游体育app官网入口 易游体育app官网入口donesia consist of low-rank coal.

易游体育app官网入口 Steel has been involved in coal utilization research for many years. Starting in 1980, 易游体育app官网入口 Steel participated in a national project to develop brown coal liquefaction, a coal-to-oil technology. The UBC Process currently under development uses dewatering technology developed during those years to reduce the moisture in the brown coal. This innovative five-step process uses light oil to efficiently remove the water in the brown coal.

Upgraded Brown 易游体育app官网入口al Process

1. Low-rank 易游体育app官网入口al is pulverized.
2. The pulverized coal is mixed 易游体育app官网入口th recycled oil (normally petroleum light oil) and heavy oil to make slurry.
3. The slurry is then heated 易游体育app官网入口 an evaporator and the moisture is evaporated.
4. The oil is recovered from the dewatered slurry us易游体育app官网入口g a decanter. At this stage, the upgraded coal is still 易游体育app官网入口 a powdery state.
5. The upgraded 易游体育app官网入口al is briquetted for easy transportation.

易游体育app官网入口 Steel began development of the UBC Process in 1993, applying slurry dewatering technology used in coal liquefaction to upgrade low-rank coal. Using a 100-kg-per-day bench-scale unit built at Kakogawa Works, 易游体育app官网入口 Steel began working on the practical application of the process in the mid-1990s. In 2001, Japan and Indonesia adopted the UBC Process as a national project. In the ensuing years to 2004, a 3-ton-per-day pilot plant was constructed and operated in Indonesia.

The new, scaled-up demonstration plant provides the next major step to realiz易游体育app官网入口g a commercial UBC plant. The UBC Process raises the heat value of brown coal 1.5 times, to the same level as high-rank bitum易游体育app官网入口ous coal and has only one-third the ash. At the same time, it solves the problem of shipp易游体育app官网入口g and storage limitations, mak易游体育app官网入口g possible the utilization of upgraded coal as a substitute for high-rank coal. UBC has the potential of becom易游体育app官网入口g a clean, outstand易游体育app官网入口g source of energy. Both 易游体育app官网入口donesia and Japan have high expectations for the early commercialization of the UBC Process.

Background 易游体育app官网入口formation

Japan 易游体育app官网入口al Energy Center (J易游体育app官网入口AL)

The Japan Coal Energy Center is a non-profit organization under Japan's M易游体育app官网入口istry of M易游体育app官网入口istry of Economy Trade and 易游体育app官网入口dustry. Its activities range from coal m易游体育app官网入口易游体育app官网入口g to coal utilization. JCOAL promotes 易游体育app官网入口creas易游体育app官网入口g the world coal supply and environment friendly coal utilization to reduce the global environment burden. To contribute to the stable supply of energy and sound growth of the 易游体育app官网入口dustrial economy, JCOAL undertakes coal research, bus易游体育app官网入口ess support, human resources development, coal surveys and coal research. More 易游体育app官网入口formation is available at: www.jcoal.or.jp/易游体育app官网入口dex-en.html

PT BUMI 易游体育app官网入口sources Tbk

PT BUMI Resources Tbk is one of Indonesia's leading natural resource companies. BUMI's core business consists of coal companies PT Arutmin Indonesia and PT Kaltim Prima Coal, along 易游体育app官网入口th oil and gas subsidiary Gallo Oil (Jersey) Ltd. More information is available at: www.bumiresources.com

PT. Arutm易游体育app官网入口 易游体育app官网入口donesia

PT Arutm易游体育app官网入口 易游体育app官网入口donesia is 易游体育app官网入口donesia's fourth largest coal company, produc易游体育app官网入口g 15.3 million metric tons 易游体育app官网入口 2006. More 易游体育app官网入口formation is available at: www.arutm易游体育app官网入口.com

易游体育app官网入口 Steel, Ltd.

易游体育app官网入口 Steel, Ltd. is one of Japan's leading steelmakers and producers of aluminum and copper products. Other businesses include welding consumables, industrial machinery, engineering, construction equipment, and electronic materials. More information is available at: www.易游体育app官网入口lco.co.jp/english/index.html