Jakarta, December 3, 2020 – As an effort to increase productivity of heavy equipment in its mining operations, Indonesia's Largest Coal Group(hereinafter referred to as the "D Group" ) signed a 5 year Total Tyre Management (TTM) Agreement with China's large manufacturer of Giant OTR Tires in China, Haian Rubber Group Co., Ltd.(hereinafter referred to as the "Haian" ). This agreement was signed by the Vice President Director of the Principal, and the Director of Fujian Haian Rubber, Mr. Zhitang Chen, on 25 November 2020.

Photo 1: Haian's Chairman Zhu Hui met the D Group's procurement team for the first time in November 2018 and introduced the TTM cooperation model

Under the TTM Agreement, Haian Rubber Group Co., Ltd., through its subsidiary PT Luan Tire Indonesia, will provide all the tyre needs for heavy equipment at theire coal mining projects. TTM will include procuring, fitting and maintenance of tyres, and regular training on optimal tyre use, wear and tear for the D Group's operators, and monitoring their operational efficiencies.

With tyres contributing to almost 30% of the maintenance costs, through this TTM, Haian will standardise unit tyre costs and reduce the cost burden on Principal. Tyre supply and maintenance from Haian will have a unique actual monthly operation-based payment mechanism of US$/BCM/KM.

Photo 2: In July 2019, Zhu Zhenpeng, Executive Vice President of Haian, met with the Chairman of the D Group for the first time, and discussed specific plans for TTM cooperation

This TTM arrangement will have several benefits for the D Group. First is that it is of minimal risk, since the payment will be made reflecting the actual usage and distributed on a per BCM basis. Second, this achieves a significant reduction in capital as well as operating costs with no inventory to maintain and an undivided focus on maximizing productivity. Third, Fujian Haian Rubber willsupervise daily operations hands on to make more suitable off the road tires specific for site conditions and strive for continuous improvement. There will be experienced professionals who are tasked with maintaining tyres to ensure safety and efficient productivity while being transparent on costs. Finally, it ensures timely supply of tyre needs without lost time in operation and production.

"TTM is the key to managing tyre costs as part of our maintenance budget. With this collaboration, we can now totally devote our focus on productivity. As a result, the Company's volumes will increase and ultimately contribute to the increase in revenue and profits, while effectively managing our costs. We are indeed excited about teaming up with Haian in achieving our goal to be the most cost effective mining services provider in Indonesia" said Vice President Director and Chief Executive Officer of the D Group.

Photo 3: On November 25, 2020, Chen Zhitang, Director of Overseas Market of Haian, officially signed a  Strategic Tyre Management Agreement with the vice chairman of the D Group, Indonesia

Regarding the performance, until the end of October 2020, overburden removal at one of coal mine was recorded at 66.55 million BCM, one of the coal mine at 17.50 million BCM and the other coal mine at 11.37 million BCM. For coal production, one of the projects recorded 7.68 million tonnes, one of the projects amounted to 5.95 million tonnes and the other project at 0.6 million tonnes.

News source : D Group's Press Release on December 3rd 2020.