From Coal to Biomass HMS Bergbau AG HEAT AND POWER GENERATION WITH RENEWABLE ENERGY 17th May 2011, Dublin

1. From Coal to BiomassHMS Bergbau AGHEAT AND POWER GENERATION WITHRENEWABLE ENERGY17th May 2011,Dublin - Confidential and Preliminary - not to be copied or distributed without written consent

2. HMS Bergbau AG (www.hms-ag.com) HMS, based in Berlin, trading of steam coal, coking coal, anthracites and biomass (wood pellets, PKS, agro biomass) into Europe, India, Asia from Russia, South Africa, Americas, Indonesia Expanding into coal production with projects in Poland, South Africa, Indonesia and strongly growing in the field of biomass Founded by Heinz Schernikau in 1995 industry veteran, used to run Eastern Germany‘s coal and energy trading business Publicly listed at Frankfurt stock exchange in December 2008 still family run and majority owned by Schernikau family

3. Where we are active… Headquarter HMS Bergbau AG Berlin, Germany HMS Bergbau Polska Sp. Z o.o. Katowice, Poland HMS Representative Office Bristol, Tennessee, USA HMS Niwka Coal Production Sp. z o.o. Katowice, Poland HMS Representative Office Singapore privileged and confidential HMS Representative Office Lahore, Pakistan HMS Representative Office Mumbai, India PT. HMS Bergbau Indonesia Jakarta, Indonesia

4. Port Kintap, South Kalimantan

5. World – Primary energy mix – Scenario 2100What lies behind the oil age? 100% Biomass Hydro Other 80% Solar GAS Nuclear 60% Oil 40% Coal 20% 0% 1850 1900 1950 2000 2050 2100 Source: World Coal Institute, www.wci-coal.org, i001

6. Main biomass driver: EU 20/20 reduction targets Substitution of coal by biomass – in stand alone plants or in co-firing systems Countries with a high share of coal in their electricity production matrix can reach the ambitious EU-target only by burning biomass Biomass is the cheapest and smoothest way in order to have a fast reductions of CO2 emissions. Main importing countries of biomass in Europe: Denmark, Sweden, Belgium, Netherlands, Italy, Poland, UK, Situation in Germany: Solid biomass is only subsidized in the domestic market and in CHP plants No support for big co-firing projects due to the unbundling approach of the EEG – Renewable Energy Law From Coal to Biomass – EU Reduction Targets

7. Worldwide Technical Biomass Potential Source: Kaltschmitt, 2009, p. 10f

8. Worldwide Biomass trade – Traders Market International Biomass trade Liquid Biomass: Ethanol – has a very long history in Brazil – fuel flex cars. Bio Diesel – driven by EU subsidies Solid Biomass: Woodchips: 30 Mio tons; 4,5 (15 % for power and heat supply) Wood Pellets: 4,0 Mio tons Industrial Pellets – nearly no seaboard trading of premium pellets. Source: IEA Bioenergy ExCo65

9. Wood Pellets: Premium pellets for residential usage and industrial pellets for commercial and industrial customers Different cooperations with reputable pellet producers Wood Chips: Mainly on a regional basis Agro Biomass: Sunflower-husk-pellets and straw-pellets from the Ukraine olive cake North-Africa Palm Kernel Shells: From Indonesia and West-Africa Torrefied Pellets: “The Holy Grail” of the Industry – but no quantities available on the market yet HMS Biomass – What we trade…

10. Palm Kernel Shells Since 2007, Indonesia has become the largest palm oil producer Annual production approx. 20 mio tonnes crude palm oil (CPO) During the production of palm oil several residues become available Palm kernel shells (PKS) or palm nut shells (PNS) are the biggest residues in terms of quantity. PKS represents about 6-8% of the fresh fruit bunch production

11. Characteristics of PKS • Low ash content below 3 % (ARB) • Moisture content 15-20 % (ARB) • High energy density 15-18 GJ/t – 60% higher than green wood chips • Not sensitive to rain and can be stored open without an significant increase of water content. • Bulk density 650kg/m3 (coal: 850-900kg/m3) • PKS are shipped in bulk • Very slow degradation of material • Negligible dusting • Can be used as a single fuel in power plants but can also be used for blending or co-firing.

12. Torrefication: Partial-combustion without oxygen Process: Pre-drying 100-130°C, heating up to 130-250°C, pyrolysis 250-300°C Effect: Reduction of moisture content, reduction of acids, reduction of volatile matters, reduction of mass by 30%, reduction of NCV by 10% Black Pellets - Torrefication Process Agricultural residues Mixed organic waste Pelletisation Torrefication Woody biomass

13. Torrefied Pellets • Advantages: • High Feedstock-Flexibility: agricultural residues, wood waste, saw dust, wood chips – increase in production potential & availability • Storage characteristics: water resistance - can be stored in uncovered stockpiles • Excellent Grindability: existing coal infrastructure can be used • Very homogenous end-product • Reduction of SOx and NOx during combustion Market Situation: Huge demand but no significant supply yet Most projects are still in very early stages “Power producers are willing to pay extra 2-3€ /GJ only due to the better storage- and handling characteristics” Rob Marcus, Vattenfall

14. Thank You! (www.hms-ag.com)