Indonesia's largest coal producer Bumi Resources and US chemical company Air Products and Chemicals will start developing a new Indonesian coal gasification facility by May.
This will be the second coal gasification facility being developed in Indonesia, the first being a joint venture project between Air Products, state-owned coal producer Bukit Asam and oil firm Pertamina. The $2bn project is expected to consume at least 6mn t/yr of coal to produce 1.8mn t/yr of methanol once operational, Bumi said.
The new gasification facility will be built at the Batuta Chemical Industrial Park (BCIP) located in Bengalon, east Kalimantan, Bumi added. The area is currently undergoing the second stage of land clearing in preparation for actual construction of the plant to begin. The facility is targeted for completion by late 2025 or early 2026.
Under an initial agreement by both companies, Bumi will supply coal for the facility through its Kaltim Prima Coal (KPC) mining subsidiary and its Ithaca Resources' Kaltim Nusantara Coal subsidiary. Both companies will be responsible for the offtake of the methanol produced, while Air Products will be the builder, owner, and operator of the facility.
Indonesia's energy ministry (ESDM) welcomed the development of the new gasification facility, saying that these types of projects will help accelerate investments in the growing downstream coal sector.
Investments remain low because of the significant financial undertaking needed, as well as the lack of an existing market for coal derivative products, the ESDM said. The ESDM is hoping that the commercial operations of two large-scale coal gasification plants will demonstrate the economic feasibility of the downstream coal sector to industry players.
The methanol produced by the plant is expected to help reduce imports, and increase the value of lower-quality coal produced in Indonesia.
By Antonio delos Reyes
