Coal price

Publicly listed coal miner PT Bukit Asam (PTBA) will complete feasibility studies for its coal gasification project in Sumatra in May.

Following PTBA’s plan to build two coal gasification plants in Sumatra, company president director Arviyan Arifin said he expected the studies to be completed by the end of the month.

The plants, to be located in Peranap, Riau and Muara Enim, South Sumatra, will enable the coal miner to produce coal derivative products dimethyl ether (DME), synthetic natural gas (SNG), urea and polypropylene.

The Peranap plant is projected to produce 400,000 tons of DME and 50 million standard cubic feet per day (mmscfd) of SNG, while the Tanjung Enim plant has a maximum output capacity of 570,000 tons per year of urea, 400,000 tons per year of DME and 450,000 tons per year of polypropylene.

PTBA spokesperson Suherman told The Jakarta Post that each plant would need around US$3 billion to build. However, he said, the amount could increase following the finalization of the feasibility studies.

“There could be a change in the technology we’re using [for the plants], so the cost could rise above what was initially projected,” he said in Jakarta.

Arviyan said that as soon as the feasibility studies were completed, the company would establish joint venture companies with its future buyers of the derivatives, namely state-owned energy holding company PT Pertamina, state-owned fertilizer company PT Pupuk Indonesia and integrated petrochemical company PT Chandra Asri Petrochemical.

“We expect to establish the joint venture companies by the second half of this year,” he told the press, adding that the plants’ construction would start soon after. But he declined to go into detail.

Previously, business development director Fuad Fachroeddin said the projects were expected to start commercial operations in early 2023.

Arviyan continued that Pupuk Indonesia would later turn the coal-derived urea into fertilizer and Chandra Asri would turn the polypropylene into plastics.

Meanwhile, he said, Pertamina would turn the coal-derived DME gas and use it as a replacement for liquefied petroleum gas (LPG), which was commonly used for cooking in most houses in the country. The use of DME gas would reduce the cost of LPG significantly as coal was a lot cheaper than natural gas, he said.

Energy and Mineral Resources Minister Ignasius Jonan also said recently that DME gas could also help reduce Indonesia’s LPG imports, which currently totaled 4.5 million to 4.7 million tons annually and cost Rp 40 trillion (US$2.79 billion) to Rp 50 trillion.

Aside from building coal gasification plants, PTBA is also eyeing to expand its coal mine this year.

Arviyan said the company was seeking to acquire new coal mines that produced high-calorie coal this year. Although he declined to specify the size of the mines, he said his company was looking outside of Sumatra.

“[The mines] could be located in Kalimantan or even outside of the country as long as it’s good for us,” he said, but declined to go into detail about the amount of funds the company would allocate to acquire the mines.

He said the acquisition was necessary for the company to fulfill its mandate of increasing the country’s coal reserves.

Suherman said the company would allocate Rp 6.2 trillion for capital expenditure this year. The funds, he said, would be used for its routine investment and business development, such as railway development to Kertapati dock, and the construction of the Sumsel 8 coal-fired power plant construction in South Sumatra.


— The Jakarta Post