The Ministry of Energy and Mineral Resources (ESDM) has announced on temporary termination of the coal downstreaming project, or coal gasification, into Dimethyl Ether (DME) in Indonesia following the withdrawal of a US-based petrochemical company from the consortium innvolving PT Bukit Asam Tbk (PTBA) and PT Pertamina (Persero).
Special Staff to the Minister of Energy and Mineral Resources for Mineral and Coal Governance, Irwandy Arif said that since the departure of the US company, the project to downstream coal into DME in Indonesia has effectively stopped until today.
“Since the withdrawal of Air Products, we have stopped (downstreaming coal to DME), some have changed their products, for example KPC (Kaltim Prima Coal) converting to Ammonia. Meanwhile, PTBA is still looking for a replacement for the previous partner and others,” Irwandy told the media at the Ministry of Energy and Mineral Resources in Jakarta on Friday, Dec. 29, 2023.
He said that currently there is no serious coal gasification project in the country, as both domestic and foreign companies are still focused on the feasibility study (FS) of coal gasification into DME. “No one has started gasification yet, it is still under FS,” he added.
Irwandy also said that the withdrawal of Air Products has invited another problem of how the coal gasification project in Indonesia will run. “Air Products has resigned, the problem appears as how the project can run, especially in regards with converting the permit from PKP2B (contracts of work) to IUPK (special mining permit). It is their obligation to downstream the coal,” he said.
Air Products is reported to have withdrawn from two major projects in Indonesia, namely the coal to DME gasification project in collaboration with PT Bukit Asam Tbk (PTBA) and PT Pertamina (Persero), as well as the coal to ethanol gasification project with Bakrie Group companies, KPC and PT Arutmin Indonesia.
Executive Director of the Indonesian Coal Mining Association (APBI) Hendra Sinadia has earlier revealed that one of the biggest challenges in coal downstreaming project here is because Indonesia has a high-cost economy.
Hendra also emphasised that there are several reasons for high economy, one of which is inadequate technology.
The DME project in Tanjung Enim, South Sumatra was initially targeted to produce 1.4 million tons of DME per year and is estimated to absorb 6 million tons of coal per year.
With the production capacity of 1.4 million tons of DME per year, it is estimated to reduce LPG imports by 1 million tons per year.
The project, whose ground breaking was witnessed by President Joko Widod in January 2022, was initially estimated to require an investment of US$ 2.1 billion and could save foreign exchange on LPG imports of up to Rp 9.14 trillion or US$ 590 million per year.
