Coal Technology Utilization

ICMA WEBSITES – EDITORIAL (14 SEPTEMBER 2020)

Coal Technology Utilization

                Minister of Energy and Mineral Resources Arifin Tasrif in his keynote speech delivered at the 5th Save Indonesia Coal (SIC), a conference organized by Indonesian Mining Professional Associatio (PERHAPI), urging Indonesian mining professionals to develop coal utilization technology. According to the Minister, acquiring such technology is key in the transformation of the coal industry in the future. The government is encouraging coal industry to transform the industry from extracting and burning coal as merely for power generation to more value added coal utiliziation. Industry players however deemed that the technology is still too expensive and therefore not economically viable yet.

                Utilization of coal to be processed further as resources for chemical and methanol industries have been pushed by Jokowi administration. In responding to the government guidelines, some companies have initiated to explore business opportunities in the coal value added process. PT Bukit Asam the state owned enterprise has taken an initiative to develop a project in processing coal into gas (coal gasification) to produce demethyl ether (DME). The project developed jointly with other SOEs such as Pertamina and Pupuk Indonesia as well as Chandra Asri is in the feasibility stage. Meanwhile, PT Kaltim Prima Coal has signed an MoU with AirProduct, a coal technology utilization provider based in the USA, to develop a coal to methane project.

                The key to attract appetite to invest in the business considered as the high-risk is the economic viability. As long as the project could brings more attractive IRR (internal rate of return) then companies would consider to invest. Beside the coal utilization technology still considered as too expensive, investment facilities in the form of fiscal and non-fiscal are very important. The government has been working to review the proposed fiscal and non-fiscal investment facilities to support the development of the coal value added opportunities. The Mining Law provides a strong ground work to support the coal value added business by giving long-term investment certainty for holders of coal contract of work (CcoW) and mining business permit (IUP). In addition the Mining Law also gives a more flexible permit term for coal miner that investing in the coal utilization business. Industry is awaiting for draft of government regulation as implementing regulation of the New Mining Law and other relevant regulations to support development of the coal utilization. A conducive investment climate and industry-friendly regulation would encourage more investment in the coal value added.

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