Bumi plans coal gasification project in E. Kalimantan

Petromindo|Lucky

IDX-listed coal giant PT Bumi Resources Tbk plans to develop a coal gasification project in East Kalimantan next year to produce various chemical products, Bisnis Indonesia reported on Tuesday.

The paper quoted Bumi President Director Ari Saptari Hoedaja as saying that feasibility study is expected to be completed next year, and the company is currently seeking the required financing and partner to provide the coal gasification technology. Construction is targeted to be completed in three years.

?The potential opportunity of this business is quite huge,? he said, pointing out to the huge gas demand in the country. He added that the gas produced from coal will be processed into chemical products.

He did not provide further details.

Meanwhile, Director of Upstream Chemical Industry at the Ministry of Industry, Muhammad Khayam said that Bumi will team up with state-owned fertilizer firm PT Pupuk Kujang, which will absorb the ammonia and dimethyl ether (DME) to be produced from the project. Bumi will also produce ammonium nitrate as raw material for the production of explosives used in mining sector.

Khayam said that coal gasification is one of the alternatives to reduce the country?s dependency on natural gas. He said that many coal mines in Kalimantan have lignite resources, a low rank coal with calorific value (CV) of around 3,000 kcal/kg, which are mostly unutilized as coal used in domestic power plants or for export market are mostly those with CV of between 4,000-6,000 kcal/kg. He added that lignite has much lower price of around $20 per ton, compared to the current market price of coal for power plant at around $90 per ton.

He added that the government will support the development coal gasification projects in the country. He suggested that royalty rate for miners developing coal gasification project should be lowered as incentive. (*)