Government pushes seven coal downstream projects to boost value

By Dominikus

Indonesia is advancing a pipeline of seven coal downstream projects as it seeks to transform its coal sector from a bulk export industry into a diversified base for chemicals, fuel substitution and steel production.

At the recent AsiaCoke 2026 conference in Jakarta, Director General of Mineral and Coal Tri Winarno outlined plans for seven coal development and utilization facilities currently planned or under development, with a combined coal input capacity of more than 24.6 million tons.

The projects span multiple downstream pathways, including coke (semi-coke, locally known as semikokas), methanol, dimethyl ether (DME), ammonia and integrated coal-based energy systems, reflecting a shift toward multi-product coal utilization.

Indonesia is targeting semi-coke output of 702,000 tons per year, alongside methanol production capacity of 2.74 million tons annually and integrated methanol-ammonia projects reaching 2.95 million tons per year. Additional coal-to-DME facilities are designed to produce either over 2 million tons of methanol or 1.34 million tons of DME annually.

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Coal gasification is emerging as a central pillar of the strategy, particularly for DME production as a substitute for imported liquefied petroleum gas, aligning downstream coal development with Indonesia’s energy security objectives.

The government is also supporting the development of coke plants and integrated steel complexes, including projects linked to PT Krakatau Steel and emerging industrial corridors in Sulawesi, aimed at strengthening domestic metallurgical capacity.

Beyond output expansion, the downstream push is tied to stricter environmental and efficiency standards, with new facilities required to adopt best available technologies, conduct comprehensive environmental impact assessments and implement waste heat recovery and by-product utilization systems.

Indonesia holds coal reserves of approximately 31.95 billion tons, providing a long-term resource base for these projects. However, the government’s strategy increasingly centers on capturing higher value from these reserves through processing, rather than relying solely on exports.

The seven-project pipeline underscores a broader transformation in Indonesia’s coal sector, where downstream integration, energy substitution and industrial development are becoming key drivers of future growth.

Editing by Reiner Simanjuntak