JGC Corp to invest up to $300 mln on Indonesian upgrading coal facility

Japanese engineering firm JGC Corporation plans to invest between $200 million to $300 million to develop a coal upgrading plant which can turn low-rank coal into an alternative fuel to petroleum products, said a company executive on Tuesday.

Low-rank coal which has high moisture content and low heating value, accounts for about 65 percent of Indonesia?s 105 billion tons of coal resources.

Limited high-quality bituminous coal deposit has prompted miners to exploit low-rank coal to feed growing demand from China and India. It also has attracted investors to develop technologies which can turn brown coal worth less than $50 a ton, into a bituminous type that can fetch more than $100 a ton.

JGC Corporation plans to build a coal upgrading facility with production capacity of 1 million tons a year which can turn coal with heating value of less than 4,000 kcal/kg As-received, into a bituminous-type one with heating value of above 6,000 kcal/kg AR, said Tetsuo Fujita, the President of JGC Coal Fuel.

?Upgrading low-rank coal is very important for Indonesia and we have the technology to do that,? Fujita told Petromindo.com on the sidelines of Coaltrans Asia Conference in Indonesia?s resort island of Bali.

The government is drafting a regulation which will require coal producers to upgrade brown coal into a medium-quality one with minimum heating value of 5,600 kcal/kg on air-dried basis before exporting the fuel.

The plan is part of a new mining law introduced in 2009 which requires miners to process coal and minerals into higher value products before exporting them, as Indonesia wants to increase revenue from the mining sector.

JGC Corporation has developed technologies that use high-pressure hot water to upgrade low-rank coal and then turn the upgraded coal into slurry which can be used as substitute for marine fuel oil, widely used in power boiler for power plants and other industries such as chemical.

The firm is constructing a demonstration plant with capacity of 10,000 tons a year in Karawang, West Java which will be managed by PT JGC Coal Fuel.

?The demonstration plant will be put into operation in November. We envisage having commercial plant in 2 years,? said Fujita.

JGC Corporation has been involved as an EPC contractor for a number of oil and gas projects in Indonesia including construction of Donggi-Senoro liquefied natural gas (LNG) in Sulawesi, Tangguh LNG in Papua province and in Balongan oil refinery, operated by state oil firm Pertamina.(fitri)