Kobe Steel begins low-grade coal trial project

Japan steel maker Kobe Steel Ltd. said Wednesday it has begun a US$70 million trial project in Indonesia to utilize low-grade coal as a viable energy source for power generation, agency reported.

A demonstration plant will be set up in fiscal 2007 to process 600 tons of coal per day for two years, the major Japanese steelmaker said.

The company will aim to build a commercial production plant in fiscal 2010.

Kobe Steel has partnered with Indonesian natural resources investment firm PT. Bumi Resources Tbk and its subsidiary PT. Arutmin Indonesia to construct and operate the demonstration plant in southern Kalimantan, it said.

The project has the support of Japan's Ministry of Economy, Trade and Industry through the Japan Coal Energy Center, a METI-affiliated nonprofit organization, the company said. Kobe Steel is a member of the organization.

Through the project, the company aims to raise the heat value of brown coal 50 percent to the same level as high-grade bituminous coal, while making it less combustible, Kobe Steel said.

The upgraded coal will also produce about 66 percent fewer ashes than bituminous coal, it said.(*)