W

ith the ban on unprocessed coal exports imminent in two years, a handful of coal producers are racing with time in conducting feasibility studies to manufacture derivative products using new technologies to convert the commodity to gas or liquid fuels.

State-owned coal producer PT Bukit Asam in tandem with fertilizer producer PT Pupuk Sriwijaya has launched an initiative to identify the commercial viability of coal gasification.

“Pusri will absorb coal gas produced, when the technology is proven to be economic,” Bukit Asam corporate secretary Hananto Budi Laksono told The Jakarta Post last week.

He added that the company was also embarking on other initiatives to study the feasibility of Coal to Liquid (CTL) and calorie upgrade technologies.

The state-sanctioned Center for Minerals and Coal Technology Research and Development (tekMIRA) is involved in helping Bukit Asam and Pusri on their coal conversion initiatives.

According to tekMira chief Bukin Daulay, by using the so-called Direct Liquefaction system, one metric ton of coal with a content of above 6,000 kilogram calorie per kilogram can produce 3.5 barrel of synthetic diesel fuel. Indonesian coal, which mostly comes with a lower calorie, will be able to yield around 2.5 barrels of fuel using the same amount of coal.

“Using Direct Liquefaction means that we don’t have to increase calorie content to perform liquefaction,” said Bukin, who just returned from trip to China to meet experts from Shenhua Group, the operator of the world’s largest coal liquefaction plant.

Despite making economic sense, experts argue that the direct liquefaction method creates a bigger environmental hazard as the making of the fuel produces prodigious amounts of carbon dioxide, even before the fuel is burned. The process also uses enormous amounts of water, creating more environmental impact.

Coal producer PT Darma Henwa, through its subsidiary, DH Energy, is also embarking on pioneering initiatives on gasification, liquefaction and also upgrading technologies at its production base in Pendopo, South Sumatra. The company expects gasification project to begin commercial production in 2016, while upgrading to begin as early as next year.

Indonesia’s second largest public listed coal producer, PT Adaro, is also researching coal calorie upgrading technology. Adaro external relations general manager Bambang Susanto said the research would be completed “in a few years” and that the company was looking for a suitable site for a pilot plant.

Indonesia has seen coal mining boom in the last decade, with annual output jumping almost 500 percent in 10 years to 275 million tons by 2010, posing a set of unique challenges on the future of energy security. Last year, mining companies produced 370 million tons of coal.

Aware of such a rapid rate of exploitation, the House of Representatives amended the Mining and Coal Law in 2009 and specified that all mining permit holders should give high added value to coal and minerals before exporting. The new law gives mining companies five years to prepare.

In a bid to prepare the companies for the 2014 deadline as well as ensuring domestic supply of coal to power electricity generators, the government is set to introduce a domestic market quota.