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Publicly listed coal producer PT Bukit Asam (PTBA) and state-owned fertilizer company PT Pupuk Sriwijaya Palembang (Pusri) will build a coal gasification plant to take advantage of the company’s huge reserves of low-grade coal.

PTBA’s president director Milwarma said in Jakarta on Friday that the feasibility study for planned coal gasification plant was currently
underway.

“The plant will be designed to process coal into gas. If we have the technology, we could also produce various by-products from coal such as methanol and dimethyl ether [DME],” PTBA president director Milawarma told reporters on the sidelines of the Porseni sports and art competition at the company’s office on Friday.

Milawarma said that by entering the coal gasification business, PTBA would be able to use the company’s large reserves of low-grade coal, which had not been fully used. Gas produced from the plant would be supplied to Pusri for fertilizer production, he added. “Our low-rank coal accounts for between 60 and 70 percent of our total
production.”

PTBA is targeting to produce around 17 million tons of coal this year from its coal mine in Tanjung Enim, South Kalimantan. The company plans to produce 50 million metric tons of coal by 2016. In its attempts to meet the target, the company is developing supporting facilities, such as a new railroad to connect its mining sites in Tanjung Enim to its coal terminal in Lampung.

“Our low-grade coal has been used to meet demands from domestic buyers, while the high-grade coal is usually sold overseas to countries such as to Japan, South Korea and Taiwan,” he said.

High-grade coal has a caloric value above 6,000, while low-grade coal falls short of that mark.

As reported earlier, US-based company Celanese inked a US$2 billion (Rp 19 trillion) deal with PT Pertamina to develop a similar coal gasification project in Indonesia. The difference is that Celanese would turn coal, through gasification processes, predominantly into ethanol, used as a fuel additive, to supply fuel for Indonesia’s transportation needs.

Celanese, a global producer of specialty chemical products, introduced the so-called TCX technology last year in the US, claiming its technology to produce ethanol from coal was more profitable than producing the gasoline additive from plants, and was a “game-changer” for the US chemical company, Bloomberg reported.

Celanese chief financial officer Steven Sterin said after his company received approval from the government, it would then take around 30 months to complete the construction of the new facility, which was expected to convert as much as 4 million tons of coal per year into 1.3 billion liters of ethanol.

Milawarma said he was open to the possibility of participating in the Celanese-Pertamina’s project.

“There is a possibility that we would go there [participate with Celanese], but we are focusing on completing our own gasification project. If we could do that, then it would be easy to turn it into many other products,” he said.

PTBA reported slower profit growth for the first six months of the year on rising expenses and relatively flat coal prices.

The company booked Rp 1.56 trillion in net profits the first half of the year, a 3 percent drop from Rp 1.61 trillion in the same period last year.