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Jakarta Post

Japanese Mitsui eyes coal gasification projects in Indonesia

  • Linda Yulisman

    The Jakarta Post

Jakarta   /   Mon, May 18, 2015   /  09:40 am

Japan-based diversified company Mitsui & Co. Ltd. plans to expand its investment in Indonesia'€™s energy sector through a coal gasification project.

Yukio Takebe, the president director and CEO of Mitsui Indonesia, a local business unit of the group, revealed the interest during a recent meeting with Industry Minister Saleh Husin in Jakarta.

'€œIn the coal sector, Mitsui aims to increase the value of coal to go beyond an energy source. It can raise the coal grade from low to high,'€ Saleh said in a statement during the Wednesday meeting.

The processed coal would be expected to supply raw materials for the domestic fertilizer industry, he added.

Saleh did not elaborate on the investment value or time frame for the proposed project. Takebe declined to comment on his discussion with the minister.

The expansion plan came up after a recent visit to Japan by Vice President Jusuf Kalla and the Industry Minister in March, during which they met with a number of top business executives from Japanese giants, such as Mitsui, Mitsubishi, Marubeni and Toyota Motor.

Mitsui, which operates a wide range of businesses in Indonesia, including steel, automotive, petrochemical, transportation and logistics, power generation and finance, has long had a presence in Indonesia'€™s energy sector.

Through Paiton Energy, a consortium of foreign firms and a local firm, Mitsui built coal-fired power plants in Probolinggo, East Java.

Mitsui is now bidding for a coal-fired power plant in South Sumatra along with Adaro and Korean Electric Power and another project in West Java or Banten together with Adaro and GDF Suez.

The firm is also teaming up with state-owned fertilizer company Pupuk Indonesia Holding Company on a number of projects to support the government'€™s plan for food sufficiency. The two are conducting a joint study on coal gasification in Kalimantan and Sumatra.

Indonesia holds abundant reserves of low-grade coal, but they are yet to be optimized because of high moisture and lower heating value content.

Coal gasification technology helps transform lignite coal into gas and other feedstocks, which then serve as a competitive source of manufacturing inputs.

Indonesia'€™s government has cooperated with Japan'€™s Ministry of Economy, Trade and Industry (METI) to develop a coal gasification project, which involves state-owned fertilizer firm Pupuk Kujang and Japan'€™s engineering giant IHI Corporation.

Recently, IHI Corporation kicked off the trial operation of its gasification prototype plant in the area of Pupuk Kujang in Cikampek, West Java.

The plant turns low-grade coal into chemical feedstocks, particularly hydrogen and nitrogen, to produce ammonia fertilizer.

The Industry Ministry'€™s director general for chemicals, textiles and miscellaneous industry, Harjanto, said that Mitsui also showed an interest in another project of coal liquefaction in ethanol, which converted brown coal into a liquid fuel. This project, together with coal gasification, would come as a solution for Indonesia'€™s attempt to achieve self-sufficiency in both food and energy.

'€œThese processes will give significant added value to our coal at times we'€™re coping with high domestic gas prices. They will serve as a breakthrough for our industry, especially fertilizer and food production,'€ Harjanto said.

Coal gasification is one of the quick wins that the ministry has mapped out to meet energy supply shortages and feed the struggling manufacturing industry.

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