BKPM Reveals Why Coal Downstreaming Is Stuck in Place
JAKARTA - The Ministry of Investment and Downstream Industry / Investment Coordinating Board (BKPM) has acknowledged that the added value of coal downstreaming is not as great as that of other commodities such as nickel and bauxite.
Rizwan Aryadi Ramadhan, Director of Mineral and Coal Downstreaming at the Ministry of Investment and Downstream Industry/BKPM, said these economic characteristics are one of the reasons coal downstreaming projects have been slow to progress.
“If you look at the added value, indeed for coal derivatives it is not particularly large compared with other mineral commodities such as nickel or perhaps bauxite,” Rizwan explained to journalists in Jakarta, quoted on Thursday (30/7).
On the other hand, companies must shell out considerable investment to build coal downstreaming projects. For example, PT Bumi Etam Chemical (BEC) spent US$2.3 billion to transform the ‘black gold’ into methanol.
“So the added value is no more than ten times that of the coal itself. With an investment value like BEC’s US$2.3 billion, but the added value not being particularly large, it seems the effort is too great compared with the profit that might be obtained,” he said.
In addition, finding the right technology remains homework for making the coal downstreaming agenda a success. The government is still exploring the most efficient technology to carry out the agenda in line with the roadmap that has been drawn up.
“The technology exists, but we have already drawn up a roadmap. So perhaps a technology that is more efficient and cheaper has yet to be found, and demand from buyers for the resulting products must be secured so that the economies of scale can be achieved,” Rizwan said.
“There is indeed some investment interest from other countries coming in, but so far it is still only interest,” he added.
“As for other projects, Danantara recently announced one involving DME, though not methanol, and we will try to shepherd that as well. The hope is that it can demonstrate that the coal downstreaming industry has better commercial value than before,” he concluded.