Indonesia moves to upgrade coal quality
Leony Aurora, The Jakarta Post, Jakarta
In a bid to fully utilize Indonesia's coal reserves, the Ministry of Energy and Mineral Resources in cooperation with Japan plans to build a plant to upgrade low-rank coal (LRC) into high quality fuel.
The pilot project, with a limited capacity of 1,000 tons per day, would be built in Sumatra or Kalimantan, the ministry's head of research and development center for mineral and coal technology M. Lobo Balia said on Monday.
"We will decide on the location soon," he said on the sidelines of a one-day seminar on upgraded-brown coal (UBC) technology. The pilot project will kick off in 2006 and the plant is expected to start operating in 2008.
The UBC technology uses moisture content reduction techniques to lift the heating value of LRC -- generally defined as coal producing under 5,000 kilocalories per kilogram (kcal/kg) -- to over 6,000 kcal/kg, equal to that of high-rank coal.
Such technology is seen as a possible way to utilize coal reserves in Indonesia, at present estimated at 57.8 billion tons, of which over 60 percent is classified as LRC.
Over the past four years the ministry has worked in cooperation with the Japan Coal Energy Center (Jcoal) in building a coal research center in Palimanan, West Java, with a production capacity of five tons per day.
The joint team has conducted extensive tests on samples taken from locations in Sumatra and Kalimantan -- islands with the biggest coal reserves -- to study and prove the feasibility of the LRC upgrade technology.
After the pilot project has been proved, a commercial plant with a capacity of 1.7 million tons per year is expected to start construction in 2008 and start operating two years after.
Energy minister Purnomo Yusgiantoro has urged the private sector to jump straight into constructing commercial plants, even before the pilot project starts production.
"Why wait for 2010, when prices in the international coal market are good now," he asked after opening the seminar. "We should develop (the plants) as soon as possible."
Purnomo said the price of high-rank coal currently stood at US$50 a ton, while the cost for purchasing LRC and upgrading it was less than half that -- between $10 and $15 per ton to buy the LRC, and about $9 per ton to process it.
Chairman of the Indonesian Coal Mining Association Jeffrey Mulyono, however, opted to wait to see the outcome of the pilot project.
"The commercial design is only between 60 percent and 70 percent complete," he said. "If there are results, then investors will definitely want to come in."
The government is aiming to have 15 UBC commercial plants nationally with a total annual capacity of 25.5 million tons by 2020.
Indonesia's coal output is expected to increase by 18 percent in 2005 to 150 million tons from the 127 million tons produced last year. Some 70 percent of the country's output is exported.
Analysts have estimated that the coal industry will grow substantially, with the government planning to construct and develop nine more coal-fired power plants by 2009 in order to ensure domestic power supplies.
Overseas demand is also signaling an upward trend, with Japan and China -- two of the world's largest coal importers -- having shown interest in increasing their imports from Indonesia.
Estimated coal demand in several Asian countries (in million of tons)Country Current 2010
China 980 1,200
India 263 465
Japan 94 110
Indonesia 20 48
Taiwan 33 38
Malaysia 9 19
Thailand 14 18
Source: Ministry of Energy and
Mineral Resources