Indonesia starts coal-to-methanol project in East Kalimantan

hartono · Sep 1, 2026

Indonesia starts coal-to-methanol project in East Kalimantan

Energy and Mineral Resources Ministry Deputy Minister Yuliot (second from right) officiates the groundbreaking ceremony for the National Strategic Project on coal gasification in Belangon, East Kutai District, East Kalimantan. /ANTARA/HO-Energy and Mineral Resources Ministry/mrt.

Jakarta (ANTARA) - Indonesia has begun construction of a coal-to-methanol project in East Kalimantan that is expected to produce 1.3 million metric tons of methanol annually, strengthening domestic industry and reducing import dependence, the Energy Ministry said Monday.

Energy and Mineral Resources Ministry Deputy Minister Yuliot said the National Strategic Project would convert low-calorie coal into methanol for domestic industries, increasing the value of coal resources while supporting energy security and independence.

“This project is part of our efforts to increase the value of natural resources, strengthen domestic industry, reduce dependence on imports, and support national energy security and independence,” Yuliot said in a statement in Jakarta.

The project is being developed by PT Bumi Etam Chemical (BEC), a joint venture between PT Arutmin Indonesia and PT Kaltim Prima Coal (KPC), on about 943 hectares in the Batuta Chemical Industrial Park (BCIP) in East Kutai District, East Kalimantan.

Yuliot officiated at the groundbreaking ceremony for the coal gasification project in Belangon, East Kutai District, marking the start of construction of the methanol facility.

The project will process about 7.70 million to 7.78 million metric tons of coal with a calorific value of 3,300-3,400 kilocalories per kilogram each year into methanol meeting International Methanol Producers and Consumers Association (IMPCA) Grade standards.

The project is expected to produce 1.3 million metric tons of methanol annually to meet part of domestic demand and reduce imports, while potentially saving up to Rp7.1 trillion in foreign exchange each year.

“This groundbreaking marks the start of concrete steps to build a methanol industry based on coal downstreaming,” Yuliot said.

He said the government hoped the BEC project would serve as a model for other coal companies, given the large potential of low-calorie coal in Kalimantan and Sumatra.

“We will continue to promote this downstreaming, which President Prabowo Subianto has designated as a development priority under his Asta Cita program,” Yuliot said.

The facility will include gasification units, synthesis reactors, a power plant, water treatment facilities and a port terminal. Its technology is also designed to control emissions and will be integrated with carbon capture and storage (CCS).

The methanol produced will supply industries, particularly petrochemicals and formaldehyde, while supporting the development of fatty acid methyl ester (FAME) and the B50 biodiesel program.

BEC President Director Rio Supin said the company had entered the engineering stage through the preparation of a Front-End Engineering Design (FEED) and an Engineering, Procurement, Construction and Commissioning (EPCC) Framework Agreement with PT Istana Karang Laut (IKL) and China National Chemical Engineering Co. Ltd. (CNCEC) on July 29, 2026.

“Indonesia’s first coal gasification project is ready to enter implementation, with commissioning targeted for 2029 following the minister’s direction. BEC is ready to support national energy independence and security,” Rio said.

Yuliot said the project was expected to create jobs, spur supporting industries and increase economic activity through broader multiplier effects for stakeholders.

The coal-to-methanol project is part of Indonesia’s efforts to process low-calorie coal into higher-value industrial products, reduce imports and strengthen domestic industry.