Indonesian coal producer Bumi Resources, through its subsidiaries Arutmin and Kaltim Prima Coal, has committed to a $2.3 billion coal-to-methanol project in East Kalimantan, targeting first production in 2030. The venture, formalized through engineering and construction agreements signed July 29, marks Indonesia’s most advanced attempt yet to convert low-grade coal into methanol after earlier gasification projects stalled.
Key Facts At A Glance
- Project developer: PT Bumi Etam Chemical (BEC), a 50-50 joint venture between PT Arutmin Indonesia and PT Kaltim Prima Coal, both subsidiaries of PT Bumi Resources Tbk
- Investment value: approximately $2.3 billion (around Rp41.5 trillion), based on a bankable feasibility study completed in 2025
- Location: Bengalon, East Kutai regency, East Kalimantan, on a 93-hectare site within the Batuta Chemical Industrial Park
- Initial output: 2 million tonnes of methanol per year, with a long-term target of 3.6 million tonnes
- Feedstock: roughly 7.7 to 7.8 million tonnes of low-calorific coal (about 3,300 kcal/kg) annually
- Strategic partners on engineering and construction: PT Istana Karang Laut and China National Chemical Engineering Co., Ltd. (CNCEC)
- Designated a National Strategic Project by the Indonesian government
- Target commercial operations: 2030, with a dedicated captive power plant to supply the facility
Project Advances After Years Of Stalled Coal Gasification Efforts
PT Bumi Etam Chemical signed a Front-End Engineering Design (FEED) contract and an Engineering, Procurement, Construction, and Commissioning (EPCC) framework agreement in Jakarta on July 29, formally starting the engineering phase that precedes construction. The signing was described by BEC president director Rio Supin as a milestone toward strengthening national technological independence and creating value through technology transfer.
The project has a long history. Arutmin and Kaltim Prima Coal each pursued separate coal-to-chemicals plans starting around 2010, with Arutmin eyeing a South Kalimantan site and KPC targeting East Kalimantan. In 2023 the two Bumi Resources units merged their efforts by forming BEC, and the venture reached a bankable feasibility study for 2 million tonnes of annual capacity in October 2025.
The move comes as Indonesia’s earlier flagship coal-to-DME project in Tanjung Enim, South Sumatra, has struggled since Air Products withdrew from Indonesian gasification ventures in 2023, prompting officials to pivot toward methanol as a more commercially viable coal-downstreaming path.
Deal Structure And Technical Scope
The FEED and EPCC agreements bring in PT Istana Karang Laut and China’s CNCEC as strategic partners supporting planning, construction, and commissioning. Kaltim Prima Coal chief executive Muhammad Rudy said the contract signing symbolizes the start of a more concrete phase in the project’s development.
The facility will convert coal into methanol through gasification, producing sulfuric acid as a byproduct, and will rely on its own coal-fired power plant to supply electricity to the site rather than drawing from the regional grid. BEC has said the plant’s methanol will be produced to International Methanol Producers and Consumers Association (IMPCA) standards rather than Chinese specifications, a decision aimed at making the output acceptable in global markets.
Government Backing And Demand Context
Rizwan Aryadi Ramadhan, director of mineral and coal downstreaming at Indonesia’s Ministry of Investment and Downstreaming, said at the signing ceremony that the government is encouraging the project to strengthen national technological independence and create knowledge-based value through technology transfer. The project’s National Strategic Project status is intended to streamline regulatory approvals during construction.
Domestic methanol demand is expected to keep rising as Indonesia rolls out its mandatory B50 biodiesel program, which took effect in July 2026, since methanol is a key feedstock in biodiesel production. BEC has said it has already reached preliminary agreements with prospective buyers and expects to finalize binding purchase contracts as the project advances, with any output beyond domestic needs directed toward export markets.