Indonesia Breaks Ground on 2 Million-Tonne Coal-to-Methanol Plant
Indonesia has begun construction of a coal gasification complex in East Kalimantan designed to produce about 2 million tonnes of methanol annually. The project will consume 7.70–7.78 million tonnes of low-calorific coal and aims to replace imports valued at Rp 7.1 trillion in 2025.
Construction begins in Kutai Timur
Indonesia has broken ground on a coal gasification plant in Kutai Timur, East Kalimantan, designed to produce about 2 million tonnes of methanol per year. Deputy Energy and Mineral Resources Minister Yuliot Tanjung formally launched the project at the Batuta Chemical Industrial Park in Bengalon district, Liputan6.com reported.
The development has been designated a National Strategic Project and will occupy approximately 93 hectares. PT Bumi Etam Chemical, a joint venture between PT Arutmin Indonesia and PT Kaltim Prima Coal, is developing the complex. Commissioning is targeted for 2029.
BEC President Director Rio Supin said the project entered the engineering phase after the preparation of front-end engineering design and an Engineering, Procurement, Construction and Commissioning Framework Agreement with PT Istana Karang Laut and China National Chemical Engineering Co., Ltd. The agreements have been in place since 29 July 2026.
Low-grade coal gains a domestic industrial outlet
The plant is expected to process 7.70–7.78 million tonnes of coal annually. Its feedstock will have a calorific value of 3,400 kcal/kg, creating a large, dedicated outlet for lower-grade coal resources found in Kalimantan and Sumatra.
The coal will be converted into methanol meeting International Methanol Producers and Consumers Association Grade specifications. All output is intended for Indonesia’s domestic market, with petrochemical and formaldehyde producers identified among the principal customers.
The facility will include gasification units, synthesis reactors, power generation, water treatment and a port terminal. Liputan6.com said its technology is being prepared to control emissions and will be integrated with carbon capture and storage. The source did not disclose the project’s capital cost, financing structure or expected carbon capture volume.
Import replacement and chemical supply
Indonesia imported 1.3 million tonnes of methanol worth about Rp 7.1 trillion in 2025, according to Liputan6.com. The government estimates that domestic production from the project could save as much as Rp 7.1 trillion in foreign exchange annually by reducing the country’s dependence on imported supply.
The planned annual capacity exceeds the stated 2025 import volume by 700,000 tonnes. That creates scope to cover existing imports while serving additional demand, although the project’s actual effect will depend on plant utilization, domestic consumption growth, product pricing and the timing of commissioning.
Beyond established petrochemical and formaldehyde uses, the government expects the methanol to support fatty acid methyl ester production and the B50 program. Yuliot said the project should add value to Indonesian natural resources, strengthen domestic industry and encourage supporting businesses and employment. The government also wants the development to serve as a model for other coal companies as President Prabowo Subianto’s administration promotes downstream processing of the country’s low-calorific coal.