PT Bukit Asam, Indonesia’s state-owned coal miner, plans to launch a coal-to-chemical project in December, the company said in a summary of investors meeting published in Indonesia Stock Exchange on Sept. 20.
The company will work with state-owned energy firm PT Pertamina and an PT Chandra Asri, a listed petrochemical producer to develop the project.
“This is a feasible project because the coal will be priced using cost-plus-margin, and not at a market price,” the company said in the summary. The project will process 9 MnT of coal per year into urea fertilizer, DME and polypropylene.
Domestic Sales Requirement
As for a requirement to sell 25% of output to domestic buyers (Domestic Mining Obligation), Bukit Asam said it has delivered the full volume of 6 MnT to state-owned electricity firm, Perusahaan Listrik Negara (PLN). Even as its domestic sales has been met in 1H of this year, Bukit Asam will still supply coal to PLN in 2H because it has a long-term contract to deliver 11-12 MnT coal per year.
The power-plant fuel is sold to PLN at the government-set price of USD 70/MT but, Bukit Asam said, PLN also pays between USD7-8/MT as a compensation for delivering the coal by train for 200 km.
“This is a premium for guaranteeing supply security and quality,” it said.
For this year, Bukit Asam plans to increase output by 5% to 25.54 MnT, from 24.25 MnT in 2017. About 53% or 13.74 MnT out of total 2018 sales target of 25.88 MnT will be sold to domestic market, while the remaining 47% or equal to 12.12 MnT will be for exports. The company’s coal sales this year is expected to rise by 10%, from 23.63 MnT a year ago.
The company noted that the increase in sales target was supported by a plan to market medium-to-high calorific coal to premium markets. Additionally, the company has also noticed demand growth in ASEAN market, where new power plants are expected to start operation.
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