Ecosystem Not Yet Formed, Coal Downstreaming Stagnant

Executive Director of the Center for Energy Law Studies and Mining (Pushep) Bisman Bhaktiar, Thursday (9/5/2024), said that Indonesian coal commodities have so far been sold simply, or raw. In recent years, demand has increased, making prices relatively high. With that condition, it's like: if you sell it raw it will sell well, why bother processing it again?

Apart from the price, the certainty of the market that will absorb DME products in the country is also unclear even though the product is said to be replacing LPG. "The most urgent thing is the matter of costs. Coal gasification requires high technology and financing so that up to now coal downstreaming has not been optimal. "This is different from minerals," said Bisman.

Also read: Reset Coal Gasification Project

This is also driven by the lack of formation of the DME ecosystem, which is still relatively pioneering. According to Bisman, there is hope for DME or other downstream coal products to develop, but the level of speculation and considerations is still very high. Thus, a number of parties are still waiting and seeing in developing downstream coal.

Legal certainty must be ensured, no matter what, "Because this is a big investment. (For entrepreneurs) it's not about making profit or waiting for a green light, but at least it should be a safe investment or capital. (Regarding incentives) there is indeed a 0 percent royalty, but until now it hasn't been attractive in reality. Then, how is this product synergized with the energy transition policy? There must be a clear roadmap," he said.

Director Main PT Bukit Asam Tbk (PTBA) Arsal Ismail, on the sidelines of the PTBA Annual General Meeting of Shareholders (AGMS) for the 2023 Financial Year in Jakarta, Wednesday (8/5/ 2024), said that the coal gasification plan is still in progress. Studies are still being carried out because in coal downstreaming, economic value must really be taken into consideration.

"Do not let the economy interfere with PTBA's finances. We must be cautious about this. However, we still support the government's downstreaming program. In terms of coal resources, we have plenty. But the technology to process coal for downstreaming into what form is still under review. It should have been done before, but (Air Products) stepped back," said Arsal.

According to him, the study is being conducted at length to ensure its economic feasibility is achieved. "The study will continue until it is truly economic and profitable for PTBA and the government. Moreover, the volatility of the global situation is constantly fluctuating. If asked how long it will take, we are ready to proceed as soon as the investor enters," he said.

Director of Business Development Rafli Yandra said that the coal downstream product which is also under research and development is mono ethylene glycol (MEG). Collaboration continues to be carried out with a number of universities and research institutions. It is hoped that there will be innovations that will support economies of scale so that coal downstreaming can actually run.

Since mid-2021, global coal prices have risen with the increase in global demand. According to Trading Economics, the peak occurred on September 5, 2022, reaching around 457 US dollars per ton. After that, prices fluctuated and experienced a significant decrease. However, since mid-2023, prices have consistently been maintained in the range of 120-150 US dollars per ton.

In January 2024, the price of coal briefly dropped to 117 US dollars per ton, but later rose again. On Monday, May 6, the price of coal was recorded at 146 US dollars per ton. The last time the price of coal was below 100 US dollars per ton was in 2021.

Also read: Decreasing Coal Prices Still a Challenge for Mining Issuers

Distribute dividends of IDR 4.6 trillion

During the PTBA Annual General Meeting on Wednesday, shareholders approved the use of 75 percent of the net profit in 2023, amounting to Rp 4.6 trillion, as dividends. Throughout 2023, PTBA recorded revenue of Rp 38.5 trillion resulting in a net profit of Rp 6.1 trillion. This was supported by the production volume in 2023 of 41.9 million tons, or a 13 percent increase compared to 2022.

Arsal Ismail stated that global and national economic challenges are faced with the implementation of appropriate business strategies, enabling support for more sustainable performance expansion. "Going forward, PTBA will carry out developments to enhance operational performance or sales," he said.

According to the approved work plan and budget, Arsal added that in 2024, PTBA's production target will remain around 41 million tons. It will then increase to around 50 million tons in 2025 and rise again to nearly 60 million tons in 2026.