The consortium of Indonesia' venture capital firm, PT Bakrie Capital Indonesia (BCI), PT Ithaca Resources, and an American international corporation, Air Products has formed a strategic alliance to build a methanol industry worth more than US$2 billion in Batuta Industrial Chemical Park, in Bengalon, East Kutai Regency, East Kalimantan, said the company last week - Photo by the Company

JAKARTA (TheInsiderStories) – The consortium of PT Bakrie Capital Indonesia (BCI), PT Ithaca Resources, and an American international corporation, Air Products has formed a strategic alliance to build a methanol industry worth more than US$2 billion in Batuta Industrial Chemical Park, in Bengalon, East Kutai Regency in East Kalimantan, said the company last week.

The signing of the definitive long-term contract for the world-scale coal-to-methanol facility was done virtually by the CEO of BCI Adika Nuraga Bakrie (Aga), President Director of Ithaca Resources Agoes Projosasmito and president and CEO of Air Products Seifi Ghasemi witnessed by the coordinating minister for maritime and investment affairs Luhut Binsar Pandjaitan, coordinating minister for the economic affairs Airlangga Hartarto, minister of industry Agus Gumiwang Kartasasmita, and Head of Investment Coordinating Board Bahlil Lahaladalia in Jakarta.

Based on the long-term contract, the company under the Bakrie Group and Ithaca Resources will supply coal raw materials and have committed to take over the production of methanol to be marketed in Indonesia. Coal supplied from the mines owned by PT Bumi Resources Tbk (IDX: BUMI) and Ithaca Resources are then processed by Air Products’ production facilities to be produced into methanol.

This facility will be able to produce nearly 2 million tons of methanol per year produced from nearly six million tons of coal per year. This project is expected to be streamlined by 2024.

“Going forward, after the construction of the production facility is completed in 3 years, the methanol industry will significantly reduce imports of fuel oil and ultimately reduce the pressure on the Rupiah. Of course we also hope that this project will come later the government can be categorized as a ‘national strategic project’ and can in turn maximum benefit for our nation,” said Aga in an official statement.

While, Projosasmito said that the development of the downstream coal industry that raised the value of low-calorie coal products was in line with the vision of the President of the Republic of Indonesia. He stated, “This project will lead us to a new era of the coal mining industry in Indonesia, and will change the current paradigm of treating coal only as fuel.”

And, Ghasemi revealed, the project is part of Air Products’ long-term strategy to always prioritize strategic projects in the high-value gas industry sector. Commenting on the deal, the senior minister Pandjaitan said, this project became a milestone for the Indonesian government especially in terms of the supply of raw materials for the methanol industry which has been dependent on imported products.

“Not only is it important for the chemical industry, methanol is also one of the main factors in the implementation of the biodiesel program that we are currently promoting,” he said.

Written by Staff Editor, Email: theinsiderstories@gmail.com