Ecobiz.asia – State-controlled coal miner PT Bukit Asam Tbk (PTBA) is targeting to begin construction of its coal downstream projects this year through the development of coal gasification facilities producing dimethyl ether (DME) and synthetic natural gas (SNG).
PTBA’s director of downstream and product diversification, Turino Yulianto, said the company is currently finalizing feasibility studies for both projects before starting construction at its mine-mouth industrial estate in Tanjung Enim, South Sumatra.
“We are currently conducting feasibility studies for the DME and SNG projects. Both are now under detailed review at Danantara. God willing, we aim to begin groundbreaking this year, and it will not merely be ceremonial but the start of actual construction,” Turino said at the Indonesia Mining Outlook 2026 conference in Jakarta on Wednesday (March 4, 2026).
According to Turino, PTBA has prepared a mine-mouth industrial estate covering more than 500 hectares to support the development of coal downstream industries.
The site will host two major projects: a DME plant intended to partially substitute Indonesia’s LPG imports and an SNG facility that could supply gas to the national pipeline network operated by PT Perusahaan Gas Negara Tbk (PGN).
Turino explained that DME has characteristics similar to LPG, allowing it to serve as an alternative fuel to help reduce Indonesia’s reliance on imported LPG.
“DME behaves very similarly to LPG, so it can be used as a substitute for LPG imports,” he said. Meanwhile, the SNG project will convert coal into synthetic gas that can be distributed through PGN’s pipeline network. The nearest gas pipeline is located about 50 kilometers from PTBA’s operational area in Pagardewa.
In addition to the two projects, PTBA is also exploring the development of other coal derivative products, including methanol and potassium humate, as part of its long-term downstream strategy.
To support the program, PTBA has allocated more than 800 million tons of coal reserves for downstream processing, most of which consist of low-rank coal. Around 500 million tons are located in Tanjung Enim, South Sumatra, while nearly 300 million tons are in Peranap, Riau.
Turino noted that the majority of Indonesia’s coal resources are low-rank coal that is relatively difficult to commercialize in export markets, making downstream development a strategic option to enhance the value of these resources.
However, coal gasification projects require substantial upfront investment. Turino estimated that a DME plant with a capacity of around 1.4 million tons per year could require investment of about Rp40 trillion, while the SNG project may require up to Rp50 trillion.
“The investment is very large upfront, but once the facility is established, it can generate many downstream derivative products,” he said. Despite the high capital requirement, Turino said coal gasification development could significantly strengthen Indonesia’s energy security given the country’s abundant coal reserves.
“Once coal is converted into gas, supply will not be an issue because Indonesia has very large coal reserves that can support demand for decades,” he said, adding that the downstream program is expected to support import substitution and foster the development of coal-based industries domestically. ***
