East Kalimantan - Leading Liquid and Gasification Coal Investment Destination

Indonesia is one of the world''s leading coal producers and exporters. Indonesia''s production capacity keeps rising since 1990s where it was just able to unearth 10 metric tonnes (mt) of coal, until 2018 where it reached coal production up to 528 mt. 

In addition to South Kalimantan, East Kalimantan has been the powerhouse in coal production. The abundance of coal availability in the province has led the provincial government of East Kalimantan to actively develop the one of the coal derivative products, liquid coal. 

Liquid coal is coal-based liquid hydrocarbons that is converted into liquid fuels and petrochemicals. Head of Mineral and Coal Department of Ministry of Mineral Resources and Energy East Kalimantan province Baihaqi Hazami stated that the coal liquification agressively conducted by the provincial government is driven by the fact that the coal exported is still in the form of raw materials or only used as an energy source. "Based on its contents, coal can be processed into new energy source through gasification and liquification process. The processed coal surely is more valued," he expounded. 

He continued, one of the coal derivative products is Coal Bed Methane (CBM). CBM has widely been used in the a number of industries, households, and even developed as power plant fuel. With the country''s capital relocation to East Kalimantan, Baihaqi hopes the coal industry, particularly the coal liquifaction, can be further developed and, eventually, be more contributive to the country''s economy. "With the country''s capital relocation, the province is preparing whatever it takes to optimize the indigenous industries, particularly the coal industry," he said. 

Expanding export destinations US-China trade war indirectly negatively impacts the Indonesian coal export volume. East Kalimantan''s coal production has decreased from June 2018 which reached 8,680,440.90 metric tons (MT) to 7,788,553.77 MT as of June 2019. This decline is suspected to be due to external factors namely the impact of US-China trade war. 

To anticipate the further impact, the provincial government of East Kalimantan is trying to target other countries as export destinations such as India and several Southeast Asian countries while continuing to strengthen the domestic market. Head represetative of Bank Indonesia of East Kalimantan Tutuk SH Cahyono admitted that East Kalimantan''s economic slowdown in the third Quarter of 2019 stemmed from external demand for coal commodities that began to decline. 

"The Chinese government began implementing import restrictions as of July 2019 to keep the coal import target in line with the target by the end of 2019," he stated. China''s move to do so is none other to support China''s domestic coal sales which are starting to lose its competitiveness as the price of Chinese coal in the international market continues to fall. "Although the coal sector is slowing down, the construction sector is expected to increase again to pursue the target of completing the construction of government projects by the end of 2019," he concluded. 

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