The Government Asks Coal Entrepreneurs to Speed ​​Up Downstreaming

Jakarta, APBI-ICMA: REPUBLIKA.CO.ID April 3, 2019 reported that the government asked coal entrepreneurs to carry out business transformation. The Minister of ESDM, Ignasius Jonan, assessed that this business transformation is important so that the coal business is not just mining and selling, but also can provide added value.

Jonan explained that the downstream steps are not only required by mineral entrepreneurs. Even though until now there is no regulation that requires coal entrepreneurs to downstream, but the government encourages entrepreneurs to downstream.

"So, in my opinion, the times are growing, this coal business should not just sell and sell. There must also be added value. We encourage the downstream to have added value," Jonan said, Tuesday (2/4).

Jonan gave an example, for example, the simplest downstreaming is that coal entrepreneurs can build a Mouth Tambang PLTU. The concept of the Mine Mouth Power Plant in addition to being more efficient in terms of production costs, which are sold from this concept are no longer just coal but directly into electricity.

"For example, the PLTU is mine mouth. So tomorrow, sell and sell electricity. So it's not selling raw coal," said Jonan.

Jonan explained the second example is making Dimethyl Ether (DME) or coal-processed compounds into gas. This DME said Jonan has the potential to be a substitute for LPG. With this DME, besides being beneficial for coal entrepreneurs because it can maximize the potential of low-calorie coal which is not sold in the market, it can also help the government reduce the dependence on LPG imports.

"Or do you make DME, become a substitute for LPG. Pertamina has already started, right? But there are no other private mining operators. But we first start through BUMN," said Jonan.

In response, the Chairperson of the Indonesian Coal Mining Association (APBI), Pandu Sjahrir, explained that since three years ago all APBI members had begun to focus on downstreaming. In addition to mining as usually many APBI member companies have carried out downstream stages.

However, Pandu details the most probable and efficient downstreaming steps taken by employers now is to make plants. Besides because capital is not difficult and easy, making the PLTU in terms of investment guarantee perspective is far more stable.

"Electricity is the most obvious. Because first, it is long-term. Second, the investment is also clearer. Supply is guaranteed, because we certainly have the goods. Then, about demand. The market is more certain," Pandu told Republika on Sunday (3/4).

However, to reach DME, Pandu said that this has not been a concern for mining companies at this time. Because, so far the business concept of coal is B to G or between entrepreneurs and the government. While the DME business concept is a B to B. concept

"DME is good, but what I say is that the mining business does not have B to B. Mostly B to G. So, indeed, there needs to be government action first. That's why First and PTBA is first. Okay. look for a more certain one, "said Pandu.

Adaro Energy's President Director, Garibaldi Tohir agreed on this. Currently the most feasible downstream process for coal entrepreneurs is coal to electricity. He explained that in addition to the greater impact and benefits for the community, from an entrepreneur's perspective it was far more effective.

"It is true that the downstreaming is very important for coal to power, coal to gas, coal to methanol. But in my opinion, the biggest downstreaming is coal to power," said Garibaldi.

He also explained that currently PLN is massively increasing electricity consumption. In addition to promoting electric stoves, in the future the government has also begun to promote electric cars. That is, said Garibaldi, the future electricity demand will increase.

"In my opinion coal to power is the most feasible and can be applied now and the benefits are large. Future electricity needs will continue to grow," said Garibaldi.

Meanwhile, when talking about electricity, Garibaldi said, coal is currently the cheapest raw material for electricity. Then coal still plays an important role in the future.

"Indeed, the cheapest today is coal. Then some say it is not environmentally friendly? Who said, the more advanced technology today many PLTU have used super or ultra critical technology that greatly suppresses air pollution. So this is the most strategic, "Garibaldi said.


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