By Calvin Purba
Daya Anagata Nusantara (Danantara), Indonesia’s newly-launched sovereign wealth fund, is set to finance four dimethyl ether (DME) projects, according to Tri Winarno, the Director-General of Mineral and Coal at the Ministry of Energy and Mineral Resources. The total investment allocated for these projects amounts to $11 million.
“There are four DME projects with a combined investment of $11 million,” Tri told Petromindo.com on Tuesday (March 4).
The funding for these DME projects is separate from initiatives coal companies are obligated to undertake as part of their contract extensions—from the Coal Contract of Work (PKP2B) to the Special Mining Business Permits (IUPK).
“These projects are distinct. The funding Danantara provides will be outside the scope of DME projects that arise from PKP2B contract extensions,” Tri explained.
Tri said that in addition to supporting DME initiatives, Danantara is also set to fund several downstream projects across a range of commodities. These include one iron project, one alumina project, one aluminum project, two copper projects, and one nickel project.
Read also: Indonesia launches sovereign wealth fund, BPI Danantara
The Ministry of Energy and Mineral Resources (ESDM) has targeted the start of coal downstream production by 2030. Several coal companies are currently conducting feasibility studies to explore ways of adding value to coal products.
Six coal mining firms holding Special Mining Business Licenses (IUPK) are authorized to develop coal downstreaming projects. These companies previously held Coal Contract of Work (PKP2B) licenses, which the government extended under the IUPK status, with a particular focus on coal downstreaming.
One prominent project that has stalled is the coal gasification program, which aims to produce DME as a substitute for liquefied petroleum gas (LPG). The project, led by state-owned PT Bukit Asam Tbk (PTBA), was initially launched with a groundbreaking ceremony by then-President Joko Widodo on January 24, 2022.
The project, estimated to cost $2.1 billion, was expected to save Indonesia approximately Rp 9.14 trillion annually in LPG imports. However, the initiative has been delayed due to the withdrawal of PTBA's strategic partner, US-based Air Products & Chemicals Inc.
Project locations
Meanwhile, Minister of Energy and Mineral Resources Bahlil Lahadalia said on Tuesday that the Ministry will accelerate the development of DME industries to substitute LPG. The project is planned to be built in parallel in Muara Enim and Ogan Komering Ilir (OKI) in South Sumatra, Tanah Bumbu in South Kalimantan, and Kutai Timur in East Kalimantan.
“We will also build DME plants using low-calorie coal as a substitute for LPG. This is a step to ensure the product can be marketed domestically as an LPG import substitute,” Bahlil said in a statement.
Bahlil added that the DME industry’s development will no longer depend on foreign investors but rather on domestic resources and capital, to be implemented through government policies. Apart from DME, the government also plans to increase value-added products in the mining sector, such as copper, nickel, and bauxite, which will be processed into alumina.
“Now, we no longer need foreign investors. The country will leverage its domestic resources, as per President’s policy. What we need are the technologies. The funding, capex, and raw materials will come from us, and the off-takers will also be domestic. I believe this time, we won’t be reliant on others,” Bahlil emphasized.
Previously, Bahli attended a meeting led by President Prabowo. During the meeting, 21 downstreaming projects were agreed upon in the first phase, with a total investment of $40 billion. President Prabowo has also designated 26 commodity sectors as national priorities for downstreaming, covering minerals, oil and gas, fisheries, agriculture, plantations, and forestry. In addition to strengthening national energy security and industry, this downstreaming initiative is expected to create job opportunities for the Indonesian population.
Editing by Reiner Simanjuntak
