Construction has begun on a USD 2.3 billion coal-to-methanol project in East Kutai, East Kalimantan. The National Strategic Project is being developed by PT Bumi Etam Chemical (BEC), a joint venture between PT Arutmin Indonesia and PT Kaltim Prima Coal, at the Batuta Chemical Industrial Park in Bengalon.
The facility is expected to process around 7.7 million tonnes of low-calorie coal annually into methanol. According to the latest English-language information from the Ministry of Energy and Mineral Resources, the project is targeting annual production of around 1.3 million tonnes of methanol, with commissioning scheduled for 2029.
The project forms part of the government’s efforts to expand downstream processing of domestic resources while reducing imports of industrial raw materials. Indonesia imported around 1.3 million tonnes of methanol in 2025, valued at approximately IDR 7.1 trillion. The government estimates that domestic production from the project could generate foreign-exchange savings of up to IDR 7.1 trillion per year.
Methanol produced at the facility is expected to supply domestic industries including petrochemicals and formaldehyde production, as well as support fatty acid methyl ester (FAME) production and the B50 biodiesel programme. The development will include gasification units, synthesis reactors, power generation, water-treatment facilities and a port terminal. The Energy Ministry also said the technology is being designed with emissions-control systems and integration with carbon capture and storage (CCS).
BEC entered the engineering phase in July 2026 through a Front-End Engineering Design (FEED) contract and an Engineering, Procurement, Construction and Commissioning (EPCC) framework agreement with PT Istana Karang Laut and China National Chemical Engineering Co., Ltd. The government expects the project to contribute to supporting industries, employment and economic activity surrounding the development.
