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.


SOURCE: Provincial Government of East Kalimantan