Indonesia’s MBAP to build its first wood pellet plant

Indonesian coal producer Mitrabara Adiperdana (MBAP) is aiming to begin construction of its first wood pellet plant in December, as part of its plans to diversify into the renewable energy space.

The company’s subsidiary Malinau Hijau Lestari is making its first foray into the wood pellet manufacturing market with the development of the plant, which will have an output capacity of at least 120,000 t/yr when fully operational. The plant is expected to be operational in the first quarter of 2024 and will gradually ramp up production, MBAP said. MBAP plans to export the bulk of the pellets from the plant to Japan, and will be applying for certification that will qualify the pellets to be used in Japan’s feed-in-tariff scheme.

The company has acquired a plantation permit covering 19,000 hectares (ha) of land in Malinau, with shipments loading out of Tarakan port. Around 10,000ha are reserved for the plantation. MPAB started researching the biomass manufacturing project two years ago, working with eucalyptus, kalinda, and sengon timber for its wood pellets. The firm produces coal with a calorific value of GAR 5,000-5,700 kcal/kg. It produced around 4mn t/yr last year and in 2020.

MBAP established Malinau Hijau Lestari in 2015 with an aim of moving into the plantation and forestry business sector. It also established another subsidiary Mitra Malinau Energi in the same year, with the aim of moving into biomass power generation.

A number of Indonesian coal producers have announced plans in recent years to diversify into non-coal businesses, including moving into the renewable energy space, in order to expand alternative revenue streams and reduce their carbon footprint.

Indonesia exported 366,286t of wood pellets last year, up from 310,546t in 2020, according to government statistics data. Indonesia is Asia-Pacific’s biggest palm kernel shell exporter and the third-largest wood pellet exporter, after Vietnam and Malaysia. Indonesia’s reliance on biomass electricity generation is set to grow, with plans to increase biomass utilisation in the coming years.