Palembang, The South Sumatra Provincial Government is looking for a new investor for its $2.3 billion (Rp 37.5 trillion) coal downstream project in Muara Enim after the withdrawal of US investor Air Products. Acting Governor Elen Setiadi confirmed this in Palembang on Friday.

"The DME project was initially based on a partnership with Air Products. However, they withdrew as an investor, so we are now seeking new investors from China," Elen, who is also an Expert Staff member for Regulations, Law Enforcement, and Economic Resilience at the Coordinating Ministry for Economic Affairs, said.

Elen explained that Air Products withdrew because they needed certainty regarding the offtaker. State energy company Pertamina, the designated offtaker, found the business model or economic value unviable due to high coal prices over the past two years.

"Pertamina, as the offtaker, would need to cover production costs plus a margin. This issue was under government review when Air Products decided to withdraw," he added.

Elen emphasized the importance of realizing the DME project, noting South Sumatra's status as a coal-producing region. "We are still waiting to see the coal gasification project come to fruition," he said.

President Joko "Jokowi" Widodo presided over the groundbreaking of the $2.3 billion project in January 2022. The project was the second-largest direct investment by an American company in Indonesia, after Freeport's $3.7 billion copper smelter in East Java.

Air Products had partnered with state-controlled coal miner Bukit Asam and state-owned energy company Pertamina to build a plant converting coal into dimethyl ether (DME). The government had hoped the gas fuel could replace liquefied petroleum gas (LPG) in households across the country. Air Products had committed $2.1 billion to the project, which aimed to utilize 6 million tons of coal annually to produce 1.4 million tons of DME, potentially reducing LPG imports by 1 million tons per year.

This withdrawal follows the recent exit of German chemical producer BASF and French miner Eramet from a $2.6 billion nickel-cobalt refining project in Weda Bay, North Maluku, as they no longer saw the investment necessary for securing a resilient metals supply for their battery materials business.