Indonesian and Japanese firms agreed Friday to jointly build a factory to produce upgraded brown coal (UBC) in South Kalimantan province with an investment of 68 million U.S. dollars.

The project involves Japan Coal Energy as a ready buyer, Kobe Steel as contractor, Indonesia's PT Arutmin as coal supplier, state-run oil firm PT Pertamina and the Energy and Mineral Resources Ministry's research and development center.

The plant aims to upgrade brown coal into high-grade coal that can be used for power generation, with initial production target of 1,000 tons of upgraded coal per day.

Energy and Mineral Resources Minister Purnomo Yusgiantoro, who witnessed the project signing ceremony, said the government fully supports the upgraded brown coal project which enjoys high global demand.

"Besides, Indonesia has huge coal reserves with an annual production of 170 million tons," he said.

Indonesia's coal reserves are estimated at 36 billion tons. The price of upgraded brown coal on global market may reach 50 dollars per ton, compared with low-quality coal price of between 25 dollars and 30 dollars per ton.

The factory construction will commence late this year and is expected to begin production in the mid of 2008.

The factory in Asam-Asam is set to launch mass-scale production of 1.7 million tons a year by 2010.

Japan has earlier initiated a trial UBC project in West Java town of Palimanan in 2001 to produce 5 tons of UBC per day.

Source: Xinhua