Indika Energy, a prominent Indonesian coal company, is branching out into the biomass industry, shifting towards more sustainable business practices and lessening its dependence on traditional fossil fuels. This evolution is part of the company’s efforts to transition to greener energy sources.
In 2023, Indika produced 30.1 million tons of coal through its subsidiary Kideco. However, in a major green move last year, the company completed the construction of a wood pellet factory in Paser, located in East Kalimantan. This initiative was highlighted in their 2023 sustainability report.
This new venture falls under Indika Nature, another subsidiary that is gearing up for its inaugural wood pellet production, aiming to manufacture 150,000 tons annually by 2025. These pellets, with a calorific value between 4,200 and 4,750 kcal/kg, are designed for inclusion in biomass-based power generation or to supplement coal in thermal power plants. The strategy includes exporting these pellets to Japan, a country that saw its wood pellet imports surge to 531,500 tons in March, marking a significant increase from the previous year.
Indika is setting a precedent in Indonesia’s biomass market as the first company to oversee an end-to-end biomass value chain. Indika Nature is also cultivating a commercial forest in East Kalimantan to produce biomass for carbon-neutral energy, with plans to cultivate 7,500 hectares of calliandra, a plant used for biomass, throughout the current year.
Additionally, Indika’s commodity trading arm has begun dealing in palm kernel shells—by-products of palm oil production used as fuel in biomass energy projects. Their trading partners span across Indonesia, Japan, and even Portugal.
Looking to the future, Indika Energy has set a bold target: by 2025, half of its earnings should come from its non-coal operations as part of its broader goal to completely divest from coal and enhance its role in renewable energy and other non-energy sectors.
The company has already begun decreasing its investments in coal-related domains, while simultaneously increasing involvements in electric mobility, gold mining, and digital technologies. This strategic shift was underscored by the sale of a 100 percent stake in its Mutu coal mining division to the domestic firm Petrindo Jaya Kreasi last year. In 2023, coal brought in nearly 87% of its $3.02 billion in revenues, showing a slight decrease from 89% in 2022.
