Indonesia is a country rich in natural resources. According to the Government of Indonesia, coal resources and reserves in Indonesia are estimated to be 105 billion tons and 21 billion tons respectively that are distributed widely throughout Indonesia. The great majority of coal resources and reserves are located in South Sumatra and East & South Kalimantan. In terms of coal production, Indonesia has the coal energy source for over 300 years and in terms of coal consumption, for over a century.

South Sumatra has the largest coal resources and reserves in Indonesia which accounts for 40% of coal resources and reserves in Indonesia, primarily in the form of lignite. Lignite is not yet suitable to conventional power generation and is non-traded in the energy market due to its high total moisture and low calorific value.

As demand for energy continues to rise in Indonesia, the Government of Indonesia gives support to the utilization of lignite for mine mouth coal-fired power generation, coal upgrading, coal gasification and liquefaction.