Japan’s engineering giant IHI Corporation kicked off Thursday the trial operation of its gasification prototype plant that, when it succeeds, will pave the way for the firm to build a similar facility for commercial purposes.

The plant, located in the area of state-owned fertilizer producer PT Pupuk Kujang, will convert 50 tons per day (TPD) of low-grade coal into chemical feedstock, such as hydrogen and nitrogen, to make ammonia fertilizer.

Speaking during the opening ceremony on Thursday, IHI Corporation vice president Toshinori Sekido said the firm would carry out a series of tests at the plant within a year.

“We want to ensure the sustainability of the operation and its reliability […]. We expect it can progress into a commercial phase,” he said.

Indonesia has enormous reserves of low-grade coal, but they are still underutilized as a result of high moisture and lower heating value content.

The coal gasification technology, which transforms the lignite coal into to gas and other feedstock, will help push up its utilization and provide a cheaper source of manufacturing input.

Began in early 2013, the gasification project is funded by Japan’s Ministry of Economy, Trade and Industry (METI) and runs under cooperation with some Indonesian ministries with IHI as the executor and PT Pupuk Kujang as the local host. The coal for the operation is now supplied by PT Pesona Khatulistiwa Nusantara from its East Kalimantan mine.

Business development and sales manager at IHI energy and plant operations division Daizo Takayanagi said apart from having huge reserves of low-grade coal, Indonesia also had high demand for ammonia.

“We may start accept orders in 2016 and go into commercial operation in 2017 depending on the demand of Indonesian users,” he said, adding that IHI would build a facility to process 3,000 TPD of coal, to be equal to 1,000 TPD of ammonia.

At present IHI also runs another non-commercial plant with capacity to process 6 TPD in Yokohama, Japan.

In Indonesia, IHI, with local subsidiary PT Cilegon Fabricators, currently makes boilers for export to several destinations, including Australia, Malaysia, Thailand, Japan, Chile and the US. It has yet to sell its products in Indonesian markets.

President director of state-owned fertilizer PT Pupuk Indonesia Holding Company (PIHC) Arifin Tasrif said the total gas needs for all its plants nationwide totaled to 700 or 800 million cubic feet per day (mmcfd) and a part of this figure would gradually be fed by coal.

One of its subsidiaries, PT Pupuk Sriwijaya Palembang (Pusri), is carrying out a feasibility study jointly with state-owned coal miner PT Bukit Asam to build a coal gasification plant in South Sumatra.

Arifin anticipated that the study would conclude by the end of this year and after that it could begin the project.

Another study would also be conducted in East Kalimantan where coal reserves were abundant, he added.

“We aim to set up the gasification facility near the coal mine so that we will transport only the output,” said Arifin.