Bumi's Kaltim Prima Coal will build the facility in Bengalon, East Kalimantan, with an annual capacity to produce 1.8 million tonnes of methanol, director Dileep Srivastava told Reuters.

He added the joint venture company will invest "around $2 billion all in".

Indonesia's investment minister, Bahlil Lahadalia, said the two companies aim to break ground in May, while Srivastava said the facility is expected to come online by 2025 or 2026.

Air Products did not immediately respond to requests for comment.

In 2020, the company announced it had signed a definitive agreement with Bumi's parent Bakrie Group and PT Ithaca Resources for a $2 billon "world-scale coal-to-methanol production facility".

Bumi said in 2020 it was looking into investing $1 billion in a coal gasification project, to comply with the Indonesian government's ambition of processing its natural resources domestically.

(Reporting by Stefanno Sulaiman and Fransiska Nangoy; Writing by Gayatri Suroyo)

By Fransiska Nangoy and Stefanno Sulaiman