The Coal Development and Utilization in Mongolia

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THE FOURTH U.S.-MONGOLIA BUSINESS FORUM June 9,
2009 Washington, DC
The Coal Development and Utilization in Mongolia
and Need for Coal Conversion Technology
Bazardorj Bayarsaikhan, Coal Research
Division Mineral Resources Authority of Mongolia
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Distribution of Large-Scale Coal-Bearing Basins
Mongolia national land 1.57 million km2, 3,500
lakes and 7,000 rivers, average height 1,580 m
above the sea level
A
O
I
M
L
G
B
C
J
E
N
H
K
D
F
A Kharkhiraa D Ikh Bogd G Choir-Nyalga J
Sukhe-Bator M Orkhon-Selenge B Mongol Altay E
Ongiyngol H Middle Govi K East Govi N
Altay-Chandmani C South Khangay F South Govi I
Choybalsan L Tamsag O Bayan-Ulgii
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Mongolian Coal Resources by Regions
Total recoverable reserves 10.0 bill
Billion tons
Total 175.54 billion tons
122.95
27.16
13.03
12.40
Western region
Southern region
Central and Northern part
Eastern region
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Coal Production, Consumption, Export
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Action Plan of the Government of Mongolia /2008
2012/
Industrialization policy

• Take multi-step measures to supply households
  with smokeless fuel
• Start projects implementation on the coal
  liquefaction and coal
• gasification in order to provide stable
  domestic oil supply
• Implement the renovation project of Baganuur and
  Shivee Ovoo
• coal mines to provide stable coal supply to
  power plants
• Implement the project to provide stable coal
  supply to Darkhan
• and Erdenet power plants
• Implement projects on the geological survey of
  coal mine methane
• gas and create a legal environment for a wide
  use of gaseous fuel

• Take multi-step measures to supply households
  with smokeless fuel
• Start projects implementation on the coal
  liquefaction and coal
• gasification in order to provide stable
  domestic oil supply
• Implement the renovation project of Baganuur and
  Shivee Ovoo
• coal mines to provide stable coal supply to
  power plants
• Implement the project to provide stable coal
  supply to Darkhan
• and Erdenet power plants
• Implement projects on the geological survey of
  coal mine methane
• gas and create a legal environment for a
  wide use of gaseous fuel

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Need for Coal Liquefaction Technology
In Mongolia, the petroleum is totally consumed as
fuel for cars, buses, trucks, airplanes and
locomotives (in the form of gasoline, diesel and
jet fuel).
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Mineral Resources Authority of Mongolia
Mineral Resources Authority of Mongolia
(MRAM), created in 1997, is an independent
implementing Agency of the Mongolian Government
in charge of basic geological and mining surveys,
research and the registering and issuing of
licenses
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Discussion Topics

• History of Coal and Energy Sector Development
• Mongolias Coal Resources
• Coal Production, Consumption, Export
• Government Policy on the Coal Development
• Mongolias Major Coal Mines

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History of Coal Development

• 1922, The Nalaikh, the first Mongolian coal
  deposit
• has been taken to the state ownership
• 1939, The Mongolian Geological Survey Agency
• was created
• 1965, Sharyngol coal mine began to mine
• 1966, Tavantolgoi coal mine began to mine
• 1978, Baganuur coal mine began to mine
• 1992, Shivee Ovoo coal mine began to mine

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Coal Energy Sector Development

• 1932-1934, TPP-1 installation /30 MW/
• 1961-1969, TPP-2 installation /21.5 MW/
• 1968-1982, TPP-3 installation /148 MW/
• 1983-1991, TPP-4 /540 MW/
• 1965-1966, Darkhan TPP installation /48 MW/
• 1987-1989, Erdenet TPP /28.8 MW/

Decommissioned in 1974
These power plants - generate 95 of the
national electricity production - consume more
than 80 of the domestically consumed coals
Pulverized coal fired power plants designed by
former Soviet Union
TPP thermal power plant
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Smokeless Fuel Manufacturing Plan
Former
Briquette
Raw coal
Mixing with clay
Grinding
Pressing
Smokeless fuel manufacturing project /TPP-2/
Removal of volatile products
Coal
Char
Mixing with clay
Pressing
Briquette

• Required investment 7.5 million US
• Semi-coke production 100,000 t/y
• Briquette production 120,000 t/y

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Coal Liquefaction Projects
Axens IFP Group Technologies
Feasibility study to build a coal liquefying
plant in Mongolia
Coal feed to liquefaction, dry basis 6350
t/day Products bbl/day LPG 912 Gasoline 6
,344 Diesel 11,263 Fuel oil 7,088 Total 25
,607 Total capital required, bill. US 2.38
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Coal Liquefaction Projects
Industrial Corporation of Mongolia /ICM/
Coal-to Gasoline Project
Feasibility Study

• Prepared by - Uhde, ThyssenKrupp, Germany
• Financial advisor - Commerzbank

230 mill. tons
Location
Ulaanbaatar

• Tugrugnuur lignite deposit
• Financial advisor - Commerzbank

Tugrugnuur
Project Completion

• 2014

Total Required Investment
Production Capacity

• 3 - 4 billion US

Financial Plan

• 30 - direct investment
• 70 - loan

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Coal Liquefaction Projects
PetroErch Company
The full pre-feasibility on Baganuur coal for CTL
Coal
Gasification
Synthetic gas
Methanol Synthesis
Fischer-Tropish Synthesis
Conversion
Gasoline
DME synthesis
Methanol
Hydrogen
Diesel
DME
Mobile Synthesis

• gasification of 15 - 20 mill. tones of coal
• 2 mill. tons of liquid products
• 3.4 - 3.5 bill. US

Gasoline
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Perspectives for methane utilization in Mongolia

Utilization options for Mongolia

• Convert coal bed methane to heat
• Compressed natural gas (CHG) for vehicle fueling
• Liquefied natural gas (LNG) for vehicles and
  other uses
• Production of methanol or carbon black
• Electricity generation - internal combustion
  engines

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Electric Power Export Policy
The generation of electric power at mine mouth
and export it to neighboring countries such as
China by HVDC (high voltage direct current)
transmission line is an attractive project to
support Mongolian economy.
Shivee Ovoo Power Plant 4200 MW
Mine-mouth coal-fired power plant has following
advantages - Coal transportation (railway)
and stockpile can be minimized -
Environmental problems can be minimized
Fluidized bed boiler is favorable for the low
grade coal which will be supplied from the coal
mines such as Baganuur, Shivee Ovoo, because it
can burn such low grade coals in an
environmentally acceptable manner
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Coal Program /2007 2012/
Coal to gas liquid fuels plan

• It is reported that the production of synthetic
  petroleum through coal gasification
• will be competitive with crude oil when oil
  price reaches higher than 30 US/bbl
• It is recommended to evaluate coal
  characteristics for both gasification and direct
• liquefaction by installing a small scale test
  facilities in the relevant laboratories

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Main Coal Deposits in Mongolia
Ulaanbaatar
- Centers of provinces
- Coal deposits
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Baganuur Coal Deposit
Brief history of exploration 1974
1975 Exploration by the former Soviet Union 1976
1977 Detailed exploration by the former Soviet
Union Number of boreholes 502 Total
length 49,881 m Borehole interval 150
m Interval of cross section 250 m 1978
1979 Start of production by using small-size
mining equipment 1979 1980 Start of production
by using large-size mining equipment
Total recoverable reserves 511.4 mill. ton
Baganuur
Ulaanbaatar
Baganuur coal mine is located at 110 km east to
Ulaanbaatar and 200 km by a railway

• In 1995, Baganuur Joint Stock Company / JSC/ has
  been established
• A stock shareholder Government owns 75 ,
  individuals or companies own 25

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Baganuur Coal Deposit
Central energy system
Water
Q 3250 kcal/kg W 35 (as received) A 18
(dry basis V 45 (daf) Stot 0.5 (dry basis)
Coal
Pulverization
Combustion
Exhaust
Electricity
Steam turbine
Steam
Around 60 of coal consumed by the coal-based
power plants is produced by Baganuur
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Baganuur Coal Deposit
Main equipments
Number
Dragline ESH 20/90

• Draglines 6
• Shovels 11
• Drills 9
• Bulldozers 10
• Diesel and electro loco 3

Power plants
The debt of 14 billion tugruks
Baganuur Joint Stock Co. Company
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Shivee Ovoo Coal Deposit
1995, Shivee Ovoo Joint Stock Company was
formed Stock share Government 90 , the
others 10
History of exploration 1986 Exploration (all
area of Shivee Ovoo) (The number of
boreholes 72, the total number 16,221.5 m,
borehole interval 2-4 km) 1986 Detailed
exploration (Shine-us area, first mining area)
(The number of boreholes 65, the
total number 5,452.1 m, borehole interval 250
m) 1987 Detailed exploration (Shine-us area)
(The number of boreholes 80, the total
number 15,152.5 m, borehole interval 500
m) 1987 Detailed exploration (Shine-us area,
first mining area) (The number of boreholes
54, the total number 9,472.0 m, borehole
interval 250 m) 1992 Development, start
production
Recoverable reserves 564.1 million tons
240 km
Ulaanbaatar
Shivee Ovoo
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Shivee Ovoo Coal Deposit
In 1998-2004, 67.6 million US has been invested
for enhancing the production capacity up to 2
million tons.
ESH 25/90 dragline 1 unit ???-160
drilling machine 1 unit EKG-5A shovel 5
unit ??-45? drilling machine 2
unit PC-200 hydroshovel 1 unit D-8
bulldozer 1
unit PC-400 hydroshovel 1 unit D-155A
bulldozer /komatsu/ 4 unit
Coal quality
W 31.8 (as received) V 44.7 (daf) Q
3,776 kcal/kg (as received) A 16.4 (dry) S
0.75 (dry) Q 5,064 kcal/kg (daf)
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Tavantolgoi Coal Deposit
Brief history of exploration 1890 Firstly,
recorded by a geologist of U.S.A 1974 1975
Sampling survey by the Bulgarian expedition
(sampled each 5 tons from 4 seams at the central
area) 1975 Decided to develop at the meeting of
COMECON 1978 1981 Exploration at the
Tavantolgoi deposit in a narrow sense
(exploration area 90 km2) (drilling
interval 1.0 1.5 km) 1978 1990 Exploration
by Mongolia under Soviet Unions advice
(total drilling work 2,000 holes, 200 km)
1981 1984 Detailed exploration for an area of
35 km2 (drilling interval 700 750 m) 1990
Feasibility study by the former
Soviet Union
The Tavantolgoi, the largest coal deposit in
Mongolia, belongs to the South Govi Coal-bearing
basin and extends for 60 km east-west long and 6
16 km north-south wide, over an area of 600 km2.
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Tavantolgoi Coal Deposit
Tavantolgoi Coal Deposit
In 1995, the Tavantolgoi Joint Stock Company was
founded.
Government 51
Individuals or companies an 49
W 11.5 (as received) A 21.2 (dry basis) V
25 (daf) Stot 0.7 (dry basis) Q 5,110
kcal/kg (as received) Q 8,110 kcal/kg (daf)
Ulaanbaatar
540 km
240 km
Tavantolgoi
High-quality coking coal
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Tavantolgoi Coal Deposit

• Geological resources 6.4 billion tons
• Recoverable reserves 1.7 billion tons

• The Tavantolgoi Coal Mine began to mine by open
  cut in 1966
• The coal had been utilizing by local consumers
  until 2004
• Export activities had been developed in 2004

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Coal Program /2007 2012/
Grand Goal
To secure the stable energy sector growth
through comprehensive coal development and
utilization
Objectives

• Production of liquid fuels from domestic coals
• Production of natural gas substitutes from
  domestic coals
• Manufacturing the clean solid fuels from
  domestic coals
• Electric power export from large-scale
  coal-based power
• plants to be built on major coal deposits
• Metallurgical coke export from the ovens to be
  installed
• on coking coal deposits

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Carbon Dioxide Emissions
United States 6,049,435 (22.2) China and
Taiwan 5,010,170 (18.4) European
Union 4,001,222 (14.7) Russia
1,524,993 (5.6) India 1,342,962 (4.9) Jap
an 1,257,963 (4.6) Germany
860,522 (3.1) Mongolia 8,553
(lt0.1) (97th )
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Primary Energy Sources
Coal Most electricity (95 in 2008) is generated
from coal-fired power plants. In 2008, more than
80 of coal consumed was used to generate
electricity.
Petroleum In Mongolia, the petroleum is
totally consumed as fuel for cars, buses,
trucks, airplanes and locomotives (in the form of
gasoline, diesel and jet fuel).
Renewable energy Renewable energy accounted for
more than 3 of the domestically produced energy
used in Mongolia. The Mongolias
hydroelectric plants produce 28.3 MW, making the
largest contribution to the countrys renewable
energy.