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1 Mongolian Coal Resources Complement to Chinas Inner Mongolia & Rise of Inner Mongolia Energy Base Yijun Chang Chairman, Shanxi Fenwei Energy Consulting.

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Presentation on theme: "1 Mongolian Coal Resources Complement to Chinas Inner Mongolia & Rise of Inner Mongolia Energy Base Yijun Chang Chairman, Shanxi Fenwei Energy Consulting."— Presentation transcript:

1 1 Mongolian Coal Resources Complement to Chinas Inner Mongolia & Rise of Inner Mongolia Energy Base Yijun Chang Chairman, Shanxi Fenwei Energy Consulting Co., Ltd. April Coaltrans China Beijing

2 2 Agenda 1. Coal Resources in Mongolia 2. Coal R esources in Chinas Inner Mongolia 3. Mongolian Coal Resources Complement to Chinas IMAR & Their Comparison 4. Interdependent Development of Mongolia and IMAR and Rise of IMAR Energy Base 5. IMAR will Replace Shanxi to Become the Largest Energy Base in China

3 3 1. Coal Resources in Mongolia Coaltrans China Beijing

4 4 1.Coal formation in Mongolia was controlled by Siberia Plate. In Carboniferous Age, Mongolia was still in marine environment when coal was depositing in North China. 2.At the beginning of Permian, Altai Mountain began to uplift and marine environment subsided from west to east. 3.Later, good coal-forming environment was formed from west to east with coal bearing strata of Permian, Jurassic, Craterous and Paleogene in turn geographically. 4.During Alpine Tectonic Movement (namely Himalayan Movement), Altai fold uplifted which made coal seams buried shallowly, thick, and stably distributed that are suitable for opencast mining. Sketch of Tectonic Structure in Mongolia and China A. Coal-Forming Ages and Characteristics in Mongolia

5 5 1. Resources up to 152 billion tonnes, ranking top 15 globally. 2. Main coal formation ages: Carboniferous-Permian, Jurassic, Craterous and Tertiary. 3. Thick coal seams formed in all ages, but lots of partings and sub-seams. That reflected a relative stable inland coal-forming environment. 4. Generally shallow buried and good mining conditions; It is one of resourceful areas that are most suitable for surface mining. Coal-bearing Strata in Mongolia

6 6 B. Coal Type, Quality and Characteristics in Mongolia 1. Rich coking coal resources, accounting ~35% of total coal resources in Mongolia. One of areas with most abundant coking coal reserves and full coking coal types 2. Metamorphic degree becomes higher southwestwardly in same geological age 3. Better washibility than IMARs coal. Most coal seams are featured by good washbility, low sulfur and low phosphor. Mongolian coal type is primarily influenced by plutonic metamorphism. Degree of metamorphism depends on coal-forming ages. With regular distribution of coal-forming ages, coal types are also distributed regularly: coking coal in west and central south parts, steam coal in central part, and lignite in eastern part. Due to pile-up effect of dynamic metamorphism of Altai fold belt, the metamorphism of coal measure in same age is rising from east to west. For instance, Carboniferous coking coal is JM and 1/3JM in central south part but JM, SM, and PM in western part. Most coal is of low ash, low sulfur, and low phosphors. Most coking coal is easy to be washed and has great potential for future use. It is significant to complement and improve coking coal in Inner Mongolia and Xinjiang. Distribution of Coal Type in Mongolia Degree of Metamorphism Increasing

7 7 2. Coal Resource in Chinas IMAR Coaltrans China Beijing

8 8 1. Accumulative proven coal reserves reach billion tonnes, ranking first in China. 2. Similar coal forming ages with Mongolia 3. Few Carboniferous-Permian coal resources, large quantity of Jurassic and Craterous resources. 4.. Similar coal-forming environment with Mongolia but thinner coal seams. A. Coal-Forming Ages and Characteristics in IMAR Southern IMAR is located at plateau section in north of North China Plate. Carboniferous-Permian is at the edge of North China Coal-Bearing Region. During Jurassic, Ordos Basin was formed. Therefore, this area was reserved with few Carboniferous-Permian coal and rich Jurassic steam coal. IMAR is located at the boundary of Siberia and North China Plates. Marin environment lasted rather long in most IMAR. It uplifted to land in Triassic and marine environment gradually subsides eastwardly. Therefore, Faulted Basin Groups were formed in Tianshan-Yinshan structure zone and middle, north and east parts where Craterous and Triassic lignite dominated.

9 9 B. Coal Type, Quality and Characteristics in IMAR 1. IMAR is rich in coal resources but most of them are steam coal. Rich lignite is beneficial for coal gasification, liquefaction and development of related industrial chain. However, the shortage of coking coal resources will influence the comprehensive competitiveness of IMARs coal resources. 2. Coking coal is the superimposed result of two factors: plutonic metamorphism and local structure. The typical characteristic is the metamorphism degree becomes lower as coal ages become newer. In Wuhai, the ground stress of Helanshan Fault Zone transformed to heat energy which caused high temperature and high pressure locally, and caused the metamorphism degree rising in surrounding areas and formed JM and even anthracite. 3. Most coal in IMAR is difficult to be washed and its content of sulfur and phosphor are higher than that of Mongolian coal.

10 10 3. Mongolian Coal Resources Complement to IMAR and Comparison Coaltrans China Beijing

11 11 What degree is that Mongolian premium coking coal to improve the using value of IMARs coal? Lets see following comparison of coal quality A. Resources and Coal Types of Mongolia and IMAR IMARs proven coal reserves rank first in China. From the map below, we can see that Mongolian coal resource is bigger than IMARs. Mongolia and IMAR is one of the areas that are most abundant with coal resources in the world. Meanwhile, we can find that rich coking coal resources in Mongolia greatly complement to IMARs coal resource, which guarantee the strategic development and competitiveness of IMARs coking industry. It lays good foundation for IMAR and Mongolia to become the coking coal supply for China and even in the world.

12 12 B. Complement of Mongolian Coal to IMAR and Comparison 1. Mongolian premium coking coal complement to IMAR and greatly ascend value of IMARs coal. 2. Guarantee strategic development and competitiveness of coking chains in IMAR. 3.Mongolia coking coal provide strategic support and guarantee to China and even world. 4.Comparison of coking coal resources in Mongolia and IMAR (billion tonnes) Coal Resources Of which: Lignite Bituminous (Steam coal) Coking coalAnthracite Mongolia IMAR Note: Mongolian coal resources refer to those has been conducted geological survey. The resources by coal type are estimated based on coal-forming ages. Just for reference. The coal resources of IMAR are proven.

13 13 AreaAsh % Volatile Matter % Sulfur %WashbilityMake coke independently IMAR Wuhai Difficult to wash Generally hard to produce premium metallurgical coke above grade 1. Coke produced fail to satisfy modern large blast furnace. Baotou ~0.9 Difficult to wash Mongolia Central South 11.2~ ~0.7 Mostly easy to wash Can produce Grade 1 met coke or better coke or foundry coke. Coke produced can satisfy modern large blast furnace. West10.9~ ~ ~0.6 Mostly easy to wash Available product by rational blending < Comparison of quality of main coking coal in Mongolia and IMAR B. Complement of Mongolian Coal to IMAR and Comparison

14 14 4. Interdependent Development of Mongolia and IMAR, and Rise of IMAR Energy Base Coaltrans China Beijing

15 15 China and Mongolia declared to develop good-neighbor trust partnership in 2003 and signed the Outline for Mid-Long Term Economic and Trading Cooperation between China and Mongolia in China invested USD1181 million in Mongolia in 2007, about 51.3% of total foreign investment in Mongolia and the largest investor in Mongolia. A. Politics and Economics

16 16 1. Status Both road and railway infrastructures are poor in Mongolia. Only one trunk railway and four branch lines existing currently. Annual cargo capacity of railway is about 20mt. 2. Plan Mongolia intends to build a rail line from Tavan Tolgoi to Ganqimaodao. China plans to build more railways in IMAR. B. Logistics

17 17 Technology Equipment Coking coal demand Premium coking coal resources CHINA MONGOLIA Support coal mining Drive coal production Guarantee resource for IMAR C. Interdependent Development Coal Industries in IMAR and Mongolia With decades of coal development, China is at or near the world level in coal mining, processing and utilization. China is competitive enough on aspects of technology, equipment, worker and organization. Plus its advantages in location, market and culture similarity, China will play an important role in Mongolian coal development. Without participation of China, Mongolian coal development and western investors are hard to obtain desired achievements. IMAR, as a channel for cooperation between China and Mongolia, will be the biggest beneficiary. The development of Mongolian coal industry will further improve IMARs coal products, industrial chain and competitiveness and greatly promote the strategic position of IMAR in Chinese energy development. Complementary resources and interactive development between Mongolia and Chinas IMAR provide sufficient and necessary conditions for rise of IMAR energy base. In near future, we will see that IMAR will surpass Shanxi to become the most important energy base in China.

18 18 Complement of coal resources Rise of IMAR Energy Base D. Adequate Conditions for Rise of IMAR Energy Base Economic and politic promotion Improvement of logistics Interdependent development of coal industry and industrial chains Mongolians resources support Chinas growing coal demand

19 19 5. IMAR to Replace Shanxi to Become Largest Energy Base in China Coaltrans China Beijing

20 20 1. Shanxi is Chinas traditional coal producing base and exporting province. 2. Precondition for rise of IMAR coal base is the shrink of Shanxi coal base. Why compare IMAR with Shanxi? Lets compare IMAR and Shanxi in following aspects: 1.Coal output and future trend 2.Coke industrial chain and development trend 3.Coal to oil industrial chain 4.Comprehensive competiveness

21 21 Quickly Improved Construction Requirements New mine >1.2mtpa; opencast >3mtpa 30% of coal has to be transferred locally for new mines Not approve projects of heavy pollution and big water consumption Active Government, Open Policy Actively encourage foreign or other provinces enterprises to take part in coal development. Enterprises are dominated by enterprises which is favorable for improving management level and safety conditions. Rapid and Large-scale Mine Construction Newly operated capacity is 30.9mt in 2009; newly built capacity is 63.5mt in Total production capacity of coal to reach 600mt in IMAR Heavy Historical Problems 50% coal production from local mines. Governments consolidation measures are facing challenges in technology, law, and benefit conflicts. Conservative Government and Policy Discourage foreign or other provinces enterprises to be involved in coal development in Shanxi. Enterprises are dominated by government. Without normal production order. Safety cant be ensured in production. Closing Mines and Limiting Output to Rise Price Basic policy is closing or consolidating local mines to reduce numbers. Actual coal output to be 500mt in Shanxi Comparison of coal production A. IMAR will Surpass Shanxi to Become Largest Coal Producer

22 22 Projection of Coal Production (million tonnes) IMAR ,000 Shanxi IMAR will surpass Shanxi on coal output this year and on coal production capacity within three to five years, and will become the largest coal producer in China. A. IMAR will Surpass Shanxi to Become Largest Coal Producer CAGR of Coal Productions ( ) IMAR20.4%reach 35% in recent years Shanxi10.4%

23 23 Output and Quality Improvement Relies on Mongolias Coking Coal With few coking coal resources and poor qualities, IMAR can rely on Mongolian abundant and premium coking coal resources to develop its coke industry and improve coke quality. Increasing Coke Plants, Swiftly Expanding Coke Capacity Most coke enterprises are in Wuhai where 7 new coke plants about 1mtpa will come on line in Coke production capacity has been increasing that will reach 20mt in 2009, up 53.8% over 2008 IMAR Reducing coking coal supply Shanxi carries out closing mines and limiting production to rise price for years. Most coking coal supply is from local mines in Shanxi. However, lots of mines in such cities as Linfen have been closed in past two years or are hard to produce normally in next few years. It causes Shanxi coke enterprises hard to produce and also affects coking coal supply to other important coke base such as Hebei. Therefore, Chinas coking coal import has been increasing month by month this year. Output Limited and Market Share Reduced by Limiting Output to Rise Price Policy The percentage of Shanxi coke production reduced from 32% in 2004 to 25% in Shanxi coking coal prices have been higher than that in surrounding areas which has affected the competitiveness and market share of Shanxi coke. Shanxi B. Rapid Growth of Coke Capacity to Change Chinas Coke Industrial Layout Comparison of coke productions in IMAR and Shanxi

24 24 1.IMAR rich in lignite resources that is about 77.6% of Chinas total lignite resources. 2.With shallow buried depth and thick coal seam, coal production cost much lower than that in other provinces 3.Reliable coal liquefaction technology and competitive in coal to oil 4.Industrial production of coal to oil started up: Shenhua direct coal to oil (1mtpa) has tried production successfully; Shenhua indirect coal to oil (0.18mtpa) to try production in 2010; Yitai indirect coal to oil (0.16mtpa) has tried production successfully. 5.IMAR expected to be the first to succeed technologically and economically and become producing base of oil alternative energy C. IMAR to be base for energy sources alternative to oil

25 25 ItemShanxiIMAR ResourceAdvantages in coal typesReserve ranks first in ChinaBetterSame CapacityBig base, slow growthSmall base, rapid growthBetterSame Output Basic guideline is limiting output to rise price Quick and large-scale mine constructionBetterWorse TechnologyStrong backgroundDevelop rapidlyBetterSame WaterComparatively adequateComparatively shortBetter Environment Harmoniousness Lot of problemsEasy for high-level managementBetterSame Industrial ChainHigh ratio of local transferringGrow swiftly with big potentialBetter ProductExcellentHas to coordinate with MongoliaBetterWorse CostLow transport cost, high additional cost Low production cost, accelerated improvement of transportation BetterWorse Administration Official responsibility-ascertained system replaces professional management which causes accidents and high cost With strong motive to develop, the government widely absorb all kinds of resources to develop its coal industry Worse Comprehensive By 2020, IMAR will surpass Shanxi on the comprehensive competitiveness of coal industry. SX:IMAR 10 : 1 SX:IMAR 2 : 4 D. Comparison of Competitiveness of Shanxi and IMAR Coal Industries

26 26 Thank You Organized in 1998, Fenwei is one of the premier energy consulting companies in China with a high degree of expertise and experience in Chinas coal industry. The scope of services ranges from field investigations, evaluations of coal resources, feasibility and market studies, pilot plan and commercialization of technology, environmental impact and assessment. ADD: 8/F, Shanxi World Trade Tower A, 111 Changzhi Road, Taiyuan, Shanxi Province Tel: Fax:

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