Mongolian Government will provide generous assistance in the building of a coal liquefaction plant

This is an interview with A. Erdenepurev, the Head of the Fuel Strategy Department at the Ministry of Mineral Resources and Energy. Translated from the Undesnii Shuudan newspaper.

-Isn’t it estimated that when a barrel of oil is worth more than USD 100, it is profitable to liquefy coal for gasoline?

-Around seven or eight years ago, the estimation was USD 30, meaning that if the price of one barrel of oil went beyond USD 30, it was economically beneficial. But today, it is time to further advance and improve this formula.

-It seems that liquefying coal in today’s economic situation is beneficial to both the producer and the consumer. What would you say about it?

-Mongolia’s annual gasoline consumption has surpassed 1 million tons. It is estimated that this number will reach 1.5 million tons by 2015. We are supplying this daily-needed of raw material solely through imports.

98% of Mongolian gasoline is dependent on the Russian Rosneft. Of course, every Mongolian is interested in reducing this dependency and beginning to produce gasoline domestically. There are huge opportunities and possibilities for Mongolia in liquefying or gasifying coal. According to the estimation of Mongolian geologists, Mongolia has around 167 billion tons of coal. It is a very large amount and we must turn the raw mineral resources into usable fuel.

-What is the usable reserve out of these 167 billion tons of coal reserve?

-Currently, there are 20 billion tons of known coal reserves in Mongolia. Out of these 20 tons, 6.5 billion is at Tavan Tolgoi. Additionally, there are other coalmines such as in Choir, Nyalgyn, Tsaidam and Tugrug.

The short-term goal of the Ministry of Mineral Resources of Energy is to establish a liquefaction plant for coal extracted from all these mines.

-The raw materials are ready. Consumers just can’t wait for a fresh supply of liquefied coal. Private companies are requesting to build the plant. So what really is the problem?

-We have a serious lack of technology. The whole world is talking about liquefying coal, and do you know how many of them have actually built them? In a testing, laboratory level, developed countries can extract liquid fuel from coal, and our professors and the National University of Mongolia are also doing the same.

But there are so few of them on a large production scale. For example, a few years ago China built a coal liquefaction plant in Inner Mongolia and even today, they have not yet declared how much liquid fuel they are exporting. The Chinese have money, but the problem is technology.

-During the President’s visit to Germany, the two sides have signed a mem
orandum about building a coal liquefaction plant in Mongolia. Tell us more about this.

-The President has held a conference with German delegates on cooperating with each other’s mining, industry, and environmental protection sectors, and signed a cooperation memorandum with the German multinational conglomerate ThyssenKrupp. The memorandum was also signed with its subsidiary, ThyssenKrupp Uhde, on building a coal liquefaction plant in Mongolia.

In addition to cooperation with Germany, we have also made a request to Korea, and Japan has already proposed to build a coal liquefaction plant based in Tavan Tolgoi. We are welcoming the proposal and looking into it.

-What is the participation level of the Mongolian private sector on the establishment of the liquefaction plant?

-There are four companies that have made significant efforts. They are Tsetsens Mining and Energy, Energy Resources, MAK, and Industrial Corporation Mongolia. These companies are interested in bringing in the coal liquefaction technology to Mongolia.

-Why have we chosen German technology specifically?

-It is universally accepted. It is environmentally friendly and they have successfully implemented their technology on a large-scale production, they are trusted. For example, the ThyssenKrupp Uhde has its own patents on coal liquefaction technology. Their technology is also financially beneficial.

-Will the Government build the plant with the assistance of the private sector?

-Yes, the private sector will play a significant role. Throughout the development, they have not just sat there doing nothing; they have made studies, researched the matter, and developed technical and economic assessments of the project. Now the Government will help them realize their objectives, for example, ease taxes when they import equipment and machinery for the plant and also guarantee buyers for their products.

-When will the plant be in operation?

-It is planned that in 3 – 4 years, first of the liquefied coal will be produced. The first year will be entirely dedicated to the technical and economic assessment. An assessment that is being developed under the partnership of MCS, Petrovis, Energy Resources and Industrial Corporation Mongolia is almost ready.

Another assessment by MAK and Tsetsens Mining and Energy is in its final stages.

-Of course, a plant like this, which requires high-end technology, will need a large amount of funding, how will this be solved?

-A project to build a plant of this level will require at least USD 1 – 2 billion dollars. But depending on the overall capacity, they may differ. For example, one of the technical and economic assessments I mentioned above is planning to build a plant with a capacity of 400 – 500 thousand tons of fuel, and the other one will have a capacity 1 million tons of fuel. Mongolia’s GDP is USD 8 billion. The project’s cost will equal to one fourth of our GDP; we will pay careful, close attention to it.

-What other companies are cooperating with Mongolia on this?

-Mongolian MCS and Petrovis have signed partnership memorandum with Siemens, and Tsetsens Mining and Energy have signed agreements with the German Lurgi to purchase coal liquefaction technologies.
-What will be the cost for the mineral territory usage license?

-This is a business secret of the companies involved, so I am not able to disclose this information. The companies themselves, the National Security Council and the Government all have this information.

-Do the above-mentioned companies have sufficient raw material supply, i.e. coal? Will the Government provide assistance to these companies on obtaining coal-mining sites?

-Let’s start with Industrial Corporation Mongolia. This company owns the Tugrug Lake coalmine in Tuv Province. MAK says they will turn to their mine in Aduunchuluun for coal, which has a reserve of 285 million tons. Energy Resources sees that it has over 400 tons of coal available from its Ukhaakhudag, Choir and Nyalgyn mines. Tsetsens Mining and Energy owns Tsaidamnuur and Buurljuut steppe mines in Tuv Province.

These mines have a confirmed reserve of 479 tons of coal, and an estimated reserve of 6.5 billion tons of coal. Estimates show that the coal reserve these companies have is sufficient for the coal liquefaction plant to run smoothly.

-Tell us about the plant’s production capacity. What will be its annual rate of liquefied coal production?

-I will tell you about it based on the technical and economic assessments. In a year, the plant will have the capacity to process 2 – 6 tons of coal, produce 400 – 800 thousand tons of gasoline and fuel, 50 – 100 thousand tons of LPG, 20 – 50 thousand tons of sulfur. Additionally, the plant will be capable of generating 200 – 300 megawatts of electricity.

-What will be the price of the completed products?

-After estimating all the costs, producing one ton of gasoline will cost at USD 600 – 670 dollars, and the cost of 1 ton liquid fuel will be at USD 700 dollars.

-Does it mean that Mongolians will use gasoline that is twice as cheap as we use today?

-We can’t say that exactly. Well, the gasoline we import have an average price of USD 1,100 dollars, so compared to that, it is cheap.

-Since the Government is involved in the whole ordeal, why can’t they set a profit limit for the liquefied coal?
There are no talks on setting such limits. The Government is providing a ton of support and assistance to the private sector on this. For example, the Government makes an agreement with the German side to reduce the license taxation on mineral territories, or reducing customs clearance taxes. There are more I could list. I don’t think the private companies, as they all support social responsibility, will try to sell their product at the same price as Rosneft products.

Comments

  1. The use of renewables for generating power is to be congratulated. The latest coal publications and coal prices says that emerging countries are predicting to use large amounts of thermal coal for power generation and metallurgical coal for steel production.
    Cherry of www.coalportal.com

    ReplyDelete

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