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Coaltrans China Beijing. Mongolian Coal Resources Complement to China’s Inner Mongolia & Rise of Inner Mongolia Energy Base. Yijun Chang Chairman, Shanxi Fenwei Energy Consulting Co., Ltd. April 20 2009. Agenda. 1. Coal Resources in Mongolia 2. Coal R esources in China’s Inner Mongolia
Mongolian Coal Resources Complement to China’s Inner Mongolia &
Rise of Inner Mongolia Energy Base
Chairman, Shanxi Fenwei Energy Consulting Co., Ltd.
April 20 2009
1. Coal Resources in Mongolia
2. Coal Resources in China’s Inner Mongolia
3. Mongolian Coal Resources Complement to China’s 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
1. Coal Resources in Mongolia
Sketch of Tectonic Structure in Mongolia and China
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
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
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 IMAR’s coal. Most coal seams are featured by good washbility, low sulfur and low phosphor.
Degree of Metamorphism Increasing
2. Coal Resource in China’s IMAR
1. Accumulative proven coal reserves reach 701.6 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.
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.
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.
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 IMAR’s 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.
3. Mongolian Coal Resources Complement to IMAR and Comparison
What degree is that Mongolian premium coking coal to improve the using value of IMAR’s coal?
Let’s see following comparison of coal quality
A. Resources and Coal Types of Mongolia and IMAR
IMAR’s proven coal reserves rank first in China. From the map below, we can see that Mongolian coal resource is bigger than IMAR’s. 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 IMAR’s coal resource, which guarantee the strategic development and competitiveness of IMAR’s coking industry. It lays good foundation for IMAR and Mongolia to become the coking coal supply for China and even in the world.
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.
5. Comparison of quality of main coking coal in Mongolia and IMAR
4. Interdependent Development of Mongolia and IMAR, and Rise of IMAR Energy Base
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.
Mongolia intends to build a rail line from Tavan Tolgoi to Ganqimaodao.
China plans to build more railways in IMAR.
Support coal mining
Drive coal production
Coking coal demand
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.
Guarantee resource for IMAR
Premium coking coal resources
IMAR, as a channel for cooperation between China and Mongolia, will be the biggest beneficiary. The development of Mongolian coal industry will further improve IMAR’s 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 China’s 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.
Complement of coal resources
Economic and politic promotion
Rise of IMAR Energy Base
Improvement of logistics
Interdependent development of coal industry and industrial chains
Mongolian’s resources support China’s growing coal demand
5. IMAR to Replace Shanxi to Become Largest Energy Base in China
1. Shanxi is China’s traditional coal producing base and exporting province.
2. Precondition for rise of IMAR coal base is the shrink of Shanxi coal base.
Comparison of coal production
Rapid and Large-scale Mine Construction
Newly operated capacity is 30.9mt in 2009; newly built capacity is 63.5mt in 2009. Total production capacity of coal to reach 600mt in 2010.
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 2010.
Heavy Historical Problems
50% coal production from local mines. Government’s consolidation measures are facing challenges in technology, law, and benefit conflicts.
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.
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 can’t be ensured in production.
CAGR of Coal Productions (2002-2008)
IMAR 20.4% reach 35% in recent years
Projection of Coal Production (million tonnes)
2010 2015 2020
IMAR 600 800 1,000
Shanxi 500 600 800
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.
B. Rapid Growth of Coke Capacity to Change China’s Coke Industrial Layout
Comparison of coke productions in IMAR and Shanxi
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 2008. Shanxi coking coal prices have been higher than that in surrounding areas which has affected the competitiveness and market share of Shanxi coke.
Output and Quality Improvement Relies on Mongolia’s 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.
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, China’s coking coal import has been increasing month by month this year.
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