New King Coal
Paul Moore takes a look at the positive general coal mining and coal demand trends globally; some key developments in the coal equipment supply area; then homes in on four coal hotspots where a number of new projects are underway or in development: Mozambique, Mongolia, Kazakhstan and Indonesia
The global statistics for coal in 2010, published by the World Energy Council and also appearing in BP’s 2011 Statistical Review of World Energy, show a marked boost in production from 2009. The top five producing countries – China, the USA, Australia, India and Indonesia saw productionincreases of 9%, 2.1%, 2.9%, 2.5% and 19.4% respectively. The global production total increased from 6880.8 Mt to 7273.3 Mt, an increase of 6.3% on 2009. By global region, Asia-Pacific accounted for 67.2% of production; North America 15.9%; Europe & Eurasia 11.5%; and Africa 3.5%.
In consumption terms, coal usage grew by 7.6% in 2010, the fastest global growth since 2003. Coal now accounts for 29.6% of global energy consumption, up from 25.6% 10 years ago – a clear indicator that its perceived decline as a dwindling fossil fuel is far from true, and that the majority of countries with significant coal reserves are factoring coal-fired power generation into their energy mix for the long term. In addition, metallurgical coal demand is being driven by record steel production –according to the World Steel Association, total world steel production was 1,413.5 Mt in 2010, up from 1,230.9 Mt in 2009.
China as always is a major factor, with Chinese coal consumption growing by 10.1% between 2009 and 2010; China in 2010 consumed 48.2% of the world’s coal and accounted for nearly two-thirds of global consumption growth. But consumption growth was robust elsewhere as well with OECD consumption growing by 5.2%, the strongest growth since 1979, with strong growth in all regions.
Aside from those mentioned and others such as Colombia, Poland and Canada; new countries in emerging markets are also coming into play in coal production. Activity in Mongolia is rapidly ramping up, through new players such as SouthGobi Resources but also through expansion plans by established stateowned producers. Vale is not the only player active in Mozambique, with a number of other projects being advanced; making it one of the leading countries in terms of relative levels of coal mining investment for its size. The growth in Indonesian coal production really has been remarkable, almost 20% in only a year.
Mongolia
Like Indonesia, Mongoia has an eviable position given the quality of its coal reserves and its positon adjacent to China, the world’s largest consumer. Mongolia’s coal production doubled last year to 25 Mt to become the nation’s top export earner, ahead of its copper and fluorspar industries and spurring the government to push through development of mines.
SouthGobi Resources is the leading publicly listed producer with the Ovoot Tolgoi mine, some 40 km from the Chinese border. It mainly produces metallurgical coal, and from start-up in late 2008 to end-2010 it sold 4 Mt, with 2.5 Mt produced in 2010. The mine now operates a fleet of two Liebherr 996 and one Liebherr R9250 hydraulic excavators, with five Terex NHL (North Hauler) 218 t 4400AC trucks and a fleet of smaller Terex TR100 trucks. There is also a project below the mine called Ovoot Tolgoi Underground, which extends down to 600 m and is included in the current mining licence.
The company has also just announced that the Mineral Resource Authority of Mongolia (MRAM) has issued a mining licence for its wholly-owned Mongolian operating subsidiary SouthGobi Sands LLC. The new license pertains to a resource previously disclosed by the company under NI 43-101 standards as the Soumber Deposit. The Soumber Deposit is approximately 20 km east of Ovoot Tolgoi. An independent NI 43-101 resource estimate for Soumber was prepared in January 2011 by Minarco-MineConsult, which estimated 61.4 Mt of measured and indicated resources and 65.8 Mt of inferred resources. The coal resources are classified as bituminous coal and the rank ranges from low-volatile bituminous coal to medium-volatile bituminous coal, based on ASTM standard D388. Calorific values range between 5,000 kilocalories per kilogram to 7,800 kilocalories per kilogram. The new 10,992.92 ha mining licence is granted for an initial term of 30 years with an option for two 20-year extensions. SouthGobi plans to complete a Pre-Feasibility Study on Soumber and include the inaugural reserve report when it updates resources and reserves during 2012.
Lucky Strike Resources has retained Norwest in Salt Lake City to prepare an NI 43-101 compliant Technical Report on its 80% owned CN Coal Properties covering six mining exploration licenses located within the Choir-Nyalga coal basin of central Mongolia. The CN Coal Properties are contiguous, comprise an aggregate area of 13,096 ha and are located approximately 170 km from the Trans-Mongolian Railway.
Norwest has been engaged to provide a preliminary assessment of the reportable coal resource estimates based on the results of a 2,000 m exploration drill program supervised by Norwest in 2009 on three of the six CN coal properties. This data has not previously been interpreted.
Hunnu Coal, listed in Australia, has announced that the Mineral Authority of Mongolia has granted it a mining licence for the Tsant Uul Project, covering a total area of 69,233 ha. The company is targeting commencement of mining in the last quarter of 2011 and an initial production of 1.5 Mt of coal in 2012 and 3 Mt in 2013. The owner operator mining fleet is currently being purchased with initial purchases including six Caterpillar 773 trucks and a Hitachi EX1200 excavator. Exploration and development drilling now totals 56,101 m of diamond drill core and RC since discovery of the Tsant Uul Deposit in the middle of 2010. A study for a coal haulage access road from the Tsant Uul mine site to the existing coal haulage road has been completed and is currently under a government approval process. The Tsant Uul Project mining licence has been granted for an initial term of 30 years with an option for twenty years extension twice, providing a total of 70 years of mining operations.
Tsant Uul Project is located in the South Gobi Coal Province of southern Mongolia, approximately 40 km to the south of the giant Tavan Tolgoi coking coal deposit. The Tsant Uul Project has a current JORC compliant resource of 90 Mt, with 61 Mt in the Measured and Indicated categories.
The two largest mines in the country, Baganuur and Shivee-Ovoo, are majority stateowned. Initially founded as Shivee Ovoo Mine in 1990, Shivee Ovoo JSC is the second largest coal producer in Mongolia. The company mines brown, sub-bituminous coal with a high moisture content. The Shivee Ovoo brown coal deposit is located 260 km south-east of Ulaanbaatar in Shivee Gobi Soum, Gobisumber Province, beside the Trans-Mongolia railway line. Shivee Ovoo JSC mined 1,767.2 Mt of coal, sold 1,671.1 Mt and removed 6,247.1 million ha of overburden in 2010.
Baganuur JSC operates the largest open pit coal mine in Mongolia, which satisfies 50% of Mongolia’s total coal demand and 70% of the coal demand of the Central region. The Baganuur mine is located 139 km from Ulaanbaatar and has the capacity to extract 3 Mt of brown coal annually. As one of the three large coal mines in Mongolia, Baganuur along with Shivee Ovoo provides most of the coal used by the five combined heat and power plants in Ulaanbaatar, Darkhan, and Erdenet as well as by the country’s main industries and small consumers.
It was recently announced that China Shenhua Energy, Peabody Energy and a Russian-Mongolian group had been picked to develop Tavan Tolgoi, potentially the world’s largest untapped coking coal reserve. The reports quoting a Mongolian government statement said that a Shenhua-led group will get a 40% share in the project, while Peabody will hold 24% and the Russian- Mongolian venture 36%. However, there have been conflicting reports since that additional talks are ongoing, as Mongolia apparently picked a newly formed Russian-Mongolia consortium and excluded Korean and Japanese firms. The head of state-owned Erdenes MGL, which owns the Tavan Tolgoi deposit, said talks were still continuing.
The first module of the Coal Handling and Preparation Plant (CHPP) at Energy Resources’ Ukhaa Khudag (UHG) metallurgical coal mine has recently been successfully commissioned by the State Professional Inspection Authority of Mongolia. The official opening of the CHPP took place on June 11, 2011. Comprised of three processing modules and a single product handling system, the CHPP is the first of its kind in Mongolia and one of the most advanced in Asia. The first module of the CHPP has the capacity to process 5 Mt/y ROM coal.
By processing raw coking coal, it will produce washed coking coal for export with 8-10% ash content as well as thermal coal for the on-site power plant. The design and construction management of the CHPP was undertaken by Australia’s Sedgman, the already mentioned leading player in coal processing and material handling technology. The entire construction process took approximately 11-12 months with the mine owner stating that “comprehensive, effective and fast-paced progress was achieved by adopting international best practices in contracting and construction management.”
The CHPP was designed to maximise the coking coal yield and utilises modern equipment of well-known brands such as McLanahan, Outotec, Ludowici, Decanter USA, FLSmidth Krebs, Xstrata Technology, Sandvik and Eriez Magnetics. The project has involved total of approximately 600 workers from over 20 different contractors and the CHPP will work on a two shift basis employing 96 staff.
The Company has already commenced construction of the second module of the CHPP which will double the processing capacity. The 2nd module is planned to be completed and commissioned by the 4th quarter of 2011.
The process includes two stage dense medium cyclones (DMCs), spirals and flotation circuits. The primary coking coal product will be exported, and the secondary thermal coal product will be used locally. The raw coal will be deslimed at 1.5 mm. Oversized material is fed into the primary DMC. The overflow of the DMC will be dewatered in 1,500 mm centrifuges and will produce coarse coking coal. The underflow of the primary DMC will
report to the secondary DMC. Overflow will be dewatered and thermal coal is produced. The underflow will report to the reject conveyor via the a D/R screen. Underflow of the desliming screen will be classified at 0.25 mm in cyclones and sieve bends. The classified oversize will be separated in spirals. The spiral product will be dewatered in fine coal centrifuges and will report to the coking coal product. Spiral reject will be dewatered on the HF Screen and will report to coarse rejects. Classifying cyclone overflow will be separated in a Jameson Flotation Cell. Flotation concentration will be dewatered in screen bowl centrifuges and will reports to the coking coal product. Flotation tailings will be thickened and pumped to a tailings dam. An Australian electrical installation solutions provider, O’Donnell Griffin, was subcontracted to Sedgman for electrical works on the project. “We’ve done many coal wash plant installations with Sedgman in the past and we have a very strong working relationship. They knew the quality of our work was high and they knew we could immediately provide the level of human resources required, so they came straight to us to run this project.
The high voltage reticulation is complete, the structure is in place, and power has been introduced into the main switchboard,” said Project Manager, Stephen Jago, adding “Mongolia is a new mining hot spot and the local tradesmen don’t quite have the necessary specialised skills yet. Our engineers helped guide the local workers in their day-today tasks, giving them the skills and advice they needed to keep the project running smoothly. The plant is Australian-designed and needed to be built according to stringent specifications, so we needed to show the locals how to rig and wire the installation correctly.”
The global statistics for coal in 2010, published by the World Energy Council and also appearing in BP’s 2011 Statistical Review of World Energy, show a marked boost in production from 2009. The top five producing countries – China, the USA, Australia, India and Indonesia saw productionincreases of 9%, 2.1%, 2.9%, 2.5% and 19.4% respectively. The global production total increased from 6880.8 Mt to 7273.3 Mt, an increase of 6.3% on 2009. By global region, Asia-Pacific accounted for 67.2% of production; North America 15.9%; Europe & Eurasia 11.5%; and Africa 3.5%.
In consumption terms, coal usage grew by 7.6% in 2010, the fastest global growth since 2003. Coal now accounts for 29.6% of global energy consumption, up from 25.6% 10 years ago – a clear indicator that its perceived decline as a dwindling fossil fuel is far from true, and that the majority of countries with significant coal reserves are factoring coal-fired power generation into their energy mix for the long term. In addition, metallurgical coal demand is being driven by record steel production –according to the World Steel Association, total world steel production was 1,413.5 Mt in 2010, up from 1,230.9 Mt in 2009.
China as always is a major factor, with Chinese coal consumption growing by 10.1% between 2009 and 2010; China in 2010 consumed 48.2% of the world’s coal and accounted for nearly two-thirds of global consumption growth. But consumption growth was robust elsewhere as well with OECD consumption growing by 5.2%, the strongest growth since 1979, with strong growth in all regions.
Aside from those mentioned and others such as Colombia, Poland and Canada; new countries in emerging markets are also coming into play in coal production. Activity in Mongolia is rapidly ramping up, through new players such as SouthGobi Resources but also through expansion plans by established stateowned producers. Vale is not the only player active in Mozambique, with a number of other projects being advanced; making it one of the leading countries in terms of relative levels of coal mining investment for its size. The growth in Indonesian coal production really has been remarkable, almost 20% in only a year.
Mongolia
Like Indonesia, Mongoia has an eviable position given the quality of its coal reserves and its positon adjacent to China, the world’s largest consumer. Mongolia’s coal production doubled last year to 25 Mt to become the nation’s top export earner, ahead of its copper and fluorspar industries and spurring the government to push through development of mines.
SouthGobi Resources is the leading publicly listed producer with the Ovoot Tolgoi mine, some 40 km from the Chinese border. It mainly produces metallurgical coal, and from start-up in late 2008 to end-2010 it sold 4 Mt, with 2.5 Mt produced in 2010. The mine now operates a fleet of two Liebherr 996 and one Liebherr R9250 hydraulic excavators, with five Terex NHL (North Hauler) 218 t 4400AC trucks and a fleet of smaller Terex TR100 trucks. There is also a project below the mine called Ovoot Tolgoi Underground, which extends down to 600 m and is included in the current mining licence.
The company has also just announced that the Mineral Resource Authority of Mongolia (MRAM) has issued a mining licence for its wholly-owned Mongolian operating subsidiary SouthGobi Sands LLC. The new license pertains to a resource previously disclosed by the company under NI 43-101 standards as the Soumber Deposit. The Soumber Deposit is approximately 20 km east of Ovoot Tolgoi. An independent NI 43-101 resource estimate for Soumber was prepared in January 2011 by Minarco-MineConsult, which estimated 61.4 Mt of measured and indicated resources and 65.8 Mt of inferred resources. The coal resources are classified as bituminous coal and the rank ranges from low-volatile bituminous coal to medium-volatile bituminous coal, based on ASTM standard D388. Calorific values range between 5,000 kilocalories per kilogram to 7,800 kilocalories per kilogram. The new 10,992.92 ha mining licence is granted for an initial term of 30 years with an option for two 20-year extensions. SouthGobi plans to complete a Pre-Feasibility Study on Soumber and include the inaugural reserve report when it updates resources and reserves during 2012.
Lucky Strike Resources has retained Norwest in Salt Lake City to prepare an NI 43-101 compliant Technical Report on its 80% owned CN Coal Properties covering six mining exploration licenses located within the Choir-Nyalga coal basin of central Mongolia. The CN Coal Properties are contiguous, comprise an aggregate area of 13,096 ha and are located approximately 170 km from the Trans-Mongolian Railway.
Norwest has been engaged to provide a preliminary assessment of the reportable coal resource estimates based on the results of a 2,000 m exploration drill program supervised by Norwest in 2009 on three of the six CN coal properties. This data has not previously been interpreted.
Hunnu Coal, listed in Australia, has announced that the Mineral Authority of Mongolia has granted it a mining licence for the Tsant Uul Project, covering a total area of 69,233 ha. The company is targeting commencement of mining in the last quarter of 2011 and an initial production of 1.5 Mt of coal in 2012 and 3 Mt in 2013. The owner operator mining fleet is currently being purchased with initial purchases including six Caterpillar 773 trucks and a Hitachi EX1200 excavator. Exploration and development drilling now totals 56,101 m of diamond drill core and RC since discovery of the Tsant Uul Deposit in the middle of 2010. A study for a coal haulage access road from the Tsant Uul mine site to the existing coal haulage road has been completed and is currently under a government approval process. The Tsant Uul Project mining licence has been granted for an initial term of 30 years with an option for twenty years extension twice, providing a total of 70 years of mining operations.
Tsant Uul Project is located in the South Gobi Coal Province of southern Mongolia, approximately 40 km to the south of the giant Tavan Tolgoi coking coal deposit. The Tsant Uul Project has a current JORC compliant resource of 90 Mt, with 61 Mt in the Measured and Indicated categories.
The two largest mines in the country, Baganuur and Shivee-Ovoo, are majority stateowned. Initially founded as Shivee Ovoo Mine in 1990, Shivee Ovoo JSC is the second largest coal producer in Mongolia. The company mines brown, sub-bituminous coal with a high moisture content. The Shivee Ovoo brown coal deposit is located 260 km south-east of Ulaanbaatar in Shivee Gobi Soum, Gobisumber Province, beside the Trans-Mongolia railway line. Shivee Ovoo JSC mined 1,767.2 Mt of coal, sold 1,671.1 Mt and removed 6,247.1 million ha of overburden in 2010.
Baganuur JSC operates the largest open pit coal mine in Mongolia, which satisfies 50% of Mongolia’s total coal demand and 70% of the coal demand of the Central region. The Baganuur mine is located 139 km from Ulaanbaatar and has the capacity to extract 3 Mt of brown coal annually. As one of the three large coal mines in Mongolia, Baganuur along with Shivee Ovoo provides most of the coal used by the five combined heat and power plants in Ulaanbaatar, Darkhan, and Erdenet as well as by the country’s main industries and small consumers.
It was recently announced that China Shenhua Energy, Peabody Energy and a Russian-Mongolian group had been picked to develop Tavan Tolgoi, potentially the world’s largest untapped coking coal reserve. The reports quoting a Mongolian government statement said that a Shenhua-led group will get a 40% share in the project, while Peabody will hold 24% and the Russian- Mongolian venture 36%. However, there have been conflicting reports since that additional talks are ongoing, as Mongolia apparently picked a newly formed Russian-Mongolia consortium and excluded Korean and Japanese firms. The head of state-owned Erdenes MGL, which owns the Tavan Tolgoi deposit, said talks were still continuing.
The first module of the Coal Handling and Preparation Plant (CHPP) at Energy Resources’ Ukhaa Khudag (UHG) metallurgical coal mine has recently been successfully commissioned by the State Professional Inspection Authority of Mongolia. The official opening of the CHPP took place on June 11, 2011. Comprised of three processing modules and a single product handling system, the CHPP is the first of its kind in Mongolia and one of the most advanced in Asia. The first module of the CHPP has the capacity to process 5 Mt/y ROM coal.
By processing raw coking coal, it will produce washed coking coal for export with 8-10% ash content as well as thermal coal for the on-site power plant. The design and construction management of the CHPP was undertaken by Australia’s Sedgman, the already mentioned leading player in coal processing and material handling technology. The entire construction process took approximately 11-12 months with the mine owner stating that “comprehensive, effective and fast-paced progress was achieved by adopting international best practices in contracting and construction management.”
The CHPP was designed to maximise the coking coal yield and utilises modern equipment of well-known brands such as McLanahan, Outotec, Ludowici, Decanter USA, FLSmidth Krebs, Xstrata Technology, Sandvik and Eriez Magnetics. The project has involved total of approximately 600 workers from over 20 different contractors and the CHPP will work on a two shift basis employing 96 staff.
The Company has already commenced construction of the second module of the CHPP which will double the processing capacity. The 2nd module is planned to be completed and commissioned by the 4th quarter of 2011.
The process includes two stage dense medium cyclones (DMCs), spirals and flotation circuits. The primary coking coal product will be exported, and the secondary thermal coal product will be used locally. The raw coal will be deslimed at 1.5 mm. Oversized material is fed into the primary DMC. The overflow of the DMC will be dewatered in 1,500 mm centrifuges and will produce coarse coking coal. The underflow of the primary DMC will
report to the secondary DMC. Overflow will be dewatered and thermal coal is produced. The underflow will report to the reject conveyor via the a D/R screen. Underflow of the desliming screen will be classified at 0.25 mm in cyclones and sieve bends. The classified oversize will be separated in spirals. The spiral product will be dewatered in fine coal centrifuges and will report to the coking coal product. Spiral reject will be dewatered on the HF Screen and will report to coarse rejects. Classifying cyclone overflow will be separated in a Jameson Flotation Cell. Flotation concentration will be dewatered in screen bowl centrifuges and will reports to the coking coal product. Flotation tailings will be thickened and pumped to a tailings dam. An Australian electrical installation solutions provider, O’Donnell Griffin, was subcontracted to Sedgman for electrical works on the project. “We’ve done many coal wash plant installations with Sedgman in the past and we have a very strong working relationship. They knew the quality of our work was high and they knew we could immediately provide the level of human resources required, so they came straight to us to run this project.
The high voltage reticulation is complete, the structure is in place, and power has been introduced into the main switchboard,” said Project Manager, Stephen Jago, adding “Mongolia is a new mining hot spot and the local tradesmen don’t quite have the necessary specialised skills yet. Our engineers helped guide the local workers in their day-today tasks, giving them the skills and advice they needed to keep the project running smoothly. The plant is Australian-designed and needed to be built according to stringent specifications, so we needed to show the locals how to rig and wire the installation correctly.”
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