Peabody Energy Explores Coal Resource in Inner Mongolia

Peabody Energy has entered into an agreement with the government of Inner Mongolia and other Chinese partners to explore development opportunities for a large surface mine and downstream coal gasification facility that would produce methanol, chemicals or fuel products. The majority of coal from the mine would be dedicated for fuel supply to the coal conversion plant.

The agreement was signed in early October in St. Louis with the Inner Mongolia Jitong Railway Group Limited Co., the People’s Government of Inner Mongolia Autonomous Region and the Administrative Office of Xilinguole Region.

The project is expected to have an annual capacity of at least 1.2 million mt of methanol or equivalent fuel and chemical production, and is being planned for the Xilinguole League. In the coming months, the companies will begin a feasibility study to examine the potential for the project. Peabody is also continuing discussions with major global chemical companies as project partners. The major open-cut mine would be located on coal resources that, subject to additional confirmatory drilling, could total up to 3 billion mt.

“Eastern Inner Mongolia, with total coal reserves of 210 billion mt, one fifth of the probable reserves in Inner Mongolia, is one of the large-scale bases in the 11th Five-Year Plan of China Coal Industry Development,” said Su Nan, vice chairman of the board for Inner Mongolia Jitong Railway Group. “Jitong Group has made a commitment to the construction and operation of the railway network of Eastern Inner Mongolia. To accelerate energy development and railway network construction in this region, we will put all our efforts into our partnership with Peabody to build an advanced large-scale open-cut mine and down stream coal-chemical project in China, and make full use of our railway resources while being aligned with the Chinese government policies.”

Inner Mongolia has a vast reserve base and is China’s fastest-growing coal region, expected to increase annual production more than 40% over the next three years, with coal seams ranging from 25 to 175 m in height near the potential mine. Many of the region’s deposits are suitable for large-scale surface mining projects.

Jitong Railway Group is a joint venture railway company established by the Ministry of Railway of the Chinese Government, Inner Mongolia Government and North United Power, which owns four rail lines across Inner Mongolia.

As featured in Womp 08 Vol 8 - www.womp-int.com