Coal Gasification Opportunities for Mongolia

Given Mongolia’s fast-growing economy, the country is seeking ways take advantages of its vast coal resources to increase energy independence. Emerson’s Douglas Morris, a member of the alternative energy industry team, shares his perspectives from a recent conference held there.

Emerson's Douglas MorrisI had the opportunity this week to attend the North American Mongolian Business Council (NAMBC) in Ulaanbaatar. This is a gathering of investors, Mongolian government leaders, Canadian and American embassy officials, along with leaders from the country’s leading companies. This forum provided a rather complete picture of the challenges faced and successes had in Mongolia, the fastest growing economy in the world.

My participation in the event was on behalf of the Gasification Technologies Council based in the United States. Along with others in the industry who support coal gasification, we presented a comprehensive picture of the benefits and challenges when developing coal gasification, which is gaining interest as Mongolia holds very large reserves of high quality coal it the South Gobi desert area.

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Mongolia is landlocked and receives nearly 100% of its oil and gas from Russia, so like other countries, it is looking to gain some amount of energy independence, particularly as it grows and urbanizes. The vast coal resource within the country certainly presents a good opportunity to provide enough fuel to support its entire population of about 2.5 million.

The allure of gasification to produce transportation fuels has several companies looking at development, including one, MAK, who is engaged in preliminary engineering with an EPC. Will it happen? Right now, it’s a cloudy future because of the uncertainty around the country’s investment rules. The flagship example of foreign direct investment (FDI) is the Oyu Tolgoi mine, which brought in $6B of FDI, primarily from Rio Tinto.

Very recently, the government of Mongolia attempted to renegotiate its investment agreement with Rio Tinto, signed in 2009, which sent strong signals of uncertainty through the investment world and now the inflow of FDI has suffered. Until this uncertainty is resolved, it is unlikely that the outside capital required will find its way into the country to support coal gasification development.

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