Coal Age

SEP 2013

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kazakhstan coal continued Coal Mining is Highly Consolidated There are 33 companies currently mining coal in Kazakhstan, the largest of which are: LLP Bogatyr Access Komir, JSC ECE, " 2008 Production Consumption —Power Generation —Residential Exports 2012 2013 2014 2015 2020 108 84 48 12 24 121 97 63 12 22 126 98 64 13 22 134 107 72 13 26 139 110 75 13 32 159 121 84 15 36 2012, the production of the mine was 40 million mt of coal. Together with the neighboring Severnyi mine, the oldest mine in the Ekibastuz coal basin, they hold reserves estimated at 4.5 billion mt, which at current production rates would give them a mine life of more than 100 years. million mt in 2015 to 6 million mt in 2020. The level of coking coal mining will grow more rapidly than the level of mining in the coal industry in general. At the same time, the mining of coking coal will be characterized by the steadily growing level of efficiency — at least in the case of the already operating producers. Coking Coal Will be Developed Mostly Rapidly Future Investment Meanwhile, the demand for coking coal during the coming years will rise very rapidly. By 2020, Kazakhstan could be producing 27 million mt compared to the current 16-million-mt level. As of now, there are only two companies producing great amounts of coking coal, ArcelorMittal (Temirtau mine) and the Association Hephaestus, both located in the Karaganda coal basin. The Temirtau, which annually produced about 16 to 17 million mt of coal dominates the market. A recent statement by ArcerloMittal said Currently all of the large coal miners of Kazakhstan have plans for further investments and business development in coming years. In particular, Bogatyr Access Komir continues to re-equip all of its production facilities. The company has allocated funds to purchase new equipment. It almost prepared the transition to the new auto-conveyor technology for its main production assets. This project is supported by the state and it will increase the capacity of the Bogatyr mine from 42 million mtpy of coal to 50 million mtpy in 2015. We have full clarity on the prospects for the coal industry in Kazakhstan to 2020 and the development of our company until 2017. — Victor Schukin, CEO Bogatyr JSC Shubarkol, Company Borly (belonging to the copper mining group Kazakhmys), LLP Maikuben West and JSC ArcerlorMittal Temirtau. Most of them (with the exception of Bogatyr Accesss Komir) are mining coal for coal-fired power plants or steel mills owned by large multinational companies. They account for more that 90% of the total coal mining in the country. Bogatyr Access Komir owns the Bogatyr mine near the Ekibastuz in the Pavlodar province. With an output of 56.8 million mt of coal in 1985, the Bogatyr mine entered the Guinness Book of World Records for being the world's largest single coal mine. Since then, this level of production has not been sustained, and in September 2013 Table 1—Coal Production & Consumption in Kazakhstan (million metric tons) that production from Temirtau will not likely increase. With a recovery in demand for coking coal from metallurgical plants in the Russian Federation, production from the Karaganda basin could rise as high as 25-27 million mtpy by 2020. To solve this problem, several new mines are on the drawing board: Dolinskaya-Oblique, Abai-Oblique and Tentekskaya Dubovskaja, which should be launched after 2013. Together these three mines will boost the level of mining of coking coal by 6.3 million mtpy. They have all been implemented in the form of privatepublic partnerships with the strong financial support of the state. At the same time, the Association Hephaestus forecast the rise in the level of production from 2.35 " of the electricity produced in Kazakhstan," said Issekeshev. "By 2030, the share of electricity from coal-fired power plants will still be 75%. From 2020, coal mining will begin in the Turgay basin, which will boost the level of mining by 10 million mtpy. Projected volume of mining by 2030 will be 155 million mt. The total investment in the coal industry over the next decade will amount to $4 billion." At present, coal is mined in the Karaganda, Ekibastuz and Maykubinsky, basins, as well as Kushokinskoe, Borlinskoe, Shubarkol, Karazhyrinskoe fields and several small deposits in different regions of Kazakhstan, where the small amounts of coal are mined for local needs. Thus, a large part of the reserves are concentrated in central Karaganda, Pavlodar and Kostanai. The Kazakhstan government considers increasing coal exports to be very important. The representatives of the Ministry of Energy recently reported that by 2015 the country should boost the level of export to 32 million mt, almost by 10 million mt more than current levels. Kazakhstan would be selling coal in a region that is competitively dominated by Russian coal companies. In addition to new hydraulic shovels and haul trucks, the Bogatyr mine will also see new crushers, conveyors, a blending system with the warehouse with the designed capacity of nearly a 600,000-mt loading complex, which will provide a reduction in the turnover of cars by three times, from the current 15 hours to 5 hours. In total, the modernization of the largest mine in the country will cost nearly KZT 45bn ($29 million). Using market pacts with Russia, Belarus and Kazakhstan, Bogatyr Access Komir will gain more opportunities to supply coal to the Russian market."We have full clarity on the prospects for the coal industry in Kazakhstan to 2020 and the development of our company until 41

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