Kazakhstan produces over 100 million tons of coal annually, but only 3% of it is processed and the rest is burned in furnaces to generate electricity and heat or exported. However, this resource can be a valuable raw material to produce high value-added products that would generate revenues of tens of billions of dollars a year.
The 2020s could be the dawn of the processing industry in Kazakhstan. The launch in 2022 of a polypropylene plant with a capacity of 500,000 tons of products per year could provide an impetus for this. National company KazMunaiGas announced plans to implement several other oil and gas chemical projects. Construction of a large polyethylene plant started this year. Yes, polypropylene and polyethylene are still raw materials to produce end products, but further development of the processing sector is within the reach of small and medium-sized businesses.
Another area where there are points for growth of the processing industry is coal chemistry. The Republic has significant coal reserves, which at the current rate of extraction will be enough for 250 years. The coal processing sector in the country is at a very low level (we produce only coke from it), although coal can be a raw material to produce the same plastic, fertilizers and even automotive fuel.
In his annual address in 2023, President Kasym-Jomart Tokayev mentioned coal chemistry as one of the areas to be focused on. This means that the coal processing industry will become one of the priorities for the state.
What projects in the coal chemical industry can be realized in Kazakhstan? What does business offer today? How much is the realization of such production facilities estimated to cost?
Making gas out of coal…
This year the main topic of the annual coal industry forum was the development of the coal chemical industry. Scientists, businessmen and specialists shared their vision of this new sphere.
Bolat Ermagambet, Doctor of Chemical Sciences, Director of the Institute of Coal Chemistry and Technology (Astana), for example, proposes producing synthetic gas from coal, which can be used for the gasification of remote settlements, supplied as fuel for small CHPs with capacity up to 10 MW, to meet the needs of small and medium-sized businesses.
Synthetic gas or synthesis gas is produced by treating coal with water vapor and air oxygen in a gas generator unit. Therefore, the resulting gas is also called generator gas, and the process of obtaining gas from coal is called gasification.
According to the scientist, 1.5 billion cubic meters of synthesis gas, as well as metal alloys, 50 thousand tons of briquettes, 100 thousand tons of potassium and sodium humates can be produced from 1 million tons of coal by gasification. And from 1.5 billion cubic meters of generator gas during the second processing it is already possible to produce up to 200 thousand tons of gasoline, the same amount of diesel fuel, and 300 kWh of electricity. At the same time, the production of electricity from generator gas in a 1 MW mini-CHP is almost twice as cheap as the cost of 1 MW when building pulverized coal-fired combined heat and power plants.
Bolat Ermagambet says that coal deposits in Kazakhstan contain a large amount of methane. In the Ekibastuz basin, when mining 40 million tons of coal, up to 400 million cubic meters of methane is emitted into the atmosphere annually from coal seams.
The specialist believes that coal chemistry will have a multiplicative effect. In particular, the engineering sector will receive orders for the design and serial production of gas generating units, equipment for modernization of boiler houses and CHPPs to replace coal with coal gas. At the same time, public utilities, livestock breed, local enterprises, farms and poultry farms can switch to gas. Labor productivity and welfare of residents of district centers, auls and villages located at remote points will increase.
Synthesis gas is a multi-purpose technological raw material. It is also suitable for subsequent production of liquid fuel, hydrogen, methanol and other products. To produce the necessary materials and equipment to organize new production and develop coal chemistry based on synthesis gas, it is necessary to provide preferences to enterprises investing in deep coal processing projects.
Maira Kazankapova, a leading researcher at the Institute of Coal Chemistry and Technology, says that the Institute’s laboratories have studied the physical and chemical compositions of coals from Shubarkol, Ekibastuz, Karaganda, Maikuben and other basins and mines. The applicability of these coals to a certain technology was established and various products were obtained, including carbon sorbents, or so-called activated carbon. It is used at enterprises of metallurgical industry, in medicine as carriers of catalysts, electrode materials for manufacture of supercapacitors and lithium-ion batteries, for purification, separation and extraction of various substances, both liquid and gaseous.
Today the largest consumers of carbon sorbents in the world are the USA, EU countries and China. The first place in the production of activated carbon is occupied by the USA – 34% of the market share, Europe produces 24% of all global products. The cost of sorbents varies from three to $200 thousand per ton depending on the quality and purpose of the product. Kazakhstan imports the most expensive activated carbon from Japan – at $16 thousand per 1 ton. Although the main volume is bought from Russia – at $1.1 thousand per ton.
In the medium term, Kazakhstan’s activated carbon market will grow by at least 10-12% per year, primarily due to the tightening of environmental regulations, believes Maira Kazankapova. In 2021, the market volume reached 10.7 thousand tons. In Kazakhstan, against the background of significant market dependence on imports, there is an urgent need to develop domestic production.
Specialists of the Institute have developed and manufactured laboratory and semi-industrial units of carbonization and activation, worked out methods of obtaining carbon and composite porous carbon materials, developed experimental samples of carbon nanomaterials. The obtained samples have been tested for gas, sewage and drinking water purification, for soil purification from pesticides, as electrode materials, for hydrogen storage, etc. At the same time, scientists are also ready to work on the development and creation of accumulator batteries from coal. They only need support and interest from companies and the state.
What do coal companies think?
The difficulty in implementing coal chemical projects is the lack of government programs supporting this industry, said Mirkhat Musanap, deputy general director of Bogatyr Komir Coal LLP. In Kazakhstan, coal is practically not considered a raw material and is used only for electricity and heat generation.
“Bogatyr Komir” is the largest coal producer in the country – about 40% of annual production (What is the state of Kazakhstan’s coal industry).
Mirhat Musanap says that last November, as part of an official delegation headed by the Ministry of Industry and Construction, he visited China, where he familiarized himself with the experience and achievements of local companies in the field of coal chemistry. The Chinese presented the capacity and infrastructure of the plants and showed the production process.
“The experience of the neighboring country allows us to judge the prospects for the development of this industry. (…) Modern technologies make it possible to produce from coal more than 130 types of intermediates, which are further used to produce more than 5 thousand types of products,” he notes.
In China, coal is mainly used to produce synthetic ammonia, urea, methanol, soda ash and caustic soda, ethylene glycol, liquid chlorine, hydrochloric and acetic acid.
During the trip the Chinese side was presented qualitative characteristics of Bogatyr coal and indicators of its chemical composition. In mid-December, a delegation from a Chinese company arrived in Ekibastuz to familiarize itself with the infrastructure and facilities of Bogatyr Komir LLP. During the meeting they discussed the issue of conducting research and development work to determine the applicability of coal for deep processing and obtaining high value-added products. Then samples of marketable coal from Bogatyr mine were sent to China. The research should show in what areas Ekibastuz coal can be used and how feasible it is.
The coal chemical industry could be an important link in the transition to more environmentally friendly production methods. However, it is necessary to thoroughly study industry for the availability of water, energy, land and other resources. The high ash content of “Bogatyr” coal can lead to high capital expenditures. It’s also necessary to know the cost of production, availability of markets, pricing, and competitiveness with other raw materials such as oil and gas, Musanap said.
Many companies involved in the production and sale of ammonia, methanol, urea, nitrate and polymers have already expressed interest in implementing coal chemical projects, he said.
Sergei Dadyka, a representative of ERG’s Research and Engineering Center, says Shubarkol Komir, a coal mining company, already has programs in place for deep coal processing and import substitution.
Eurasian Resources Group (ERG) is the second largest coal producer in the country, accounting for about 25% of production. Its producing companies are Eurasian Energy Corporation and Shubarkol Komir.
According to the specialist, the first stage of production diversification started in 2006 with the launch of a plant for production of special coke mainly for ERG ferroalloy enterprises. The total capacity of the plant is 210 thousand tons. In 2021, the company started construction of a new special coke plant with an annual capacity of 400 thousand tons. The country’s demand for special coke is over 1 million tons per year. Now most of the production is imported from Russia, as well as China.
The company is also working on the creation of activated carbon production based on technology developed by Kazakh scientists, with a capacity of 1,000 tons per year.
“This is a synergistic project with the previous one, as it uses coke production products as raw materials and fuel – special coke fines and coke oven gas. The main advantage of Shubarkol activated coal is its low production cost due to the use of cheap coke fines as raw material and coke oven gas as energy carrier. This will help to solve a very important problem of production waste utilization”, – says Sergey Dadyka.
With the commissioning of the new plant about 100 thousand tons of tar will be generated annually. The company intends to process them. At the first stage it is planned to distill the tar into several fractions, including: coal pitch component for anode industry, raw material for production of technical carbon and boiler fuel. At the second stage a finer separation of resin fractions into phenol, naphthalene, benzene, toluene and xylene are planned. Work on the first stage is in the active phase and is planned to be completed by the end of this summer.
We also plan to establish production of technical carbon from heavy fractions of resin distillation. Laboratory studies have been conducted and several variants of raw materials have been analyzed, confirming the possibility of obtaining technical carbon of high quality in the amount of 40-50 thousand tons per year.
“Such a product is in demand in the EU, US and Asian markets, it is used in the production of car tires and other types of rubber products, plastics and can already be considered a deep conversion product. The project is in the active phase at the stage of development of technical specifications and feasibility study. We are also considering the creation of a joint venture with companies working in the chemical sector and tire production to strengthen the competencies of the project,” Dadyka said.
China has already developed technologies to produce methanol and specialty chemicals, such as dimethyl carbonate, from coconut gas.
“With special attention we are studying the possibilities of large-tonnage processing of coal and coal fines into fuel gas, as well as into chemical products and fertilizers for external sales. Such products, for example, include ammonia, urea, ammonium sulphate and nitrate and other complex fertilizers based on them. Chinese companies have achieved significant success in the production of these products,” Dadyka said.
According to him, special interest is attracted to conventional and biodegradable polymers derived from coal processing, the cost of which is already quite competitive compared to the products of oil and gas chemistry. Economic aspects are subject to in-depth analysis and comparison, but the maturity of coal chemistry technologies and its prospects are already evident.
“For Kazakhstan, carbon chemistry can become an extremely important alternative to oil and gas chemistry, especially given the comparative reserves of these resources. We continue to search for the most optimal ways of development and the possibility of creating joint ventures with Chinese partners”, – says the specialist.
At the same time, executive director of the Republican Association of Mining and Mining and Metallurgical Enterprises Nikolai Radostovets believes that the list of priority activities to be carried out in the special economic zones should include the production of products of the coal-chemical industry.
According to him, now coal mining companies are implementing projects at their own expense, and cannot get bank loans, and are limited in their ability to implement large coal-chemical projects. Without government assistance, the production of new types of coal products will be impossible, the expert believes.
Investment and profit
Oleg Pak, Chairman of the Board of the Kazakhstan Union of Chemical Industry reported that the alliance of entrepreneurs “Parasat”, with the participation of OJL “Kazhimprom” and the Center for the development of carbon chemistry in Kazakhstan has developed a draft concept of the creation of the country’s carbon chemical industry, which has an investment potential of $ 12-13 billion and involves the implementation of 15 major coal-chemical projects. It is proposed to create enterprises to produce synthetic ammonia with further production of urea, ammonium nitrate and other nitrogen fertilizers. The pool of projects also includes the organization of production of methanol, hydrogen and other products.
These projects will make it possible to produce up to $10 billion a year of products for both the domestic market and exports, creating up to 20,000 new jobs.
Barriers to the development of coal chemistry in Kazakhstan today are the lack of government policy and requirements for mining and energy companies in terms of deep processing of coal, high cost of investment – to implement one project requires from $300 million to $1 billion depending on the processing.
According to Oleg Pak, to stimulate subsoil users to invest in deep coal processing it is necessary to make appropriate changes in contracts. The state should adopt a concept for the development of the coal chemical industry, participate in the financing of projects, involve in the creation of enterprises the funds of the national and pension funds, as well as the funds of the mining sector. It is also necessary to create an interdepartmental platform for the development of coal chemistry. At the same time, he noted that to date the government has given the task to develop a roadmap and the relevant law on the development of coal chemistry.
Yerzhan Yelekeev, Chairman of the Board of Kazakh Invest, notes that processed coal is 25-30 times more expensive. By processing coal, it is possible to get the same products as oil and gas. At the same time, prices for coal are lower and stable than for gas and oil. According to preliminary calculations of the national company, the unused potential of the country’s coal chemistry is $25 billion (Table 1).
The representative of Kazakh Invest believes that synthesis of gas is the most promising direction for obtaining goods of deeper processing. Thus, synthesis gas can be used to produce ammonia, methanol and ethanol. These can be used for further processing to produce urea, nitrogen fertilizers for agro-industrial complex, chemical and woodworking industries, as well as polyvinyl chloride, polypropylene, hydrogen peroxide, acetic acid and many others.
Meanwhile, Chairman of Atameken NPP Aset Sydykov spoke about the shortage of specialists with higher and specialized secondary education in the coal chemical industry. It is necessary to develop the system of education and vocational training to provide the industry with qualified personnel.
As we can see, Kazakhstan has both conditions for the development of coal chemistry and obstacles. The good news is that we have many raw materials, its extraction is well established, the domestic market does not lack coal, we even export it – an average of 25-30% of annual production. Large mining companies are interested in further redistribution of coal. There are foreign businessmen from neighboring countries who can share their experience and processing technologies. It remains to adopt appropriate legislative norms and documents that will regulate the industry and create conditions for attracting and protecting investments. The main disadvantage of the global phase-out of coal as a fuel is that international banks and investors do not give long money to coal industry enterprises. But at the same time, coal chemistry can become an alternative direction for the development of industry. Therefore, investments in coal chemistry can also be considered as a contribution to decarbonization. Perhaps, this is the advantage of a new area for Kazakhstan.
Table No.1 Potential markets and revenues from sales of carbon chemistry products*
| Product | Distribution markets, $/ton | Potential, bln $ |
| Ammonia | EU $1 300 | 2,6 |
| South Korea $947 | ||
| Methanol | EU $762 | 5,9 |
| China $342 | ||
| Ethanol | EU $1 320 | 3 |
| Armenia $1 338 | ||
| Urea | EU $786 | 6,8 |
| CIS $506 | ||
| Ethylene glycol | EU $933 | 1,8 |
| Turkey $628 | ||
| Nitrogen fertilizers | EU $756 | 0,4 |
| Turkey $929 | ||
| Polyvinyl chloride | EU $7 458 | 0,6 |
| CIS $5 029 | ||
| Polypropylene | EU $1 320 | 2 |
| China $1 216 | ||
| Hydrogen peroxide | EU $600 | 0,3 |
| CIS $1 737 | ||
| Acetic acid | EU $1 223 | 1,2 |
| Turkey $904 | ||
| Source: JSC «NC «Kazakh Invest» | ||
*The calculation takes markets with negative trade balance, positive import dynamics for 2018-2022/2021-2022.
Table №2 Consumption of chemical products in Kazakhstan for 2023, thousand tons
| Name | Demand | Production | Import | Export | |
| Ammonium nitrate | 622,9 | 380 | 373,1 | 130,3 | |
| Calcined soda | 757,4 | 400 | 357,5 | 113 | |
| Synthetic ammonia | 103,5 | 36 | 74,4 | 6,9 | |
| Urea | 76,6 | 80 | 72,8 | 76,3 | |
| Methanol | 33,3 | 0 | 33,3 | 0 | |
| Caustic soda | 77,1 | 26 | 53 | 1,9 | |
| Hydrochloric acid | 47,7 | 45 | 5,5 | 2,7 | |
| Source: OJL Kazkhimprom, Statistical data, Bogatyr Komir | Source: OJL Kazkhimprom, Statistical data, Bogatyr Komir | ||||