Kazakhstan is close to creating an industry for deep coal processing. Currently, coal is mainly used as fuel for electricity and heat generation, as well as to produce a small amount of processed products. However, coal chemistry has very good prospects for widespread development, given the country's coal reserves and existing coal industry.
The Ministry of Energy, together with interested departments and organizations, is assessing promising areas and analyzing projects focused on the development of the coal chemical industry. On December 9, the ministry held a meeting on these issues with the participation of Kazakh and foreign coal companies. During the meeting, projects by Chinese companies CHN Energy Development Co. Limited (CHN Energy) and Shandong Energy Group were discussed.
The Ministry of Energy reports that the composition of the working group on the development of coal chemistry has been updated, specific projects and coal mines with Chinese investors have been identified, and an action plan has been drawn up for systemic solutions to the factors hindering the development of the industry.
In June, the national company QazaqGaz and Shandong Energy signed a strategic agreement on cooperation in the field of coal chemistry. The agreement provides for the construction of a plant in the Karaganda region to produce 2 billion cubic meters of gas per year. The project, with a total cost of $2 billion, will be financed in stages and will create 1,500 jobs. The Chinese side has confirmed its readiness to invest and develop cooperation.
Shandong Energy Group is the second-largest coal producer in China, as well as a major railway, shipping, coal chemical, and power generation company. In 2024, its revenue amounted to $118 billion. The company employs a total of more than 210,000 people.
CHN Energy, in turn, plans to establish the processing of Kazakh coal and organize the production of various chemical products. In November 2024, an agreement worth $4 billion was signed between the Chinese investor and the Ministry of Industry and Construction, as well as the national company Kazakh Invest, on coal chemical projects.
In the first stage, the company intends to produce secondary products, including polyolefins, with further expansion to the production of polyethylene, polypropylene, and other materials. In addition, it plans to establish fertilizer production.
In March this year, the company opened its representative office in Astana.
At the same time, China Energy Investment Corporation (the parent company of CHN Energy Development Co.) is considering the possibility of acquiring shares in the Kazakh companies Shubarkol Komir and Shubarkol Premium.
According to Kazakh Invest, CHN Energy operates 97 coal mines with a capacity of 685 million tons of coal per year, has 28 coal liquefaction plants, and produces 5.26 million tons of liquid fuel and 3.93 million tons of olefins.
What can be produced?
During the VI Coal Industry Forum held in June this year, Kazakh Invest Deputy Head Azamat Kozhanov noted that the transition from traditional mining to deep coal processing will open up new opportunities for the economy.
According to him, coal processing can be used to produce more than 400 types of various products with high added value that are in demand in the chemical, medical, agricultural, and other industries, including methanol, polyolefins, urea, polyethylene, and polypropylene. At the same time, processed products can be 25-30 times more expensive than raw materials. Currently, the share of coal chemistry products in Kazakhstan is only 3%, while the untapped potential is estimated at $25 billion.
“Despite the high capital intensity of projects, limited government support measures, and a shortage of qualified specialists, Kazakhstan has a strong raw material base, a stable investment climate, and active support from coal mining companies, associations, and development institutions,” Kozhanov said.
Meanwhile, not only Chinese but also local companies are ready to invest in coal chemistry. In particular, Qarmet, Kazakhstan's largest steel and mining company, is launching a project to process 200,000 tons of coal tar per year, producing more than 15 types of products. The cost of the project is $262 million.
"The large-scale coal chemical projects planned by Qarmet JSC will involve the modernization, expansion, and reconstruction of existing production facilities, using the latest technologies and modern methods. Therefore, state support is needed not only in the form of preferences but also in the form of incentives for projects in the field of coal chemistry. Guarantees of tax stability and legislation in general are important for the successful implementation of coal chemistry investment projects. The implementation of large-scale projects is always associated with high risks, and providing such guarantees is a necessary condition for establishing partnerships and predictable interaction with the state," says Vitaly Derevyanko, project manager of the Steel Department at Qarmet JSC.
Meanwhile, coal mining companies will have to invest in coal processing in the future. Now, when contracts are extended, coal deposit developers will be required to specify their obligations for deep coal processing along with extraction.
“In China, every company that specializes in coal mining is required to process 10% of its resources annually,” says Oleg Pak, head of the Kazakhstan Chemical Industry Union.
According to his data, China produces about 3 billion tons of coal annually, and more than 200 million tons of it is processed.
According to the expert, about 50 domestic and foreign companies are currently involved in coal mining. However, not all of them are interested in investing in coal chemistry, as the payback period for projects is about six years. Investors will need to work for the medium term.
“There is currently a shortage of carbonate in the world. This is a salt of carbonic acid, which allows the creation of various materials - glass, soap, paper, and detergents. It all depends on the type of carbonate. This is a very relevant market in the world, and Kazakhstan could occupy it,” the expert believes.
In turn, Nikolai Radostovets, executive director of the Republican Association of Mining and Metallurgical Enterprises (AGMP), notes that the cost of coal processing projects remains extremely high, which limits the development of coal chemistry in Kazakhstan.
Currently, coal companies are implementing projects using their own funds, facing the impossibility of obtaining bank financing, and have limited opportunities to implement large coal chemical initiatives. Therefore, without government assistance, it will be impossible to develop new types of coal products with high added value, according to the head of the AGMP.
He proposes moving to a stimulating model of development for the coal chemical industry, which should include the provision of preferences and state support voluntarily, a flexible approach depending on the type of deposit, production volumes, and coal quality.
According to him, this approach will minimize risks, avoid inefficient investments, and ensure the sustainable development of coal chemistry based on actual technological and economic feasibility.
There are still a number of obstacles to the development of coal chemistry in Kazakhstan. These include a shortage of qualified personnel for the operation, maintenance, and repair of coal chemical production facilities, as well as a weak scientific and technological base for studying the composition and properties of coal.
In May of this year, senators submitted a parliamentary inquiry to the prime minister with a proposal to develop a state program “Development of Coal Chemistry” for 2026-2035, prepare a draft law on the comprehensive development of coal chemistry, and approve a roadmap for the development of coal chemistry as one of the areas of state industrial policy.
Senators propose considering the creation of a National Scientific and Innovation Center for Coal Chemistry in Astana, equipped with modern equipment. Develop educational programs to train specialists in the field of coal chemistry and provide for the allocation of quotas under the Bolashak program for training abroad in these specialties.
“Given Kazakhstan's natural, infrastructural, and scientific potential, we are convinced that coal chemistry will become one of the driving forces of industrial development in the next 10-20 years,” say the deputies.
Earlier, Bolat Ermagambet, director of the Institute of Coal Chemistry and Technology, proposed producing synthetic gas from coal, which could then be used to gasify remote settlements, supply fuel for small thermal power plants with a capacity of up to 10 MW, and meet the needs of small and medium-sized businesses.
Synthetic gas, or synthesis gas, is obtained by treating coal with water vapor and oxygen from the air in a gas generator unit. Therefore, the gas obtained is also called generator gas, and the process of obtaining gas from coal is called gasification.
According to the scientist, 1 million tons of coal can be used to produce 1.5 billion cubic meters of synthesis gas through gasification, as well as metal alloys, 50,000 tons of briquettes, and 100,000 tons of potassium and sodium humates. And from 1.5 billion cubic meters of generator gas, during the second stage, it is already possible to produce up to 200,000 tons of gasoline, the same amount of diesel fuel, and 300 kWh of electricity.
"We are considering various projects—the production of fertilizer, methanol, fuel, and synthetic gas from coal. But we are largely hampered by the fact that our market is not yet fully developed and that the government is keeping prices down, including gas prices. And often, coal chemical projects can be unprofitable because they are very capital-intensive," says Oleg Pak, one of the few representatives of Kazakh business associations promoting the idea of developing coal chemistry.
According to Senate deputies, Kazakhstan's total coal reserves are currently estimated at 260 billion tons, of which 32 billion tons have been explored. Most of the resources are concentrated in the Pavlodar and Karaganda regions. In 2024, the country produced 108.5 million tons of coal, of which 29.5 million tons were exported, 8.6 million tons were sent to municipal institutions, 65.7 million tons were used at thermal power plants and state district power plants, and 6 million tons were burned at enterprises using outdated technologies.