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Coal: feeding Turkey's appetite for energy.

In a more favorable position than Turkey's metal miners, who are dealing with declining prices and permitting delays, Turkish coal producers have been boosted by Turkey's growing need for power and an advantageous government incentive scheme aimed at increasing the country's power generation capacity.

Energy demand in Turkey doubled over the last 20 years and is expected to double yet again within only the next decade to feed a growing economy and a young population. With the vast majority of Turkey's hard coal supply coming from abroad, the government has identified indigenous coal reserves as a crucial step towards energy independence. As part of Vision 2023, coal-fired power is set to meet up to 10% of the country's energy needs.

Coal consumption in Turkey has doubled since 1990 and continues to grow faster than local production. In 2011, 104 million mt/y of coal was consumed domestically, while local production came in at 76 million mt/y. Over the last decade, coal production in Turkey increased by nearly 10 million mt/y but has leveled off in recent years and only reached 65.4 million mt/y in 2012. Making up the difference, imports are coming primarily from Russia and Colombia.

Given these dynamics, it was forecast that coal imports would grow by 25% in 2012-2013; however in reality imports fell by 12% in that period coming in at 20.9 million mt/y as the Turkish Lira has depreciated and domestic coal has become increasingly attractive.

Developing Turkey's hard coal and lignite reserves

In spite of quality and extraction challenges, the 10 million mt/y boost in coal production in the past decade is attributable to the ongoing privatization of the sector. The sector remains largely in the hands of state-owned enterprises, accounting for 90% of operations, however 35% of this state production is carried out by private subcontractors. As operations transition to the private sector, improvements in exploration and production will continue.

"In 2005, Turkey had reserves of 8 billion mt of coal. Today our reserves are 14 billion mt because of the many drill programs made by the private sector and by the General Directorate of Mineral Research and Exploration (MTA)," said Alp Giirkan, chairman of private coal company Soma Group.

Since 2005, coal exploration in Turkey has reached 200,000 m drilled over 30,000 [km.sup.2]. Recent drilling programs carried out by Soma in the Black Sea district of Merzifon at the Yeni Qeltek mine, which has been producing for over 25 years, have brought in roughly 25 million mt of new high quality coal reserves. In line with government incentives, after ramp up a coal-fired power plant of 300 MW will be erected on the site.

For its part, Ciner Group, which has also invested in both coal mining and power generation, operates a state-owned 620 MW plant in Qayirhan by concession agreement which they fuel with coal mined underground. Ciner is also commissioning a three unit power plant in Silopi, 7 km away from the Iraqi border, which by end of 2014 should produce over 400 MW. Ciner is mining 1.2 million mt/y of asphaltite for the Silopi complex, which provides 4,000 kcal/kg when burned.

While the sector is boosted by both government support and growing demand, it has been held back by challenging geology and low heat content. Turkish coal reserves are primarily lignite, only 6% of which has a calorie value over 3,000 kcal/kg.

Compared to its 11.7 billion mt of lignite resources, the country has roughly 1.3 billion mt of hard coal, concentrated in the Zonguldak area on the Black Sea coast and ranging in heat content from 6,200-7,200 kcal/kg.

To confront the challenge of low caloric value coal reserves, many companies are putting investments into R&D such as Duzgun Mining Co., which produces 1.5 million mt/y of brown coal in Konya Province. "We are running a project with the Scientific Technology Research Council of Turkey (Tubitak) to build a plant to dehydrate coal, which makes it better quality," said senol Seyhan, general manager of Duzgtin Mining Co.

"There are other coal drying facilities in Turkey, but they are using different technologies. In most coal mines, the coal drying machines are rotors, which is very old technology. Our plant will improve upon this system using a rolling mill made from ceramic. This new technology will increase calorie count from 2,000 kcal/ kg to 3,000 kcal/kg," said Seyhan.

As coal projects go ahead, the service sector is honing its coal expertise to find new projects in a tough climate. "Coal is a large focus for DMT/IMC given its strategic importance to the country. Turkey will need 15,000 MW of electricity in the coming years, and the country needs more coal mine development to build coal power plants," said Yucei Picakci, Turkey country manager of DMT/IMC.

DMT, an engineering and consulting firm based in Essen, Germany, is bringing its exploration and production planning to the mining sector in Turkey through its IMC consulting subsidiary. "Germany is number one in the world for coal mining in terms of technique and mine planning. For our geological surveys, we bring in our experts from Germany who are internationally accredited," said Picakci.

Government incentives target coal-fueled power

To help the sector along, the government has introduced a scheme of incentives to encourage coal production and subsequent coal-fired power plant developments. A revision in spring 2013 to the scheme included the addition of coal with high calorific value.

Within the scheme of incentives that can be applied to coal-fired power plants based on indigenous coal, a power plant of 1,000 MW or more that enters into commercial operation by the end of 2014 will have a purchase guarantee from Turkey's Electricity Generation Co (EUAS). Further incentives include the coverage of expropriation costs and the building of transmission lines. Exemptions from license fees also apply to electricity market legislation.

Coal incentives are attractive, though there remains room for improvement, particularly with regard to license areas that are limiting development opportunities for the private sector.

"The challenge for the industry is that most of the coal fields are in the hands of TKI. The private sector has coal fields, but its licenses are divided into small packages each having 5 to 10 million mt of reserves. This does not make any sense from a power generation point of view. It is very difficult to bring the licenses together and establish 90 million mt of coal reserves that can produce 3 million mt/y and fire a 300 MW power plant," said Sami Demirbilek, president of the Energy Group at Ciner Group.
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Title Annotation:MINING IN TURKEY
Publication:E&MJ - Engineering & Mining Journal
Geographic Code:7TURK
Date:May 1, 2014
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