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Profiting from un-mineable coal

With world coal prices at an all time low, the need to consider alternatives to raise capital is not only a reality, but also a challenge.

“Coal prices have fallen to a two-year low, but market observers say the price will rise again and there is little doubt demand is here to stay,” said Coaltrans Managing Director Henry Hely-Hutchinson at their annual Asia conference, held in Bali, Indonesia.

Despite optimism that coal prices will rise again, one focus of the conference was coal mining economics and now is the opportune time for miners to consider new technology, which can raise their profits.

Un-mineable coal accounts for 90.7% of the world’s total supply with 4.8% available for mining. Experts estimate that within 40 years mineable coal supplies could be completely diminished. However, as Raj Puri, Chief Executive Officer of Mitchell Energy pointed out at Coaltrans: “There is virtually an unlimited supply of un-mineable coal.”

Coal mining operations have high diesel costs for power and transport, cause environmental concerns and have significant quantities of stranded resources. Mitchell Energy’s technology proposes to convert those stranded resources into valuable gas reserves made onsite, minimising fuel costs and lowering the environmental impact.

The technology has the ability to “bolt-on” to operational mines and injects a nutrient water solution into un-mineable coal. The coal reacts with the solution and undergoes a process of methanogenesis. The methane gas is then recovered from a well at the other side of the mine.

The focus of the project has so far been in India and Indonesia. With assets in place, Mitchell Energy is now entering the second phase of development, where they are drilling wells to demonstrate gas production. It is expected the technology will be ready for the commercial market in the near future.

A case study from a mine in Indonesia saw the potential to reduce power costs by US$13 million. Diesel costs $0.35 per kWh, while utilising onsite gas saw this figure dramatically reduce to $0.03 per kWh. However, there was no mention of initial start-up or running costs.

Mixed responses have come from the industry so far, with many questioning the potential. Puri was confident though that, “it is time for the coal mining industry to wake up as they have a valuable asset, which can bring them into gas manufacturing.”

The industry has yet to discover the full potential of onsite gas manufacturing, but the fact remains that there are vast quantities of un-mineable coal. Reducing costs is not the only factor here; coalmines have the potential to lessen their environmental impact, a topic Indonesian government officials were keen to promote throughout the Coaltrans conference.

This content is provided by Coaltrans Conferences for informational purposes only, and it reflects the market and industry conditions and presenter’s opinions and affiliations available at the time of the presentation.

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