Kazakhstan Chamber of Commerce in the USA

KazCham



Modernising mines for safe environment and profit 1

Posted on April 06, 2010 by KazCham

STEEL GIANT ARCELOR-MITTAL owns the Temirtau  steel complex, some 50km from Kazakhstan’s  mining capital, Karaganda. The bankrupt plant  was bought in 1995 by Lakshmi Mittal, the Indian  entrepreneur, together with a string of nearby  coal and iron mines. The mines guarantee supply  security at low cost and helped generate large profits at the steel plant.

Once the global steel market started to boom, cash  flow generated by low-cost Temirtau, together with  the valuable experience gained turning round the  Soviet-era giant, generated the confidence to buy a  string of similar plants in Ukraine, Romania, South  Africa and elsewhere. In this way, Mittal’s Kazakh  investment helped the company gain the critical  mass, and the cash, to win control over the Franco- Luxembourg Arcelor steel group three years ago. The  merged Arcelor-Mittal is now the world’s largest steel group, with the Kazakh company contributing about  8 per cent of the total.

However, a series of deadly methane explosions in  some of the company’s eight Kazakh coal mines over the -last three years underlined concerns that the company  had not paid sufficient attention to the poor state of the Soviet-era underground mines that had been starved of  investment for years before the Soviet collapse. Critics  said Mittal knew less about mining than it did about  steel. Certainly, when this correspondent went down  the flagship Lenin mine a few years ago, miners were  wearing little more than rags, the access shafts were  littered with broken-down machines, they were poorly  lit and had little ventilation. Working conditions in the  mine were worse than in similar mines I had visited in  South Africa.

Safety awareness campaigns designed to change  the inherited Soviet-era low priority for safety were  not enough to change the inherent dangers of  deep, sloping mines producing volatile, gaseous  coals. These are great for coking and steel making  but dangerous to mine using the inherited Soviet  technology. Sections of the mine were frequently  being closed to evacuate the methane gas and prevent dangerous accumulations.

Eventually, after a string of serious explosions,  in which 125 miners died over a four-year period,  Arcelor-Mittal turned to two US specialist companies,  EnSafe, a Memphis-based environmental engineering  company, and Dallas-based Petron Resources, to  develop a de-gasification system capable of safely  extracting the estimated one billion cubic feet  of methane estimated to be recoverable from  the coalfield.

Mittal obtained a $100 million loan from the  European Bank for Reconstruction and Development  to help finance the project, which is part of a much  wider, $5 billion scheme to double steel capacity at  Temirtau to around 10 million tonnes over the next  few years. This will also require much more extensive mining of coal, iron and limestone, all of which are  found in the Karaganda basin.

Don Cowan, vice president of international  projects for EnSafe, says: “There are three aspects to  the project – health and safety, mine productivity  and gas production.” Doug White, CEO at Petron  adds: “The first objective is to make the operations  safer, but Mittal also wants to earn greenhouse  emission credits.”

According to the Stern Review of the Economics  of Climate Change, methane has a global warming  impact 23 times more damaging than carbon  dioxide. By extracting methane from the mines,  reducing ‘fugitive emissions’ seeping out of the  mines and safely channelling the gas, using  methane mining techniques developed by the oil  and gas industry, the project will save lives, cut  costs – and provide a new fuel source sufficient  to power a 200mw power station. As a result of  Kazakhstan finally ratifying the Kyoto Treaty this  year, the company will probably also qualify for  greenhouse emission credits, which will help pay for the projects

David Vint, a veteran Scottish coal mine engineer,  is running the Karaganda methane project. His goal  is to achieve safer working conditions and make  fullest use of the gas recovered.

Explosions occur, he explains, when the methane  escaping naturally from the coal mixes with oxygen  and is ignited by a spark. Mining the methane  involves driving channels through the coal seams,  using multi-directional drilling methods and  equipment, such as blow out preventers developed  by the oil and gas industry. Channels drilled through h the coal create manageable gaps through which the  methane naturally flows into collector pipes, which  can safely transport it to the surface. “Concentrated  methane in a pipe is safe methane. You can burn  it, in a power station for example, but it lacks the  oxygen to explode,” Vint explains.

Higher productivity from modern mining  machines means that more gas can be liberated from -the cut coal. Doubling capacity of the steel plant  will require more and bigger mines. But if current  trials are successful, making the mines safer will  also deliver greater volumes of useful gas. “If the gas  potential from existing, new and exhausted mines  is added together it could provide enough gas to  generate up to 200mw of power,” Vint says.

That will be relatively clean power – energy which  Mittal will no longer have to buy from the over-loaded national grid, which is produced mainly by polluting h coal-fired power plants. The main question still open  at this stage is whether methane mining techniques,  which have been proven successful in shallower US  and Australian mines, will work, or can be adapted  to work, in Kazakhstan’s relatively deep mines. If the  current trials are successful, not only will mining  become safer, but Kazakhstan, with its vast coal  deposits, will also acquire considerable additional  energy reserves.

Invest in Kazakhstan An official publication of the Government of the Republic of Kazakhstan, 2009. Pages:72-73.



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