HELLO DARKNESS

Kazakhstan 2015 | MINING & ENERGY | FOCUS: COAL

In spite of efforts to move towards green energy, coal mining remains central to the Kazakhstani economy, and output will increase at least for the short term.

Over the years, Kazakhstan has increased coal production to satisfy growing demand. The country's mines currently produce more than 120 million metric tons per year, of which 97 million metric tons are consumed domestically and 22 million metric tons are exported. Kazakhstan has 4% of the world's known reserves, concentrated in 16 major deposits in three coal basins. Among the CIS countries, Kazakhstan occupies the third place in terms of reserves and the first in coal production per capita. Today, the coal industry provides 78% of the electricity in the country, almost 100% of coke production, and fully meets the needs of the domestic sector.

Over the short term, coal will remain the fuel of choice for electric power. In fact, coal consumption is expected to reach 121.3 million metric tons per year by 2020 and production will have to grow to more than 158 million metric tons per year to support this level of demand.

Recently, the environmental externalities of coal consumption have gained notoriety, and consequently Nazarbayev instructed the government to develop a plan through 2050 that would result in at least 50% of the country's electricity being generated from renewable resources. The coal industry could lose a significant part of planned investment for coming years if the government follows this directive. Some energy experts argue that Kazakhstan's long-term prospects are unclear. However, government officials claim that no investment projects in the area announced so far will be canceled. Moreover, coal production could be aimed at the export market after 2020 if there is excess capacity.

But for now, coal production and consumption will only grow. The government estimates Kazakhstan's total bituminous coal reserves to be more than 15 billion metric tons. Most of the estimated reserves are anthracite reserves and brown coal. These reserves are concentrated in central Karaganda, Pavlodar, and Kostanai. The government regards coal exports as central to the country's economy strategy. By the end of 2015, the country is expected to boost export levels to 32 million metric tons—almost 10 million metric tons more than in 2013.

Coal mining is highly consolidated in Kazakhstan. There are more than 30 companies currently mining coal in Kazakhstan, and the majority of them are producing for coal-fired power plants or steel mills owned by large multinational companies. These firms account for more that 90% of the total coal mining in the country. And these are big players. With an output of 56.8 million metric tons of coal in 1985, the Bogatyr mine entered the Guinness Book of World Records as the world's largest single coal mine.