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© Woodhead Publishing Limited, 2013 105 5 Coal resources, production and use in established markets A. FIKKERS, Xstrata Coal Sales Pte. Limited, Singapore DOI: 10.1533/9781782421177.2.105 Abstract: This chapter covers the coal industry in countries in which the coal market has long been established. The countries in question are Australia, Canada, Germany, Hungary, Poland, South Africa, Turkey, the UK, Ukraine and the USA. Coal supply aspects are discussed first, followed by aspects of coal demand for each territory. Key words: established coal markets, coal production, coal use, coal export, Australia, Canada, Germany, Hungary, Poland, Turkey, the UK, Ukraine, the USA. 5.1 Introduction Coal, of which world production was 7.2 billion tonnes in 2010, is a major source of primary energy globally, ranking second after only oil. It plays a key role in power generation, in particular enabling power generation at an affordable cost. In general over the last decade the use of coal has increased by 28%, more strongly than any other primary energy source; however, trends vary from region to region. Broadly speaking coal consumption has been stable in OECD countries over the last decade; however, in the EU, there was a 14% drop. The demand for coal in developing countries has increased dramatically over the same period. Countries demonstrating par- ticular increases in demand for coal have been China and India (www.eura- coal.be). Table 5.1 shows the top ten coal consumers in 2010. Table 5.2 shows proven coal reserves at the end of 2009. Table 5.3 shows the world’s top ten coal producers as of 2010. Some countries feature in both Tables 5.1 and 5.3, however not all; so it is evi- dent that some coal is traded internationally. In 2010, only 14.8% of the coal produced globally was traded, indicating that coal is mainly used near the site of mining. In general, it can be cost effective to export coal from mines located near sea ports with low production costs to customers overseas. Imported coal can play a major role in increasing a country’s

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Page 1: The Coal Handbook: Towards Cleaner Production || Coal resources, production and use in established markets

© Woodhead Publishing Limited, 2013

105

5 Coal resources, production and use in

established markets

A. FIKKERS,

Xstrata Coal Sales Pte. Limited, Singapore

DOI : 10.1533/9781782421177.2.105

Abstract : This chapter covers the coal industry in countries in which the coal market has long been established. The countries in question are Australia, Canada, Germany, Hungary, Poland, South Africa, Turkey , the UK, Ukraine and the USA. Coal supply aspects are discussed fi rst, followed by aspects of coal demand for each territory.

Key words : established coal markets, coal production, coal use, coal export, Australia, Canada, Germany, Hungary, Poland, Turkey, the UK, Ukraine, the USA.

5.1 Introduction

Coal, of which world production was 7.2 billion tonnes in 2010, is a major

source of primary energy globally, ranking second after only oil. It plays a

key role in power generation, in particular enabling power generation at an

affordable cost. In general over the last decade the use of coal has increased

by 28%, more strongly than any other primary energy source; however,

trends vary from region to region. Broadly speaking coal consumption has

been stable in OECD countries over the last decade; however, in the EU,

there was a 14% drop. The demand for coal in developing countries has

increased dramatically over the same period. Countries demonstrating par-

ticular increases in demand for coal have been China and India (www.eura-

coal.be). Table 5.1 shows the top ten coal consumers in 2010. Table 5.2 shows

proven coal reserves at the end of 2009.

Table 5.3 shows the world’s top ten coal producers as of 2010. Some

countries feature in both Tables 5.1 and 5.3, however not all; so it is evi-

dent that some coal is traded internationally. In 2010, only 14.8% of the

coal produced globally was traded, indicating that coal is mainly used

near the site of mining. In general, it can be cost effective to export coal

from mines located near sea ports with low production costs to customers

overseas. Imported coal can play a major role in increasing a country’s

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Table 5.1 Top ten coal consumers in 2010

PR China 2516 Mtce South Africa 141 Mtce

USA 733 Mtce Germany 105 Mtce

India 434 Mtce Korea 103 Mtce

Russia 177 Mtce Poland 87 Mtce

Japan 165 Mtce Chinese Taipei 60 Mtce

Source : World Coal Association.

Table 5.2 Proven reserves at end

of 2009

Country Billion Tonnes

Russia 157

Australia 76.2

Ukraine 33.9

South Africa 30.4

Brazil 7.1

USA 238.3

PR China 114.5

India 58.6

Kazakhstan 31.3

Poland 7.5

Source : World Coal Association.

Table 5.3 Top ten hard coal producers as at 2010

PR China 3162 Mt Russia 248 Mt

USA 932 Mt Indonesia 173 Mt

India 538 Mt Kazakhstan 105 Mt

Australia 353 Mt Poland 77 Mt

South Africa 255 Mt Colombia 74 Mt

Source : World Coal Association.

Table 5.4 Top coal exporters as at 2010

Total Steam Coking

Australia 298 Mt 143 Mt 155 Mt

Indonesia 162 Mt 160 Mt 2 Mt

Russia 109 Mt 95 Mt 14 Mt

USA 74 Mt 23 Mt 51 Mt

South

Africa

70 Mt 68 Mt 2 Mt

Colombia 68 Mt 67 Mt 1 Mt

Source : World Coal Association.

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Coal resources, production and use in established markets 107

© Woodhead Publishing Limited, 2013

energy security (www.euracoal.be). Table 5.4 shows the world’s top ten

coal exporters in 2010. Coal fl ows from country to country are often deter-

mined by geography; for example; markets in Asia are mainly supplied by

Australia and Indonesia.

This chapter reviews the coal industry in countries in which the market

for coal has long been established: Australia, Canada, Germany, Hungary,

Poland, South Africa, Turkey, the UK, Ukraine and the USA. Coal produc-

tion is discussed fi rst, followed by aspects of coal demand for each terri-

tory. Coal supply and demand in emerging economies is discussed in the

chapters which follow.

5.2 Australia

5.2.1 Coal production

Total coal production in Australia has been growing at 2.2% per annum over

the past 5 years to reach 405 million tonnes (Mt) in fi nancial year 2010–2011

(The Australian Coal Association; http://www.australiancoal.com.au/ , 2012). 1

This fi gure was down from 471 Mt in 2009–2010. The drop was largely as a

result of the Queensland fl oods of January 2011 where production in that

state fell by some 30%. After processing, 326 Mt of black (bituminous) coal

was available for both domestic use and for export in 2010–2011. Again, this

represented a drop in production of some 14% from the 366 Mt produced in

2009–2010. New South Wales and Queensland remained the main produc-

ing states with around 97% of Australia’s saleable output of black coal, and

almost all of Australia’s black coal exports. (Exports from Western Australia

commenced in 2007.) Australia has $26.5 billion in advanced coal mining

projects and associated infrastructure, involving more than 74 million addi-

tional tonnes of coal production by 2014. ‘Less advanced’ coal mine and coal

infrastructure projects have a potential capital expenditure of $46.6 billion,

if all projects were to proceed.

5.2.2 Role of coal in Australia

Black coal plays a major role in Australia’s electricity, steel, cement and

other manufacturing industries. Black coal generates more than 54% of

Australia’s electricity used by business, industry and households; 4.7 Mt of

metallurgical coal are used each year by the Australian steel industry and

coal is an essential ingredient in cement making.

1 The material in Section 5.2 is directly quoted from http://www.australiancoal.com.au/ and is used with permission.

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5.2.3 Coal exports

Black coal is Australia’s second-highest export commodity and Australia is

the world’s leading coal exporter. Over the past 10 years, black coal exports

have increased by more than 50%. Japan takes 39.3% of Australia’s black coal

exports – the largest share, with a total of 115.3 Mt exported last fi nancial year.

China is the second largest market with 42.4 Mt in 2009–2010, almost double

that of the previous year. The Republic of Korea accounts for 40.7 Mt, India for

31.92 Mt and Taiwan for 26.53 Mt, rounding out the top fi ve destinations for coal

from Australia. Together these fi ve countries accounted for 88% of all black coal

exports with a further 28 countries taking the remaining 12%. Demand for coal

in China and India is expected to increase dramatically over the next decade in

line with these countries’ projected need for coal for energy and manufacturing.

Australia was the only one of the world’s 33 advanced economies to grow in

2009 during the worst global recession since the Great Depression. The prin-

cipal reason for this was the country’s continued coal exports. The importance

of coal in the economy is also evident in its growing share of Gross Domestic

Product. This share has more than doubled, from 1.7% in 2006–2007 to 3.5%

in 2008–2009, making it the largest contributor to the mining sector. In 2011,

Australia’s thermal coal exports grew by 4%, relative to 2010, to total 148 Mt.

Projections for 2012 see an increase of 10% in 2012 to 162 Mt, then growing

at an average annual rate of 11% between 2013 and 2017, to total 271 Mt by

the end of the period. Australia’s exports of metallurgical coal are forecast to

increase at an average annual rate of 8%, reaching 218 Mt in 2017, with total

earnings forecast at $40 billion in current Australian dollars.

5.3 Canada

5.3.1 Coal production

Canadian coal production has been around 66 Mt over the last 10 years. 2

However in 2010, coal production increased to almost 68 Mt. Forty Mt was

thermal coal and 28 was steel-making coal. In 2010, overall coal production

increased by 8% compared to 2009.

5.3.2 Role of coal in Canada

Canada consumed 48 Mt of coal in 2009 and most of this was for coal-fi red

electricity. 42 Mt was used by 19 coal-fi red power generation plants in Canada,

3 Mt was transformed into coke and used in the iron and steel industry and 3 Mt

was used for industrial energy and non-energy uses.

2 The material in section 5.3 is directly quoted from http://www.coal.ca/ and is used with permission.

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Some provinces rely heavily on coal-fi red electricity. The following shows

the per cent of electricity generation which comes from coal:

Alberta – 74% •

Nova Scotia – 73% •

Saskatchewan – 60% •

Cost-effective and reliable coal-fi red electricity contributes to a strong eco-

nomic advantage for Alberta and Saskatchewan because of the abundance

of locally sourced coal which is harnessed through a ‘mine-mouth’ operation

where coal is removed from the earth and moved to a nearby power gener-

ation plant to be converted to electricity.

5.3.3 Coal exports

Coal mining is an important contributor to Canada’s GDP – contributing

an estimated $5.2 billion in direct and indirect impacts in 2011. In recent

years the industry has seen remarkably strong growth in revenue and capi-

tal investment. Between 2001 and 2010, revenue grew by 14.6% and during

the same time frame capital investments grew by 19.3%. The industry ben-

efi ts Canadians through employment, investment in physical infrastructure

and taxes and royalties which help to pay for roads, schools and hospitals.

40% of the coal produced in Canada is exported. In 2010, exports totalled 33

Mt, a 22% increase from the previous year. The majority of the coal exported

was steel-making coal. The percentage of total exports in 2010 was as follows:

Asia – 73% •

Europe and the Middle East – 14% •

US – 13% •

To meet its rapid infrastructure growth and consumer demand for things

such as vehicles and home appliances, Asia has turned to Canada for its

high-quality steel-making coal. As Canada’s largest coal-trading partner,

coal exports to Asia accounted for 73% of total exports in 2010.

5.4 Germany

5.4.1 Coal production

Germany has considerable reserves of hard coal (2500 Mt) and lignite

(40 500 Mt). 3 Subsidised hard coal production is to be phased out by 2018,

3 The material in sections 5.4, 5.5, 5.6, 5.8, 5.9 and 5.10 is directly quoted from http://www.euracoal.be and is used with permission.

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in agreement with national and European regulations. Restructuring of

the hard coal industry continues in Germany which still has fi ve operat-

ing deep mines, namely the collieries West, Prosper-Haniel and Auguste

Victoria (and Ost until its closure in October 2010) located in the Ruhr

area, the Saar mine in the Saar coalfi eld and another deep mine near

Ibbenb ü ren. Production in 2010 from these three coalfi elds can be broken

down as follows: 75% from the Ruhr area, 10% from the Saar and 15%

from the Ibbenb ü ren coalfi eld.

Lignite production, which totalled 169.4 Mt (52.3 Mtce) in 2010, was

centred in four mining regions, namely the Rhineland around Cologne,

Aachen and M ö nchengladbach, the Lusatian mining area in south-east-

ern Brandenburg and north-eastern Saxony, the Central German min-

ing area in the south-east of Saxony-Anhalt and in north west Saxony

as well as the Helmstedt mining area in Lower Saxony. In these four

mining areas, lignite is exclusively extracted in opencast mines.

5.4.2 Role of coal in Germany

Hard coal and lignite are Germany’s most important indigenous source

of energy. In 2010, the German hard coal market amounted to 57.8 Mtce,

of which 39.7 Mtce were used for power and heat generation, whilst 16.6

Mtce went to the steel industry. The remaining 1.5 Mtce were sold to

the residential heat market. Germany was the EU’s largest hard coal

importer in 2010, as well as one of the world’s largest coke importers.

Some 45 Mt of hard coal (steam coal and coking coal) or 77% of the

national consumption were imported in 2010. The biggest suppliers of

hard coal to Germany were Russia, with a market share of more than

22%, followed by Colombia with more than 14%. Exports from the USA

and Poland each accounted for 11% and most coke was also imported

from Poland.

Lignite availability in 2010 totalled 51.5 Mtce, with a domestic output

accounting for 52.3 Mtce and imports of approximately 80 000 tce. Lignite

exports amounted to 0.9 Mtce of pulverised lignite and briquettes. Lignite

is currently an indispensable energy source for Germany because it is

abundantly available for long-term use and is competitive. Furthermore,

the lignite industry is an important employer and investor, adding major

economic value to the mining regions. More than 90% of lignite pro-

duction is used for power generation (154.6 Mt), accounting for nearly

24% of the total power generation in Germany. Lignite use, according to

the scenarios, remains stable until 2020, but practically disappears as an

energy source by 2050.

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5.5 Hungary

5.5.1 Coal production

Hungary’s most important indigenous coal reserves comprise approx-

imately 8.5 billion tonnes of coal. Lignite and brown coal account for

about 80% of the country’s total coal reserves, making these the most

important indigenous sources of energy. Hungary’s lignite and brown coal

resources are concentrated in the regions of Transdanubia and in north-

ern and north-eastern Hungary. M Á TRAI ER Ö M Ü ZRT’s (M Á TRA’s)

1000 square kilometre lignite fi eld, which has proven mineral reserves

of approximately 800 Mt, is located 90 km to the east of Budapest.

Extraction here is concentrated at the two opencast mines of B ü kk á br á ny

and Visonta. In 2010, M Á TRA produced approximately 8.2 Mt of lignite

after removing some 67 million cubic metres of overburden. The lignite

mined at B ü kk á br á ny, some 60 km away from Visonta, is transported to

the power station by rail. Currently total lignite output in Hungary is

about 9 Mt.

5.5.2 Role of coal in Hungary

In 2010, electricity produced from coal had a share of 17% in national gross

electricity generation. Most of the coal-based electricity was generated by

M Á TRA. M Á TRA is Hungary’s biggest lignite-based power generator, with

a market share of about 15%.

Due to an environmental moratorium on coal-fi red power stations, which

affects coal-fi red power generation installations not fi tted with fl ue-gas des-

ulphurisation systems, M Á TRA’s opencast mines at Visonta and B ü kk á br á ny

and the deep mine supplying the V é rtes power station group are the only

coal production sites still in operation since 2005. The V é rtes power station

is planned to be shut down, so the associated mining operations will be also

phased out in the coming years. However, political considerations may over-

ride this economic decision.

95% of the total lignite output is used for heat and power genera-

tion. The remaining coal goes to municipalities, households and other

consumers. Annual lignite production in Hungary is expected to remain

more or less at the current level until the end of the second trading

period under the EU Emissions Trading Scheme. For the following

period, from 2013, it remains to be seen how carbon-trading regulations

and the development of prices will affect lignite-based power produc-

tion in Hungary.

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5.6 Poland

5.6.1 Coal production

Poland has hard coal reserves totalling 16.9 billion tonnes, mainly located in

the Upper Silesia basin and in the Lublin basin in the east of Poland. These

are also the locations for the commercially workable hard coal reserves,

with the Upper Silesian coalfi eld accounting for 93% of the total. The coal

reserves in this region contain some 400 coal seams with thicknesses of 0.8–

3.0 m, about half of which are economically workable. Some 56% of the

workable coal reserves consist of steam coal, while the remaining 44% are

coking coal.

Mineable lignite reserves amount to almost 15 billion tonnes. Poland’s

lignite deposits are exclusively mined in opencast mines. Two of these

operations are located in central Poland and a third one lies in the south-

west of the country. In 2010, total lignite production reached 56.3 Mt

(15.2 Mtce). Poland’s lignite mining areas are expected to maintain their

annual production output at current levels of around 60 Mt, and lignite

is expected to play an important role in Poland’s energy supply until at

least 2030.

5.6.2 Role of coal in Poland

Coal and lignite are key strategic fuels for power generation in Poland,

where indigenous supplies of these solid fuels have underpinned growth in

electricity output. The contribution of coal and lignite to total power gen-

eration is dominant today, and is expected to be maintained in the medium

term. In recent years, however, Poland has become a net importer of coal.

In 2010, imports of coal amounted to 13.4 Mt. Imports were dominated by

deliveries from Russia, with minor volumes originating from other sources,

including the Czech Republic, Colombia and Kazakhstan. 99.3% of Poland’s

lignite production in 2010 was used by mine-mouth power plants. Lignite-

fi red power stations generated 48.7 TWh of electricity, representing 30.9%

of the total power generated in Poland.

5.7 South Africa

5.7.1 Coal production

According to Wood Mackenzie, South African coal reserves (i.e. the forecast

of future marketable coal production for the duration of each mine/project)

amount to a total of 7.8 billion tonnes, 97% of which is thermal coal, with the

remaining 3% made up of metallurgical coal. The majority of these reserves

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(5.2 billion tonnes; 66% of the total) are in Mpumalanga Province, largely

in the form of thermal coal reserves in the Witbank, Highveld and Ermelo

coalfi elds. Mpumalanga also contains 1% of the total amount of metallur-

gical coal, principally as pulverised coal injection (PCI) coal, but the largest

reserves of this type of coal are found in Limpopo province, which holds

92% of metallurgical coal marketable reserves, and 27% of the total mar-

ketable coal (2.1 billion tonnes).

In terms of total annual output, Wood Mackenzie estimates that the South

African coal industry produced 239 Mt in 2011, of which 234 Mt was ther-

mal coal and 5 Mt metallurgical coal, which represents a reduction of more

than 2% compared to the previous year’s output. As might be expected

from the total reserves data above, the vast majority of coal was produced

in Mpumalanga (196 Mt; 82%), followed by Limpopo (19 Mt; 8%), with

the remainder from Free State and KwaZulu Natal provinces (http://www.

woodmacresearch.com).

5.7.2 Role of coal in South Africa

Coal plays a major role in South Africa’s electricity, steel, cement and other

manufacturing industries. Coal generates approximately 93% of South

Africa’s electricity used by business, industry and households (World Coal

Association).

5.7.3 Coal exports

In 2011, approximately 29% of the total coal produced in South Africa

was exported, amounting to 71.5 Mt. This represents an increase over

the previous year, when 67.6 Mt were exported; however, South Africa’s

increase in exports in 2010 was largely offset by a decline in domestic

production.

India has been the largest importer of South African coal since 2009,

and imported 18.9 Mt in 2011. The second largest importer was China,

with 11.6 Mt, an increase of 63% compared to 2010. The Netherlands,

which was the largest importer in 2008, fell to only the ninth place in

2011. Thanks to the substantial imports from India and China, Asia was

the region with the largest imports of South African coal in 2011, with a

total of 42.7 Mt, accounting for 60% of total exports, compared to 39.7

Mt (59%) in 2010. The largest increase in imports came from the Middle

East, which imported 42% more coal from South Africa in 2011 than in

2010. At the opposite end of the scale, exports to the Americas declined

by 43%, while exports to Europe also fell, from 15.3 Mt to 15.1 Mt (21% of

South Africa’s total coal exports) (http://www.woodmacresearch.com).

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5.8 Turkey

5.8.1 Coal production

Turkey has around 1.3 billion tonnes of hard coal and 11.5 billion tonnes

of lignite resources, of which 0.5 billion tonnes and 9.8 billion tonnes

respectively are proven reserves. Turkey’s main hard coal deposits are

located in the Zonguldak basin, between Eregli and Amasra on the Black

Sea coast in north-western Turkey. Hard coal resources in the basin are

estimated at some 1335 Mt of which 534 Mt are in the proven category.

The Turkish coal sector produces both hard coal (2.8 Mt in 2010) and lig-

nite (69.0 Mt).

Lignite is Turkey’s most important indigenous energy resource. Deposits

are spread across the country, with proven reserves of 9837 Mt. The most

important lignite deposits are located at the Afsin-Elbistan lignite basin of

south-eastern Anatolia, near the city of Mara š , where the geological and

economically mineable reserves are estimated at around 5000 Mt of low

quality lignite. The Soma basin is the second largest lignite area in Turkey.

Other important deposits are located in the Tun ç bilek, Seyit ö mer, Bursa,

Ç an, Mu ğ la, Beypazar ı , Sivas and Konya Karap ı nar basins. The quality of

Turkish lignite is generally very poor and only around 6% of the reserves

have a heat content of more than 3000 kcal/kg. In 2010, lignite output

totalled 69.0 Mt. Almost 90% of Turkey’s total lignite production is from

opencast mines. However, there are some underground mining activities,

mainly in the Soma, Tun ç bilek and Beypazar ı basins. The scale of the surface

operations allows lignite to be produced at a relatively low cost, making it

competitive with imported energy resources.

5.8.2 Role of coal in Turkey

As Turkey’s indigenous energy resources consist almost exclusively of lig-

nite and small amounts of hard coal, the country is heavily dependent on

imports of hard coal, oil and gas. The country imports approximately 72%

of total primary energy needs. In 2010, Turkey imported 26.9 Mt of hard

coal for thermal power plants, steel production, industry and domestic heat-

ing purposes, 38.3% from Russia, 10.6% from Colombia, 9.0% from the

USA and 7.6% from South Africa. Coal imports to Turkey are expected to

increase over the next years.

Turkey’s domestically-produced hard coal is mainly used for power gen-

eration. At present only a small power station (300 MW) is fed with domes-

tic hard coal from the Zonguldak basin, while the larger Iskenderun power

plant (1200 MW) uses imported hard coal. The other power plants use lig-

nite. In total, Turkish coal-fi red plants have a capacity of approximately 10.6

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GW. The main market for Turkey’s lignite is lignite-fi red power plants which

had a total capacity of 8334 MW in 2009.

5.9 UK

5.9.1 Coal production

The UK has signifi cant, potentially economic, hard coal resources estimated

at 3000 Mt. About 600 Mt of reserves are available in existing deep mines

or in shallow deposits capable of being extracted by surface mining. In addi-

tion, currently inaccessible resources have the potential to provide many

years of future production at present levels. There is also about 500 Mt of

lignite resources, mainly in Northern Ireland, although none is mined or con-

sumed at present. Indigenous production of coal in 2010 was split between

deep mines with 7.4 Mt, surface mines with 10.4 Mt, and 0.6 Mt from other

sources, such as tip washing

5.9.2 Role of coal in the UK

In 2010, the UK hard coal supply totalled 44.9 Mt, with 18.4 Mt covered

by indigenous production and 26.5 Mt by imports. There was a signifi cant

stock reduction of 7.1 Mt. Imports supplied virtually the whole of the

coking coal market, as the UK no longer produces signifi cant quantities

of coal suitable for use in coke ovens. The UK also exported 0.6 Mt of

hard coal.

Power generation in the UK refl ects a diverse energy mix. In 2010, net

electricity supplied was 363.7 TWh, dominated by natural gas (47.2%),

hard coal (28.1%) and nuclear power (15.5%). Hydropower and renew-

ables contributed 7.3%, oil 1.2% and net imports provided 0.7% of elec-

tricity supplied. Coal consumption in 2010 was 51.5 Mt, of which 41.5 Mt

was used for electricity generation. Hard coal consumption in the steel

industry was 6.6 Mt.

5.10 Ukraine

5.10.1 Coal production

Ukraine’s total coal resources are estimated at 54 billion tonnes. Economically

mineable coal reserves are estimated at a further 34 billion tonnes, of which

6.1 billion tonnes are located in active mines. Of these reserves, 3.5 billion

tonnes are steam coal and 2.6 billion tonnes coking coal. Ukraine also has

some lignite reserves. The main coal reserves (45.6%) are concentrated

in the Donetsk coal basin. A further 34.2% of reserves are located in the

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Luhansk region, 15.3% in the Dnipropetrovsk region and the remaining

4.9% in the regions of Lviv, Volyn and Kirovograd.

The ‘Energy Strategy of Ukraine’ plans an increase of indigenous coal

extraction, in order to secure the country’s energy supply, which for the

moment is too dependent on imported gas. The long-term development

of the coal industry will be implemented in three stages. The fi rst stage

(2011–2015) aims to restructure the coal industry. State-owned mines will

be privatised and uncompetitive mines closed or restructured, in order to

make them attractive for investors. Total coal output will not be allowed to

decrease because there are no other energy sources able to bridge any short-

fall. The second step (2015–2020) foresees the upgrading and modernisation

of privatised coal mines by their new owners. In the third step (2020–2030),

stable growth of the coal industry will be achieved.

Currently, 149 mines are operating in Ukraine, including 120 state-owned

and 29 private mines. The coal industry in Ukraine employs about 271 000

people. Ukraine’s coal sector includes projects on coal-mining processes,

such as coal preparation, the development of new mines and mining engi-

neering. Scientifi c and research institutes, development laboratories and

technological institutes also work for the coal industry.

The total coal output can be increased to 115 Mt in 2030 (including up to

75 Mt of steam coal) as a result of implementing the three-stage develop-

ment strategy. Ukraine fi gures amongst the top ten coal-mining countries of

the world. However, its technical and economic parameters, and its occupa-

tional health and safety situation, must still be improved. The main factors

that infl uence health and safety in Ukrainian coal mines are diffi cult geo-

logical conditions and outdated equipment.

5.10.2 Role of coal in Ukraine

Until 1970, three-quarters of Ukrainian electricity was generated by coal-

fi red thermal power plants. Today, only one-third of electricity is produced

from solid fuels. The national economy is highly dependent on imported

energy, in particular on natural gas and oil. Therefore, taking into account

Ukraine’s considerable reserves, coal will remain the main indigenous

energy source for decades to come, securing the country’s energy supply, as

well as its economic and political independence.

5.11 USA

5.11.1 Coal production

Wood Mackenzie examined the total marketable thermal coal reserves in

the US in January 2012 and put the total at nearly 24 billion short tons, while

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the US Geological Survey has estimated the Demonstrated Reserve Base in

the US at over 300 billion short tons.

Thermal coal production in the US fell by 6.4 million short tons in 2011,

with the most signifi cant reductions observed in the Powder River Basin

and Northern Appalachia, as a result of both increased competition from

natural gas and growing regulatory pressure. In addition, a number of pro-

ducers from Central and Northern Appalachia are choosing to use higher

quality thermal coals with coking properties in the metallurgical coal mar-

ket in order to obtain higher margins, although this was less in evidence in

2011 than in 2010.

Metallurgical coal production in the US showed considerable growth in

2011, partly as a result of the global coal shortage caused by fl ooding in

Australia, rising to 90.7 million short tons, an increase of 19% compared to

2010, and 60% compared to 2009. The majority of metallurgical coal was

produced in Central Appalachia (64% of the total), with 26% and 11% pro-

duced in Northern and Southern Appalachia respectively. The trend men-

tioned above for thermal coals being used in the metallurgical market meant

that the Appalachian region produced signifi cantly more metallurgical coal

in 2011 than in 2010, as thermal coals from the Pittsburgh seam crossed over

to the metallurgical market (http://www.woodmacresearch.com).

5.11.2 Role of coal in the USA

The US domestic market for thermal coal showed no signifi cant changes

in 2011; however, exports have shown signifi cant increases, with a total of

40.8 million short tons in 2011 compared to 12.7 million short tons in 2010

and 9.2 million short tons in 2009. The largest proportion of thermal coal

exports in 2011 came from Central Appalachia, with a total of 13.3 mil-

lion short tons compared to 3.4 million short tons in 2010. This substantial

increase can be explained by a high demand for coal, combined with low

ocean freight rates, which has made coal from Appalachia more appealing

and more economical for European utilities, particularly because tradi-

tional European supplies are tending to shift towards Asian markets. The

high international demand for coal also led to growth in other coal-produc-

ing areas in 2011, such as the Powder River and Illinois Basin (http://www.

woodmacresearch.com).