Chinese Pinyin - Forums show the way ahead for China's coal sector

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Forums show the way ahead for China's coal sector
By Yang Cheng and Zhao Shijun
Updated: 2007-09-18 07:22

TAIYUAN: A series of high profile forums have been the highlights of the
nation's first-ever national-level coal gala here.

The China (Taiyuan) International Coal & Energy New Industry Expo is
sponsored by the Ministry of Commerce and the Shanxi provincial
government. The forums, constituting the key events of the expo, were
organized by the Shanxi Provincial Development and Reform Commission.

"The forums offered an international platform for technological,
financial and management cooperation, and will help accelerate the
development of coal industry upgrade for Shanxi," said Cheng Zeye, chief
economist of the Shanxi Provincial Development and Reform Commission.

The conferences featured some 30 high-level government officials, as well
as world-renowned experts and researchers, and attracted large audiences
comprising industry professionals, experts and government officials.

Of the four forums on the agenda, the Energy and New Industry Development
Policy Forum was held on the morning of September 16, the New Energy and
Renewable Energy Industrialization Forum the same afternoon and the
Energy and Sustainable Development Forum took place yesterday afternoon.

The Coal and Energy New Industry Sustainable Development Summit was held
yesterday morning, and featured some of the nation's leading government
officials such as Minister of Commerce Bo Xilai and newly appointed
Shanxi Acting Governor Meng Xuenong, which further enhanced its
significance.

Cheng told China Daily that the forums were held "at the right time as
Shanxi currently meets two historically important opportunities."

First, the nation's first coal industry fund - the Shanxi Energy Industry
Fund - was approved by the State Council last week.

Moreover, the China Taiyuan International Coal Trade Center was also
approved by the State Council. The center is expected to help Taiyuan
develop from a regional coal market center to a national-level one, he
said.

"The forums offered valuable advice and solutions for Shanxi to tap into
the two opportunities, widening our horizons on how to implement Shanxi's
development strategy. Looking forward, the forums will play an important
role in improving Shanxi's sustainable development, coping with
environmental stress, enhancing production safety and sharpening its
overall competitive edge," Cheng noted.

Exchange of ideas

At the forums, industrial experts, entrepreneurs and government officials
exchanged opinions on the recent development trends in the global coal
sector and new energy industries, and offered advice on the sustainable
growth of Shanxi's industries.

Brian Ricketts, energy analyst of the Paris-based International Energy
Agency (IEA), in his speech entitled Global Outlook for Coal Demand and
Supply, said:

With current policies, global energy needs will be more than 50 percent
higher in 2030 than today.

China's changing coal demand has had a big impact on international coal
trade over the last decade.

Free and transparent markets can avoid dangerous disruptions.

Projected energy trends raise serious concerns like increased
vulnerability to supply disruptions and rising carbon dioxide (CO2)
emissions.

Many countries are already considering more vigorous policies to curb
demand growth and reduce reliance on imported fossil fuel.

A truly sustainable energy system calls for faster technology development
and deployment - involving all countries.

Coal is part of the problem, but it must be part of the solution.

Paul Bracher of Bucyrus, in his speech - Improving Productivity and
Technology Through Technology - said the following:

Mining is a complex industry with rapidly changing dynamics including
environmental, health and safety requirements.

Formulation of policy needs to include the core value of safety.

China has a particularly complex mining industry with very large
production volumes and big variances in safety standards.

Modern mining methods and mechanization have improved safety standards
considerably.

Each mining operation needs to develop its own risk profile and method of
evaluating investment in safety protection.

Many safety improvements need little financial investment, rather
requiring awareness, training and continuous improvement.

Du Minghua, director-general of the Coal Chemical Industry Branch of
China Coal Research Institute, in his speech - Development and
Application of Clean Coal Technology in China, emphasized the importance
of clean coal technology. He referred to it as:

Having important significance in China's sustainable economic
development, energy safety, and cleaner and efficient use of fossil
energy;

Being the important director of China's energy technology development in
the next few decades;

Playing an important role in the promotion of energy industry
restructuring, development of regional economy and building an
energy-efficient and energy-saving society.

Li Boqiang, a researcher with the China Energy Economic Research Center
in Xiamen University, said in his speech - China's Energy, Environment
and Sustainable Development:

China needs to establish a feasible and scientific energy strategy.

The nation needs to understand the necessity and difficulties of energy
conservation.

The target to reduce energy consumption per unit gross domestic product
(GDP) by 20 percent mainly relies on the restructuring of economic
growth. When it comes to relative comparative advantage, China should
develop labor-intensive industry rather than resource-intensive industry.

The insufficiency of market reform, especially energy pricing reform, is
leading to rapid increase in China's energy demand.

Given a certain level of energy consumption, environmental pollution can
be addressed through a cleaner energy mix, such as wind energy. But at
present the total installed capacity of wind power generation is less
than 1 million kilowatts.

Effective energy conservation and environmental protection also rely on
people's consciousness about the energy environment as well as promotion
by government officials.

Zhang Yuzhuo, vice-president of Shenhua Group Co Ltd, in his speech - the
Prospects of the Coal-to-Oil Chemical Industry in China - said:

The oil problem has become a pressing global issue and a key factor
restraining China's economic and social development. Developing the
coal-to-oil industry is a relatively realistic choice considering China's
coal-dominated energy mix.

The gap between oil supply and demand will become increasingly pronounced
along with the development of the world economy. Coal will continue to be
the best substitute for oil and natural gas in the future.

As an important means of clean conversion and effective utilization of
coal, coal-to-oil technology will be an important approach to restructure
the energy mix in the future and to guarantee oil supply for the rapidly
developing economy.

As the largest coal company in China, Shenhua is energetically pushing
forward clean conversion of coal, developing the new coal-to-oil chemical
industry and realizing the integrated development of coal, power
generation and coal chemical industry via direct coal liquefaction and
indirect coal liquefaction, to make contributions to China's economic
construction and environmental protection.

The development of Shenhua's new coal-to-oil chemical industry has a
strong demand for advanced clean coal conversion technology, and Shenhua
expects extensive and intensive cooperation with its partners both at
home and abroad (in this regard).

Michael Cosgrove, CEO of Asian American Coal Inc (AACI), said in his
speech - AACI's Cooperation and Investment Experiences in China's Coal
Industry - that:

China is one of the last frontiers in coal mining. It offers tremendous
opportunities because of its huge coal reserves and the government's
willingness to bring Western safety management to China.

China has previously encouraged foreign investment in exploration and
exploitation of coalmines, with foreign companies allowed to hold
majority interest in coalmines.

Currently, although regulatory policies still encourage foreign
investment in the coal industry, local governments have begun to restrict
foreign ownership in coalmines. For instance, such ownership is
restricted to 40 percent in Shanxi Province.

The nation's catalogue of foreign-invested industries will be revised
this year. The central government still encourages foreign investment,
but is trying to optimize the industry structure.

Foreign investment merely in commercial coal development will not be
approved; while integrated operation with power generation and
transportation is encouraged.

Therefore, foreign investment targeting western development areas,
especially in the coal industry, needs to be relevant because provision
of capital is not enough. It needs to be flexible on ownership levels,
although many foreign investors will struggle with this. Further,
investors must have long-term vision, strategic relevance and patience.

(China Daily 09/18/2007 page5)

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