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Industrial Use of Coal: ISQA 439 Commodity Study
Industrial Use of Coal: ISQA 439 Commodity Study
Nemah Dalai
Yuliya Gula
Brad Thomson
TABLE OF CONTENTS
Executive Summary…………………………………………………………………….. 3
Section I - Current Status..................................................................................................4
Coal Description.......................................................................................................................4
Current Uses.............................................................................................................................5
Primary use............................................................................................................................5
Secondary use........................................................................................................................6
Ecological Issues Relating to Uses...........................................................................................6
Major Global Producers............................................................................................................
Major Global Users..................................................................................................................6
Active Resources.......................................................................................................................6
Reserves.....................................................................................................................................6
Mode of Transportation...........................................................................................................8
Rail.........................................................................................................................................6
Barges and ships....................................................................................................................6
Aerial tramways, conveyors, and pipeline..............................................................................6
Section II - Production Process.........................................................................................4
How the item is made...............................................................................................................5
Production Technology............................................................................................................5
Improvements...........................................................................................................................5
Labor Issues..............................................................................................................................5
Ecological Issues Relating to Uses...........................................................................................5
Waste piles.............................................................................................................................6
Water quality..........................................................................................................................6
Air quality..............................................................................................................................6
Section III – Substitute Materials.....................................................................................4
Availability................................................................................................................................5
Breakdown................................................................................................................................5
Availability Issues.....................................................................................................................5
Section IV– Supply and Demand......................................................................................4
Production.................................................................................................................................5
Consumption.............................................................................................................................5
Future Projections....................................................................................................................5
Logistical Issues........................................................................................................................5
Availability of Logistics............................................................................................................5
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Section V– Pricing..............................................................................................................4
Pricing History..........................................................................................................................5
Current Price............................................................................................................................5
Projections of Future Pricing...................................................................................................5
Appendix I..........................................................................................................................4
Appendix II.........................................................................................................................4
Appendix III.......................................................................................................................4
Appendix IV.......................................................................................................................4
Appendix V.........................................................................................................................4
Appendix VI.......................................................................................................................4
Works Cited........................................................................................................................4
Executive Summary:
The international market for coal has developed over the last 25 years to its present form.
It remains relatively small compared with oil markets, and accounts for only about 13%
of world coal production because, as with gas, coal is expensive to move, especially
inland: and, to store. The world industry is still dominated by local production for local
use, but local industry, performance is increasingly assessed against the performance
standards required in the international market for coal and other energy commodities,
notably gas.
These challenges include widening access to affordable energy supplies. Over 1.6 billion
people (25% of the world's population) do not have access to electricity. Affordable,
secure and reliable electricity supply enables economic development which is a
prerequisite for poverty alleviation.
Coal plays a central role in supporting global economic development, alleviating poverty
and is an essential resource to meeting the world's energy needs. Coal currently supplies
26% of primary energy and 40% of electricity generation. Coal use is forecast to rise over
60% to 2030, with developing countries responsible for 97% of this increase, primarily to
meet electrification rates.
It is important that we maximise the value to society from the production and use of coal
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while at the same time minimising any negative impacts. The coal industry is committed
to delivering value across the whole coal chain - from production, transportation, right
through to utilisation and legacy issues.
Coal Description:
Coal is a solid carbon-rich material, typically black or brown, which occurs in stratified
coal form as a result of different chemical composition (coal type), degree of coalification
(coal rank), and range of impurities (coal grade). These classifications are determined on
fixed carbon, volatile matter, heating value, and agglomerating (or caking) properties.
Coal has been the world’s major source of commercial energy since the start of major
industrialization in Europe during the late 18th century, continuing until the middle of the
20th century. The Mineral Information Institute (M.I.I) states, there are four basic
varieties of coal:
Lignite:
This type of coal forms due to increased pressures and heat from overlying strata. This
causes buried peat to dry and harden into lignite. Lignite is a brownish-black coal with
generally high moisture and ash content with a lower heating value. Lignite coal is mined
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Sub-bituminous: Some lignite changes into the next rank of coal, sub-bituminous. This
dull, dark black and brownish coal has soft and crumbly physical characteristics, with a
higher heating value than lignite. Sub-bituminous coal is used primarily for generating
Bituminous: Even greater pressure results in the creation of bituminous, or “soft coal”.
Most commonly, this type of coal is for steam-electric power generation in the United
States. Extensive amounts of bituminous coal are used for heat and power applications in
manufacturing, and to make coke coal. It has the third highest heating value above lignite
or sub bituminous. Bituminous coal is mined predominantly in Appalachia region and the
Anthracite: Known as “hard coal,” contains a high percentage of fixed carbon with
low percentages of volatile matter. Anthracite coal forms from bituminous coal when
immense pressures expand in folded rock strata during the creation of mountain ranges.
This occurs only in limited geographic areas - primarily the Appalachian region of
Pennsylvania. Anthracite has the highest energy content of all coals, and generally used
Primary Uses:
According to The American Coal Foundation, coal usage has four primary markets:
energy utilities, industrial/retail use, the steel industry and shipping exports/imports. The
energy that coal supplies makes energy availability to consumers and allows for basic
needs to be met easier. Needs such as, energy for domestic heating and cooking, aids in
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the transportation of people, products, raw materials, and energy for industrial
applications. In order to provide these needs coal must go through a basic process. (See
Figure 2)
linked to the usage of coal. Coal is an abundant, low-cost energy source used in twenty-
three out of the twenty-five electricity-generating power plants in the US. These power
plants also have the lowest operating costs in the US. Lower operating costs from coal
help boost the economy, moderates inflation, and increases coal’s competitiveness in the
marketplace.
Secondary Uses: Manufacturing plants and industries use coal to create chemicals,
cement, paper, ceramics, and metal products. Coals byproducts, methanol and ethylene,
According to the Environmental Protection Agency, there are four forms of ecologically
harmful effects associated with the use of coal-fired generation; air, water, solid waste,
and radioactive.
Air emissions: Carbon dioxide, sulfur dioxide, and mercury compounds are all
byproducts that release into the air when coal is burned to generate electricity. To reduce
the harmful effects caused by these gases, coal-fired boilers are now required to have
control devices, which help to reduce the amount of emissions that are unconfined.
Water Resource Usage: Water used to aid in the coal production process, will often get
discharged into nearby waterways. Often this water was not properly cooled, filtered, nor
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treated thus, causing adverse effects on aquatic ecosystems. Though regulations have
been put into place (i.e. Clean Waterways Act of 1977) in the United States to stop these
practices, other developing countries do not have such stringent policies and water
Solid waste generation: Created onsite at coalmines, is the leftover residue formed when
coal is cleaned. Solid waste coal is also found in power plants, when buildups of air
Land resource use: The Soil on, and nearby coal-fired power plants become
contaminated with various pollutants from coal and may take a long time to recover, even
after the power plant closes down. Though in some areas, domestic and abroad there are
ecological restoration projects that revitalize old industrial sites know as brown-fields,
and turn them into places that promote social engagement and learning such as parks and
Reserves:
BP Global states that proven world reserves of coal are described as those quantities in
which geological and engineering information indicates can be recovered in the future
from known deposits under existing economic and operating conditions. (Appendix C)
shows the proven reserves in thousand million tones for all of the world regions. Europe
and Eurasia with 272.2 thousand million tons, Asia Pacific with 259.3, North America
246.1, Africa 32.0, South and Central America 15, and Middle East with 1.4 thousand
million tons.
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Modes of Transportation:
Railroad cars, barges, ships, trucks, conveyors, and pipelines carry and transport
Rail: Unit trains account for more than half of railroad coal shipments. Unlike a
conventional train or a mixed freight train carrying individual carloads of coal, a unit coal
train carries coal from a specified loading facility straight through to the specified
customer without stopping. It uses dedicated equipment; whereas other trains carrying
coal generally draw the equipment needed from the railroads operating pool of
locomotives and cars. There are two types of railroad cars used for transporting coal, the
gondola and the hopper. Gondola cars have flat bottoms, straight sides, and open tops and
are unloaded by being tipped over by rotary dumpers. Hopper cars have slipping bottoms
with gates that open to discharge the coal (EIA). Railway is the foundation of coal supply
and logistics (Figure 1) shows the percentage of mode transport by form of transport
from 1979 through 1997. Railroads are the foundation of coal logistics (EIA).
Figure 1
(Source:EIA)
Shipping Vessels: Ocean going vessels are the primary carriers of imported/exported
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coal. Transporting coal through rivers, lakes, and tidewater areas, accounts for nearly two
out of every ten tons of coal shipped annually to domestic markets (World Coal Report).
In relation to total coal cost, shipping coal from the exporter’s port to the importer’s port
figures to about 30% of the transported cost of coal, the domestic transportation from the
port to the fire-coal factory can account for an additional 20% of the total imported cost.
Shipping costs are subjective to a plethora of different aspects, distance traveled, as well
as competition for ships to move different types of massive cargo like iron ore and grains.
Port capabilities i.e. infrastructure and water depth also are determining factors in the
costs of shipping in consideration of the size of ship that will be able moor at that port.
Commonly larger ships have lower freight costs (World Coal Report).
Truck: This method is typically used for short haul runs if the fire-coal plant is near the
port of entry.
Conveyors: Are many miles long, commonly linking the coal mine and mining machines
Pipeline: The only coal slurry pipeline where the coal is ground to a powder mixed with
water and pumped through a pipeline called the Black Mesa line. It is 273 miles, 18
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SECTION II - PRODUCTION PROCESSES
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Figure 2 (Source: Energy Information Administration “Energy Kids”)
Production Technology:
The Energy Information Administration “Energy Kids” website explains the most basic
and clear concept of mining coal. Coal miners use giant machines to remove coal from
the ground. They use two methods: surface or underground mining. Many U.S. coal beds
are in close proximity to the ground's surface, about two-thirds of coal production comes
from surface mines. Modern mining methods allow for easy access to major coal
reserves. Due to growth in surface mining and improved mining technology, the amount
of coal produced by one miner in one hour has more than tripled since 1978. It is crushed
and pulverized into powder, which is then burned to produce heat, the heat is then used to
change water into steam, this steam then forces multiple sets of turbines to spin, which in
Surface mining, is used to extract most of the coal in the United States because it is less
expensive than underground mining. Surface mining can be used when the coal is buried
less than 200 feet underground. The process of surface mining, giant machines remove
the topsoil and layers of rock known as "overburden" to expose the coal seam. Once the
mining is finished, the dirt and rock are returned to the pit, the topsoil is replaced, and the
area is replanted.
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Figure 3
Underground mining, sometimes called deep mining, is used when the coal is buried
several hundred feet below the surface. Underground mines can reach depths up to, 1,000
ft. To remove coal in these underground mines, miners ride elevators down deep mine
shafts where they run machines that dig out the coal.
Figure 4
Long Wall Mining: Long wall mining is a highly productive underground mining
technique, where a panel or block of coal up to 1,000 feet wide and up to three miles long
is entirely extracted. Underground coal mines are held up by hydraulic pillars known as
shields. These devices protect miners from cave-ins and falling debris. Mining is done by
one or several massive machines. These mining machines called “continuous miners”
produce a constant flow of material (coal) by the use of large rotating tungsten cutting
heads that bore directly into the face of the mine. These machines can produce up to five
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tons of coal per-minute which is more than a single man can produce in a full shift (Coal
International).
Since 1978, coal power plants have seen an array of new environmental regulations and
policies, implemented to help reduce the amount of sulfur dioxide and other pollutants
that are released into the air. In result, these new policies require power plants to install
burn coal that has lower amounts of sulfur. Additional sulfur emission policies, set by the
Clean Air Act Amendment of 1990, are taking effect in two stages. For the power plants
built before 1978, emissions are generally limited to 2.5 pounds of sulfur dioxide per
million (BTU) of energy consumed. The second stage, referred to as Phase II, took effect
in 2001, this confines emissions for all power plants, old or new, to 1.2 pounds of sulfur
dioxide per million BTU of energy consumed. Coal plant owners can choose how to
achieve these lower emissions limits. They can retrofit scrubbers, switch to low-sulfur
coal, blend low-sulfur coal with high-sulfur coal, co-fire with natural gas, repower with
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boilers that are more efficient or close the plant.
Direct coal liquefaction converts coal to a liquid by dissolving coal in a solvent at high
temperature and pressure. This process is highly efficient, but the liquid products require
further refining by adding hydrogen over a catalyst, to achieve high grade fuel
characteristics. Indirect coal liquefaction first gasifies the coal with steam to form a ‘syn-
gas’ which is a mixture of hydrogen and carbon monoxide. The sulfur is removed from
this gas and the mixture adjusted according to the desired product. The syn-gas is then
condensed over a catalyst with the Fischer-Tropsch process (method for the synthesis of
Multiple products can be made through these processes including ultra-clean petroleum
and diesel, synthetic waxes, lubricants and chemical feedstocks. A similar process, using
different catalysts, will produce alternative liquid fuels such as methanol and dim-ethyl-
ether (DME).
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Labor:
The United States Department of Labor for the Mine Safety and Health Administration
enforces the Mine Act and is responsible for the coal mine safety and health of workers.
investigating fatal and serious accidents, issues citations, and conducts safety and health
conferences with mine operators on citations and orders that are issued out. Additionally,
Coal Mine Safety and Health approves roof control, ventilation, and training plans
required to be submitted by mine operators, directs various mine safety and health
If coal mine inspectors find violations or other conditions that may pose an immediate
threat to the miners safety or health, they have the authority to issue a withdrawal order
for the affected area, remove the related equipment from service, and have the miners
Waste piles: From mining and coal preparation and from coal-fired power plants.
Water quality: Acid mine drainage, which contains sulfuric acid produced when pyrite
and other iron sulfides react with air and water. The acid water increases the solubility of
toxic heavy metals, such as arsenic, lead and mercury, and renders the water toxic to
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aquatic life and unfit for domestic and municipal use.
Air quality: Sulfur dioxide emissions, carbon dioxide from coal combustion, and
Availability:
According to the 2009 Global Coal and Consumable Fuels Industry Profile, conducted by
Peabody. There are several energy substitutes for coal: oil, gas, and nuclear fuels. These
similar non-renewable energy sources are considered the most competitive. Although, a
switching over to facilitate and generate power from sources other than coal, creating
extremely high switching costs. Nonetheless, willing companies with high venture capital
are attracted by better market growth from last years. However, assets required for coal
as weak.
Renewable Substitutes:
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Renewable energy technologies that act as substitutes for coal and generate clean
electricity are: biomass, geothermal, solar photovoltaic’s, and wind. According to the
U.S. Department of Energy, new innovating wind technology programs are working with
wind industry partners to develop clean, domestic, and innovative wind energy
technologies that can compete with conventional fuel sources. The department of energy
is looking to generate 20% of the nation's electricity demand by 2030 with wind power.
Solar Photovoltaic (PV) systems are more costly than electricity from the utility grid,
demand though from (PV) technology systems has the potential to expand rapidly and
become a significant part of the national energy supply. The downfall to (PV) systems is
that they must be located in areas that receive frequent solar radiation year round in order
The department of energy says that bio-energy, (bio-mass) ranks second (to hydropower)
in renewable U.S. primary energy production and accounts for three percent of the
primary energy production in the United States. Energy derived from biomass means that
it comes from renewable resources, agricultural food and feed crops such as, corn and
grain. Benefits of energy derived from renewable biomass resources are that ecological
impacts are kept to a minimum. The detrimental ecological results of burning coal for
electricity production, has been a considerable factor to implement new policies and
regulation for further renewable and clean energy research and sources.
Kyoto Protocol:
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The Kyoto Protocol is an international agreement joined with the United Nations
Framework Convention on Climate Change. The Kyoto Protocol sets targets for the
largest industrial nations across the globe to curtail the amount of greenhouse gas (GGE)
emissions they emit into the atmosphere. These countries are expected to implement new
regulations, that will limit the amount of emissions released to the amount that were
released in 1990, which is about a five per cent decrease from present day (Kyoto-
Protocol).
The United States is the second largest consumer of coal, with 17.1% of total world
share. India is currently the third largest consumer of industrial coal, with 7.0% of total
world share. Japan is the next largest consumer of industrial coal with 3.9% of world
share. Over the past four decades, coal demand showed overall growth from 1965 to
World consumption by world region in 2008, North America accounted for 18.4%,
South & Central America accounted for 0.7% , Europe & Eurasia accounted for 15.8%,
Middle East region accounted for 0.3%, Africa accounted for 3.3%, and the Asia Pacific
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Figure 7 Source: (BP Statistical Review) World Demand by Country
Major Global Producers:
The BP statistical review of world energy (Diagram ) shows world coal production data.
The units are shown in million tones oil, equivalent to the amount of tons of oil required
to release the same amount of energy. Asia Pacific accounted for the biggest producer of
coal, totaling 2030 million tons in 2008. In comparison to North America, who only
produced 638.8 million. Europe and Eurasia followed with 456.4 million, the Middle East
and Africa with 144.1 million and South and Central America with 55.5 million. (See
world coal consumption data. Asia Pacific accounted for the largest consumer of coal,
totaling 2000 million tons in 2008. In comparison with North America, who consumed
606.9 million tones. Europe and Eurasia following with 500 million tons, the Middle East
9.4 million, Africa with 119.4 million and South and Central America with 23.3 million.
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Figure 8 BP Statistical Rev. Figure 9 (Source: BP Statistical Review)
Future Projections:
Datamonitor’s global coal and consumable fuels industry analysis, forecasts the coal
markets to slow down in 2009 in spite of a recovering recession. However, an upturn can
be expected around 2013, with the growth rate largely remaining at around 6%. The
global coal and consumable fuels market generated total revenues of 408.4 billion in
2008, representing a compound annual growth rate (CAGR) of 16.5% in the time of
2004-2008. European and Asia-Pacific markets also saw growth, to reach market values
reaching a total of 7.5 billion short tonnes in 2008. Market volume has been projected to
grow to 8.9 billion short tonnes by the end of 2013, representing a (CAGR) of 3.4% for
the 2008-2013 periods. The primary coal segment saw the most profits in 2008; with total
revenues of $405.8 billion, equivalent to 99.4% of the market's overall value. The
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secondary coal segment contributed revenues of $ 2.6 billion in 2008, equating to 0.6%
of the market's aggregate revenues. The performance of the markets is forecasted to lose
pace, with an anticipated CAGR of 3% for the five-year period 2008-2013, which is
expected to drive the market value to $473.8 billion by the end of 2013 (Data monitor).
Logistical Issues:
According to the Energy Information Association, the production of coal from U.S.
mines has shown an average of around 19 million tons per week. Although, weekly
supplies of coal from mines can vary significantly. A steep rise in the coal supply occurs
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electricity generating sources i.e. nuclear power plants closed for maintenance, or when
hydroelectric power generation slows down during periods of low water, or when coal
Low supply during weekly coal production can sometimes be caused by employee
vacations and holidays. Strikes by coalminers and worker unions involved with coal
shipments, can sharply decrease the supply of coal from the mines also. Delays in
delivering railroad cars to the mines due to maintenance or inclement weather can result
SECTION V – PRICING:
Price: (Refer to Appendix C): Coal prices have historically been lower, readily stable,
and cheaper than oil and gas prices. Coal is likely to remain the most affordable fuel for
power generation in many developing and industrialized countries for decades. The price
of coal varies by coal rank, mining method, geographic region, and coal quality.
Between the years of 1990-2007, the price of coal stayed at $28-$86 dollars per metric
ton (appendix C). A dramatic increase in coal price during 2008 was accepted in respect
to the inflated cost of fuel for shipping, and other modes of transportation. The price of
coal grew by 50% per metric ton. In the early 1970’s a spike in coal costs was a result of
the oil embargo where inflated prices were a result also (EIA).
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Works Cited:
BP Global, "Coal Statistical Review 2009.". N.p., n.d. Web. 15 Nov. 2009.
<http://www.bp.com/subsection.do?categoryId=9023763&contentId=7044548>.
Carter, Devereux. "Coal Availability." USGS Energy Resources Program. N.p., n.d.
Web. 23 Nov. 2009.
<http://energy.usgs.gov/factsheets/coalavailability/coal.html>.
"Coal (fossil fuel)." Encyclopedia - Britannica Online Encyclopedia. N.p., n.d. Web. 15
Nov. 2009. <http://www.britannica.com/EBchecked/topic/122863/coal>.
"Coal Mining." Coal Mining Industry Yearbook (2001): N.PAG. Business Source
Premier. EBSCO. Web. 17 Nov. 2009
Coal price - World Coal Institute. Home - World Coal Institute. 20 Nov. 2009
<http://www.worldcoal.org/coal/market-amp-transportation/coal-price/>.
DATAMONITOR."Global Coal & Consumable Fuels." N.p., n.d. Web. 22 Nov. 2009.
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<https://mintglobal.bvdep.com/version-
2009115/MintGlobal/scripts/report/MarketResearch/datamonitorencoded.htm?
bhhbmlkfckbhmnmhhejkplnfecmffchhpm.PDF>.
Environmental Protection Agency "Coal Clean Energy” . N.p., 28 Dec. 2007. Web. 18
Nov. 2009. <http://www.epa.gov/RDEE/energy-and-you/affect/coal.html>.
"Mineral Information Institute - Coal ." www.mii.org. N.p., n.d. Web. 19 Nov. 2009.
<http://www.mii.org/Minerals/photocoal.html>.
"MSHA - Coal Mine Safety and Health." United States Department of Labor - Mine
Safety and Health Administration. N.p., n.d. Web. 22 Nov. 2009.
<http://www.msha.gov/programs/coal.htm>.
"World Coal Report." World Coal Report 2.(2007): 1-162. Business Source Premier.
EBSCO. Web.23Nov.2009.http://stats.lib.pdx.edu/proxy.php?
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Appendix A: World Coal Production
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(Source: BP World Energy Statistical Review 2009)
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(Source: BP World Energy Statistical Review 2009)
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(Source: BP World Energy Statistical Review 2009)
Appendix D:
28
(Source: BP World Energy Statistical Review 2009)
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