Western China the 'Middle East' for coal?

LONDON, March 8 (UPI) -- Western China's vast coal reserves could make it the "new Middle East," a top coal industry official said.

In an interview published Tuesday in The Guardian newspaper, Fred Palmer, chairman of the World Coal Association and a key executive at Peabody Energy, the world's largest privately owned coal company, dismissed the prospect that the world could face the possibility of peak coal -- the point at which demand for coal will outstrip production capacity.

Acknowledging that supplies of metallurgical coal and high-quality thermal coal aren't unlimited, Palmer pointed to supplies of lower-ranked coal which are more plentiful in certain areas of the United States as well as in western China and Mongolia.

"I think Xinjiang province in the west of China where they say there's a trillion tons of resources will be the new Middle East. Anyone who has the notion that we're going to move away from fossil fuels just isn't paying attention."

St. Louis company Peabody announced in January that it would develop a 20 million ton-per-year surface coal mine in the Zhundong Region of Xinjiang with China's Yankuang Group Co Ltd., parent company of Yanzhou Coal Mining Company Limited. From 87 million tons of production in 2009, Xinjiang is expected to nearly triple coal production by 2015 and could increase annual output to 1 billion tons by 2020, Peabody said.

Palmer said China should be applauded for using so much coal because it takes the pressure off of oil.

While China relies on coal for 70 percent of its energy needs, Palmer pointed out that the country's biggest use for coal now is for Btu conversion, rather than for generating electricity.

"In a 'peak oil' world, we should applaud what China is doing because it makes the world better for everyone for no other reason that it takes huge price pressures off of oil," he said.

Noting that last year China consumed 3.5 billion tons of coal, Palmer said that when he joined Peabody 10 years ago, that figure was 1.5 billion tons.

As part of its latest five-year plan announced over the weekend and to be voted on this week in Parliament, China aims to limit energy consumption in 2015 to 4 billion metric tons of coal or its equivalent in other fuels.

Palmer said that China is ahead of the United States in developing low-carbon coal technology and in 10 years would have "an absolute state-of-the-art coal-based electric generating system that's cleaner and more efficient than any other country on Earth, including the U.S."