OREANDA-NEWS. September 09, 2013. POSCO is speeding up the clean CTL (Coal to Liquid) project with Mongolia`s largest private company, MCS.

The Coal to Liquid (CTL) process produces a liquid-type fuel from coal that can replace oil, and has greater cost competitiveness over imported diesel oil. Further, less sulfuric acid and nitric acid are produced than when coal is directly burned, while most of the carbon dioxide formed can be collected and recycled for industrial use, having an effect of reducing air pollution.

This project utilizes low quality coal that is abundant in the Mongolian region, ranked in the top 10 countries in size of coal reserves, to produce a compound gas of hydrogen and carbon monoxide, and applies clean CTL technology to remove pollutants. POSCO and MCS plan on producing 450,000 tons of diesel oil and 100,000 tons of dimethyl ether annually.

Of these, dimethyl ether, a compound material extracted from the compound gas made from pyrolyzing coal, is lower in price than LPG and causes less carbon dioxide and ash, and is in the spotlight as an environment friendly fuel to replace fossil fuels.

POSCO and MCS started discussing this project in 2010. After Hatch, the Canadian CTL plant engineering specialist, confirmed economic feasibility of the project, the joint venture Baganuur Energy Corporation was established in May and is in the process of selecting technicians and receiving approvals and permissions of the Mongolian government to proceed with the project.
The Mongolian government recognizes the importance of the project from two perspectives—securing a stable energy source and developing an environmentally friendly power plant business—and is offering full support to successful proceeding such as applying no taxes on imported materials and equipment for constructing the plant.

The Mongolian government is proactively supporting the project because, although it is one of the world`s top 10 resource-rich countries, it imports most of its oil from Russia.

With the rapid economic development of Mongolia, the current annual 800,000 ton fuel consumption is expected to reach 3.5 million tons by 2020. As fossil fuel usage increases, Mongolia`s environmental pollution has also become a social issue. Air pollution in Ulaanbaatar, the country`s capital where about half of the population resides, has already reached serious levels.

Mongolia, through the CTL project, expects to solve the air pollution issue by self-supplying environmentally friendly fuel, and also replace fuels imported from overseas.

Through this project, POSCO also plans to lead the global clean energy plant business based on accumulated coal processing and energy production technology and operation management experience, and in the mid- to long-term, take an advantageous position in securing natural resources in Central Asia, including Mongolia.