Datong Coal Mine Group's power model may become China's norm

Datong Coal Mine Group Co Ltd (Tongmei) generates power from the fuel it produces close to the pit it came from. The trial at Tashan industrial park by China's largest coal miner may become a model for the country's changing industry.

Visitors get just a hint that they are near one of the world's largest coal mines. The Tashan park is about 30 kilometers to the south of Datong city in northern Shanxi province. There are broad and clean roads, neatly cut plants lining streets, fresh air and a sparsely populated modern residential area.

There are also large patches of depressed areas, the by product of mining.

The large thermal power plant and the Tashan coal mine are at the park's core.

The mine began production in 2006. It has an exploitable reserve of more than 3 billion tons and yielded 20 million tons last year, 1 percent of China's total.

There are about 30 workers operating the power generator, and 800 miners. Mining here appears to not be the traditionally known dangerous, polluting and labor-intensive work.

"All coal excavators and cutters are equipped with baseboard and protection beams. The dynamic compression effectively reduces the coal dust in the air." Shi Li, a veteran miner in his 40s, said.

The Datong Coal Mine Group Co Ltd is one of the four largest coal mining companies in China and produces 10 percent of the nation's coal. (Photo/Xinhua)

All the coal is delivered on a 1.5-km long, 2-meter-wide conveyor belt from the pit to the washery factory and power plant. The belt can deliver 6,000 tons of coal an hour from the washery to two 60-megawatt power generation boilers. It is the largest power plant in China that is situated near a pit.

It takes 329 grams of coal here to generate 1 kilowatt of electricity, while the national average is from 400 to 600 grams depending on the size of thermal generators. The Tashan plant's sulfur removal efficiency rate is 95.1 percent, five percentage points higher than the national required level.

Power plants near the mine have their advantages.

The conveyor saves 200 yuan ($32) in transportation costs per ton of coal for the Tashan plant and greatly reduces pollution. The coal washery is made up of dozens of big cylinder tanks of three-story building height.

The clean coal is transported by rail to Qinhuangdao harbor 500 km away at Bohai Bay. Some leftovers are sent by conveyor to the furnace to make power for Tashan, and some are delivered to the coal chemical factory to produce methyl alcohol. Coal gangues, the waste with little commercial value, is used to make bricks.

The huge amounts of kaolinite rock dug out with the coal in Tashan are processed, ground, dried, roasted and modified to make paper, cosmetics, porcelain and medicines.

The coal ash from the furnace in Tashan is used to make cement. The waste residues of the cement factory enter the kiln to make construction materials.

The industrial wastewater discharged from the mines and the workers' sewage are processed and purified for use in the thermal power plant.

The washery's wastewater goes through sedimentation treatment. Some is reused, some goes as storage water for fire fighting and some to mining.

All 13 projects are seamlessly connected in Tashan park, to squeeze the last drop of oil" from the "black gold", as required by Tongmei's corporate principles.

The Tashan park will reach full capacity by end-2015 when it will be able to process 50,000 tons of kaolinite rock, 2 million tons of cement, 4 million cubic meters of bricks, 600,000 tons of methyl alcohol and 4,000 tons of waste water each day.

Power generation, a key link in the chain, is a new field for Tongmei.

It cooperated with Datang International Power Generation Co Ltd, and began building the Tashan plant in 2005. Operations began three years later.

"We learned a lot about the management and operation of a power generation enterprise from the cooperation," said Du Jingdong, a workshop director of Tashan power plant.

Tongmei invested 20.4 billion yuan to build the park, starting from 2004 and following the sharpest decline in coal prices.

"It was a bold investment at that time," Wang Aihua, the plant's Party chief, said. "Although we know integrated development of coal and electricity is the future, the decision-makers did need some bravery to invest so much money in the park - especially when the group was in extreme difficulties."

The efforts paid off. The park's annual net profit hit nearly 3 billion yuan, about 10 percent of it earned by the power plant.

Tongmei is cooperating with other large State-owned power groups to build similar plants at three more big mines, Yang Qiping, director of the Tashan power plant, said.

The central government recently opened the power generation sector in accordance with the reform plan approved at the Third Plenum of the Communist Party of China's 18th Central Committee in November. That has encouraged Tongmei to seek further independent growth in the industry.

"Turning coal into electricity collectively and efficiently at the mine helps clean the air for a large area of the country that would burn the coal separately otherwise," Yang said.

Tashan power plant also helps clean the air in Datong. It replaced the former 240 small coal-fired boilers with 5.5 million square meters of miners' apartment buildings in Datong. That cut 6,900 tons of smoke dust each year.

According to Tongmei's plan, the non-coal businesses should contribute 40 percent of group revenue by 2015. Most of the non-coal businesses are from the recycling economy of the Tashan park model.

This is a necessary transformation, if not an enforced change, for Tongmei because of coal-price fluctuations, serious air pollution and the exhaustion of coal resources.

The best coal at the layer of Jurassic Period is almost depleted after more than 100 years' excavation in Datong. The lower-quality coals are buried deeper, along with associated minerals.

If Tongmei does not change its exploitation technology, it cannot earn enough money to pay its miners.

If the company can seize the opportunity and expand to other related industries, it can make better use of the coal that is increasingly hard to come by and also turn associated minerals into treasures that would otherwise be thrown away as pollutants, Tongmei President Zhang Youxi said.

By 2015, Tongmei's power generation capacity will increase to 1,500 megawatts from the current 800. That will generate 2.5 billion yuan in net profit. It would be a backbone industry for Tongmei.

FACT BOX

Datong Coal Mine Group, or Tongmei, was founded in 1949 on the base of former Datong Coal Mine Bureau in north Shanxi province.

Tongmei now has 73 mines across an area of 180,000 square kilometers in Shanxi and the Inner Mongolia autonomous region.

With 200,000 employees, the group has produced nearly 2.5 billion tons of coal in the past 64 years, with the record exceeding 200 million tons last year. Output changes with coal-price fluctuations.

Tongmei is one of the four largest coal mine groups in China and produces one-tenth of the national total. Its businesses include coal mining, thermal power, coal chemical, metallurgy, machinery manufacturing, construction, logistics and tourism.