African Carbon Energy (Africary) is putting South Africa at the forefront of Underground Coal Gasification (UCG) by developing a one billion-tonne coal deposit at Theunissen in the Free State to fill a vital gap in the country’s electricity supply.
The junior miner, based in Pretoria and founded in 2007 by current CEO Johan Brand and late business partner Eliphus Monkoe, had pooled together their expertise in mining, exploration and gasification to establish a diversified commodities technology supplier in Southern Africa.
Working to register as an Independent Power Producer (IPP) with the Department of Energy, Africary is championing a technique that had been commonplace several decades ago, and one which holds several advantages over conventional coal mining which has now become the mainstream.
Brand, a former government certified mining engineer at Sasol and an important part of its UCG development, outlined his ambitions.
He said: “My vision is to optimise the whole coal to electricity value chain. My aim is to safely and efficiently transform our valuable coal resource into a transferrable energy commodity which can be sold to meet local demand. In South Africa we are experiencing a huge electricity demand, for what is a large and growing economy and with aging Eskom power stations as we are running out of supply.”
Central to Brand’s objective is arguably the largest coal deposit in the Free State province near Theunissen, bought from BHP Billiton in 2012, and one ideally suited to UCG due to its coal being at an average depth of 350 to 500m.
Having acquired surface rights, Africary has access to 600 hectares, but has completed exploration drilling on a 100 hectare area to obtain a Measured resource of roughly four million tonnes of coal. Production at this first site will make use of very efficient syngas-rated gas engines, and the plant is set for operation in 2017.
“This is enough to run our 50 Megawatt (MW) power station for 16 years, and if you consider that we still have 996 million tonnes of Inferred coal left, we are here for the long run,” Brand said. “It is a whopping large resource.”
The South African Department of Energy recently unveiled a 2,500MW coal base load IPP (Independent Power Producer) programme, with Africary set to contribute 50MW within three years and a further 1,000 MW by around 2022, comprising two systems of roughly 500 MW based on combined cycle gas turbine technology.
The bidding process for the DoE IPP contracts for the first 50 MW operations will start next year, and Africary will be using its strategic alliance partners, CDE Process Engineering and Aqua Alpha Directional Drilling, to implement the UCG syngas handling technologies and horizontally drilling.
Africary has a proven track record stretching before the 2012 acquisition. In 2009 it supported Australian ASX listed Wildhorse Energy with investment, technology and management skills for a proposed UCG Project in Europe. The whole Africary team has also a long track record with Sasol who is the wolds largest coal mining for gasification company producing 150,000 barrels of oil every day form coal gasification.
Underground Coal Gasification is a mining method that extracts previously stranded coal reserves in-situ, through a gasification process by constructing at least two horizontal boreholes, where one borehole is used to inject air/oxygen to convert the coal into syngas and another to bring the syngas to surface.
It is an economically and environmentally viable option for mining deep reserves (200 metres or deeper), and with two thirds of the planet’s coal unable to be mined through conventional techniques it is the most promising technology for the future.
Brand added: “It was the mainstream method from around 1940 to 1960 in the former Soviet Union, which had 15 power stations and plants mining over 15 million tonnes of coal, of which one is still operational in Uzbekistan. In South Africa Eskom is operating their first UCG pilot since 2007 at Majub Power Station by co-feeding the syngas into a boiler and is currently involved in the EIA and permit application processes to increase the size to 100 MW.”
“About 80 percent of the energy in the coal comes out in the gas to surface, making UCG a very efficient mining process. At the same time no person has to be underground whilst you can implement high extraction mining, brining great safety benefits.”
The syngas is contained deep underground inside the coal mine by operating the process at a lower pressure than the hydrostatic pressure surrounding the coal strata, meaning that surface leakages are prevented, while ash is also kept from producing smoke and other environmental hazards like leaching. The process also uses a tenth of the water used by an equivalent sized boiler systems.
“It doesn’t require much manpower to run either,” Brand said. “The boreholes are pre-drilled and last for eight to 10 years, so there will only be a few people looking after the gas clean-up equipment and power generators. The rest operates autonomously via computer control.”
“This is a complete breakaway from South Africa’s traditionally mining industries of opencast or shaft mining, which are both very labour intensive and requires huge amounts of upfront capital.”
Together with the likes of Exxaro, Eskom and Sasol, Africary founded the South African UCG Association, designed to champion the technology and create industry standards and training schemes, propelling the country to the forefront of the global industry.
Brand’s vision for the company is to move into poly generation, combining electricity production with the creation of chemical products such as ammonia, fertilisers and liquid feuls.
The greatest challenge that the CEO overcame on this project was to find the sweet spot of connecting three divergent areas of constraint – a suitable coal resource, a productive, save and environmental mining technology and a lucrative market.
He concluded: “With any resource and technology, it can only be effectively utilised when there is a suitable market for it. The one thing about syngas is that by itself it is not a commodity people would buy directly. Either you have to turn it into natural gas or electricity or some other fuel or chemical. I was fortunate enough to come from an environment doing exactly this, making many products from syngas.
“As a junior mining company we are very excited to compete for projects of such a scale. We get support from local banks as they know the current government (DoE and Eskom) IPP initiative is the sovereign 30 year off taker for the electricity.
“What UCG needs is countries and companies that are willing to build a value chain around it. To lead the way we have worked hard to become UCG specialist that can design, integrate, operate and own the whole value chain.”