MAC: Mines and Communities

China Update

Published by MAC on 2006-04-28

China Update

28th April 2006

The issue of dealing with nuclear waste, from an expanding nuclear programme, is being added to the 'pot' of growing environmental problems in China. With regard to energy needs the Chinese government is leading the way in coal-to-liquid technology research. Finally, back to the issue of health and safety in Chinese coal mining, where the government planning to jail people who cover up deadly accidents.

FEATURE - China's Nuclear Dreams Clouded by Cost, Waste

Story by John Ruwitch, REUTERS NEWS SERVICE -

24th April 2006

DAYA BAY, China - Look away from the four giant nuclear reactors, and Daya Bay's manicured lawns, golf range and ocean-front apartments seem like the trappings of a luxury south China housing enclave.

Just 50 km (30 miles) from the heart of Hong Kong as the crow flies, they form a ring around one of the oldest fission-powered electricity plants in China, a template for success in an industry launching one of the most ambitious expansion drives in the world. China's leaders think nuclear power offers a partial remedy for ills ranging from the pall of smog hanging over its cities to a growing addiction to foreign oil.

But analysts and environmentalists warn a range of challenges, from waste disposal to the daunting price tag on new generators, could give the energy cure a bitter taste.

Beijing began commercial nuclear generation late, after devoting resources and scientists to weapons development during Mao Zedong's rule. The country's first atomic bomb exploded in 1964 but civilian reactors only came online in the 1990s.

It is now racing to catch up and to meet booming energy demand with plans to more than quadruple capacity by 2020 and work on a new technology that scientists tout as accident-proof.

At present, nine reactors contribute barely 2 percent of the nation's power -- just one eighth of the global average. The target is to raise this to 40 gigawatts, or 4 percent over the next 15 years by building 30 new reactors.

"China started late, but to build two major reactors a year is a very ambitious programme and I don't think anyone has ever attempted that," said Clarence Hardy, vice-president of the Pacific Nuclear Council.


China has what is probably the largest variety of nuclear technologies within a single nation's borders. It has used Canadian, French and Russian designs and is considering signing up for a US one, as well as supporting home-grown technology.

"It was a deliberate, not accidental, mix and it probably was a good strategy as it keeps them up to speed on what is going on worldwide," said Beijing-based energy analyst James Brock.

Besides cherry-picking the best international technology, Chinese scientists believe they may have found a way to lay to rest the ghost of the 1986 Chernobyl explosion, which still haunts the industry.

The pebble bed reactor being developed at Tsinghua University is meltdown-proof, said scientist Wu Zongxin, who has worked on the project for over two decades.

It uses fuel "pebbles" -- roughly the size of tennis balls and wrapped in graphite with a higher melting point than the uranium inside -- to prevent runaway reactions, he explained.

"It is impossible that the nuclear fuel could melt ... the passive safety mechanism does not rely on humans to control the temperature," Wu told Reuters.

A 10-megawatt test reactor is on-line near Beijing and work starts on a demonstration plant in Shandong in 2008, he said.

Chinese power developers are also pursuing designs that use less uranium. As nations trying to cut pollution take another look at nuclear power, world uranium prices have risen, more than tripling since 2004.

Despite the new research, China's government may struggle to persuade listed utilities to help fund the nuclear expansion.

Although nuclear plants are cheap to run, with low exposure to fuel costs particularly valuable as oil and gas prices rise, they are very expensive to build.

"I do not think Chinese power producers are going to rush into nuclear power because it's the 'in' thing," said Joseph Jacobelli, utilities analyst at Merrill Lynch in Hong Kong.

"For a 2-gigawatt power plant, you have costs of around US$3 billion and all of that is front-loaded. They will want a high level of guarantees," he added.


Rigorous safety procedures copied from the designers have given China a solid record so far despite the variety of reactors it uses. A single operating company, China National Nuclear Corporation, helps unify safety plans.

But if something does go wrong and officials are tempted to cover up, there may be no one to call them to account in a society that brooks limited dissent from central control.

"Civil society safeguards -- press freedom, whistleblower protection, human rights laws -- form a more amorphous layer of protections which are largely absent in China," said Jim Green, nuclear campaigner from Friends of the Earth in Australia.

Disposing of the over 1,000 tonnes a year of radioactive waste that the expansion could produce, according to the World Nuclear Association, is another minefield.

There are plans to expand a small facility in western Gansu province to deal with much of the spent fuel, but Green says details are opaque and, with concern over environmental issues growing in wealthier east coast areas, poorer areas may be forced to host their nuclear waste.

"We are concerned that politically less powerful groups like Tibetans and people in northwest China are going to be targeted (for waste disposal facilities)," Green said. (Additional reporting by Emma Graham-Harrison in Beijing)

ANALYSIS - World May Turn Back Clock for Liquid Coal Future

Story by Neil Chatterjee, REUTERS NEWS SERVICE -

24th April 2006

SINGAPORE - Imagine a world where oil is running out and prices are spiralling out of control.

Governments are pouring money into potential solutions such as hydrogen fuel cells or new generation nuclear plants to offset the risk for a future energy crisis, but it may be more realistic long-term to turn huge coal reserves into gas and then oil. Industrial giant China is leading the way and others may follow since oil has hit records above US$70 on strained supplies that may last around 40 years, whereas the world may have ample coal for a couple of hundred years if it can be converted to clean fuels cheaply enough.

"In the light of very high oil prices and slowing coal prices, coal-to-liquids technologies are becoming a burning issue in developing Asia and the United States," said Alexandre Kervinio of SG Commodities.

China's largest coal producer Shenhua Group Corp. Ltd. and South Africa's Sasol Ltd. say their coal-to-liquids technology is worthwhile if oil stays above US$30 or US$35 a barrel, half its current price. New York oil futures for December 2012 delivery are above US$66

High oil prices have also made clean renewable energies such as wind competitive, but these cannot deliver liquid fuel to power cars. Biofuels are booming but are likely to remain limited in volume, and a wide network of hydrogen gas filling stations for fuel cell vehicles is not considered viable before 2020.

However, other technologies such as coal gasification and gas-to-liquids (GTL) are currently cheaper than coal liquefaction and so firms worried about a downturn in oil prices and seeking the best investment returns may opt for those instead.

Sasol, which runs a 160,000 barrel-per-day (bpd) coal-to-liquids plant in South Africa, says capital costs for an 84,000-bpd plant are around US$60,000-$80,000 per barrel.

"It still looks rather expensive and these days GTL or Canadian tar sands are attracting the big bucks," said Tony Regan of energy consultancy Tri-Zen.

So a drive to turn coal into oil is likely to be limited at first to countries with huge and cheap domestic supplies, such as China and the United States, which together hold about 40 percent of world reserves, according to BP

Shenhua is expected to start production at its first coal-to-liquids plant at the end of 2007, with annual output of 1 million tonnes of oil products including diesel, gasoline and naphtha for petrochemicals.

Beijing is encouraging development of coal liquefaction to help curb a growing reliance on oil imports. Analysts say within a decade it could be making up to 1.2 million bpd of coal-based synthetic fuel, or nearly 50 percent of 2005 imports.

Last month it signed a memorandum of understanding with energy major Royal Dutch Shell to develop a coal liquefaction project in the Ningxia region.

"It's an area where China thinks it can take a technological lead. This is probably the main driver rather than whether or not it works at US$30 barrel," said Regan.


Unlike coal gasification, an old technique for which China is ploughing ahead with a dozen plants expected to come onstream, economics for liquefaction are less certain since it requires another process after gasification and hence extra cost.

Chinese miner Ningxia Coal Industry Group Ltd. is looking at a liquefaction plant, needing more than US$3.6 billion in investment, with Sasol. South Africa developed such technologies to tap its large coal reserves and during apartheid sanctions.

These kind of start-up costs may require government help. But the attraction is clear for the Asia-Pacific region, which holds 3.5 percent of global oil and 8 percent of natural gas reserves but about a third of proven recoverable coal reserves.

Studies are underway in India and the Philippines. Australia is the world's top coal exporter and the second is Indonesia, whose largest miner Bumi Resources has said it is studying liquefaction investments.

"Much of Indonesia's is low grade in terms of heat content and therefore not such an attractive coal for export, so it could find coal gasification/liquefaction attractive," said Andrew Symon of Singapore's Institute for Southeast Asian Studies.


The United States is building a fleet of new coal power plants to use the world's largest reserves, but only a fraction will gasify coal and have the ability to capture emissions of greenhouse gases, blamed for global warming.

However, the US government is hoping to wean itself off Middle East oil dependency and is providing tax and loan incentives. This has spurred five projects expected to be onstream by 2010, said SG Commodities.

"Converting just 5 percent of the US coal reserves to Fisher-Tropsch fuels would equate to the existing US crude reserves of 29 billion barrels," said a spokesman for Canadian company Syntroleum, refering to liquefaction technology.

By contrast European Union nations, looking to reduce dependence on coal power generation as they try to meet Kyoto Protocol goals on emissions, have said little on liquefaction, though Germany's RWE is planning a gasification plant. (Additional reporting by Chris Baltimore in Washington, Vera Eckert in Frankfurt and Jeff Mason in Brussels)

China to criminalize accident cover-ups


27th April 2006

BEIJING - China plans to jail people who cover up deadly accidents for up to seven years, but some lawmakers say that is still too lenient in a country where many mine disasters go unreported, state media said on Thursday.

More than 3,300 coal mine blasts, floods and other accidents claimed nearly 6,000 lives in China last year. Many of these were blamed on mine owners who, spurred by soaring profits, pushed safety limits to fuel the booming economy.

Local officials are often accused of scheming with coal mine owners to cover up fatal accidents because they fear punishment, a loss of tax revenues and sometimes the loss of dividends from their own investments in the business.

The Standing Committee of the National People's Congress, a rubber-stamp parliament, has this week been considering a criminal law amendment that would criminalize the concealment of work safety accidents, the Beijing Youth Daily said.

Those found trying to lie about or totally covering up an accident could be imprisoned for up to seven years, it said.

But some lawmakers want harsher penalties.

"There have been outrageous cases of covering up colliery accidents by destroying the miners' bodies in some places," Wang Zuxun, a member of the Standing Committee, was quoted as saying, "The term is undoubtedly too short for such deeds."

China has launched a slew of campaigns to clean up the mining industry that have included banning official investment in the coal mines and closing all small collieries, but enforcement by local governments has sometimes been slack.

A pit flood killed 26 coal miners in the northern province of Shanxi last month, while a gas blast that claimed 214 lives in the northeastern province of Liaoning in February 2005 was one of China's worst mining disasters in decades.

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