Polish Firms to Build $1.2 Billion Coal Gasification Project

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Researched by Industrial Info Resources (Sugar Land, Texas)--Zaklady Azotowe Pulawy S.A. (WAR:ZAP) (Pulawy), Poland's largest fertilizer maker, is planning to build a $1.2 billion coal gasification installation in cooperation with state-owned coal miner Lubelski Wegiel Bogdanka S.A. (Puchaczow, Poland), which operates in the "Bogdanka" coal mine region in eastern Poland. Zaklady Azotow currently uses about 1 million cubic meters of natural gas per year to produce fertilizers. The new installation, which will take a coal feed of up to 1.3 billion tons per year, is expected to satisfy about 50% of the company's demand.

Coal for the installation will come from the Bogdanka mine, which produces about 5 million tons of coal per year. Recently, Zaklady Azotow and Lubelski Wegiel discussed prospects for the coal gasification project in order to cooperate in the area of coal processing for application in chemical production and power generation. The timeframe is about five years, and a project feasibility study would be prepared in coming months to determine details and financing.

Such coal gasification is one of the key projects included in Zaklady Azotow's business strategy for 2007-17, helping the company to diversify its supply raw material sources. The company has been the leader in Poland's fertilizers sector for more than 40 years and has products in the American market. The company is one of the 20 largest Polish exporters with exports accounting for more than 50% of production sold in the European Union, U.S., Eastern Europe, South America and Asia. Its principal activity is the production of chemicals and fertilisers. Chemicals products include melamine, caprolactam, hydrogen peroxide and carbon dioxide. Zaklady Azotow is the only melanine producer in Poland, producing for domestic and global markets. It is the only company in Poland, and the third worldwide, with a melanine production capability of 92,000 tonnes per year, supplying 10% of the world demand and 20% of Europe's demand.

Poland is Europe's largest coal producer with 100 million tons of annual output, of which it uses only 50% domestically. The country has significant coal resources of high quality. Total recoverable reserves of hard coal (mostly bituminous and some anthracite) are estimated at more than 32 billion tons, while recoverable reserves of lignite and sub-bituminous coal are estimated at more than 14 billion tons. Poland exports about five times as much steam coal as coking coal, and its coal exports go primarily to countries in Europe and the former Soviet Union. Because of favourable geological conditions and advanced mining technology, lignite is the cheapest energy source in Poland in terms of its calorific value and will continue to be the cheapest. The country's reserves of lignite are sufficient for production for more than 500 years, and Poland's energy strategy through 2025 assumes that new opencast lignite mines will be built.

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