Introduction of CTL Plant Project

(for Coal Mongolia 2014)

Baganuur Energy Corporation LLC

February, 2014

Project introduction

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Project owners• “Baganuur Energy Corporation” LLC

• 50:50 joint venture company between MCS (Mongolia) and POSCO (South Korea)

Purpose of the Project

• To produce liquid fuels from Mongolian coal• To produce clean gas fuel to solve UB air pollution

Project site • 3rd khoroo, Industrial zone B, Baganuur district, Ulaanbaatar

CAPEX • USD 2 billion

Capacity• Diesel 456 ktpa• Gasoline 90 ktpa• DME 100 ktpa

Feedstock • Baganuur 4.2 mt• Ukhaa Khudag 3.0 mt

Annual tax duties • USD 100 million

MCS and POSCO signed Joint Venture agreement to implement CTL Plant Project

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About MCS Group

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Mining

Property Development & Investment

Engineering & Infrastructure

Other

FMCG

ICT

MMC/0975.HK (UHG ooking coal mine)

• MCS Property• MCS Estate• Shangri-La

Hotel• Green catering

• MCS International (Power & Infrastructure)

• Unitel Group (mobile phone operator)

• MCS Coca Cola• MCS APB• Mongolian Beverage

company• Anungoo

• Sky Resort• Goyo Cashmere• IMC Hospital

MCS Group was founded in 1993 2nd largest taxpayer in Mongolia for last decade Over 8.600 employees

About POSCO

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POSCO-SNG plant

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• POSCO is currently implementing SNG Plant project:– Location: Gwangyang, South Korea– Capacity: 500 ktpa SNG– Feedstock: Imported Coal (Indonesia)– Startup: first half of 2014

Economic growth and petroleum products consumption of Mongolia

• Real growth of Mongolian economy averaged 9%, in 2002-2013.

– Diesel average annual growth was 12%.– Gasoline average annual growth was 5%.

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• Estimated petroleum consumption in 2020:

- Diesel: 2~3 mtpa- Gasoline: 0.6~1.4 mtpa

162 174 191 208 258 271 306 388 429 416 502

647 717 773

2 500

-

500

1 000

1 500

2 000

2 500

3 000

3 500

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2020

Diesel Import Volume (in kt)

3,000

234 224 244 250 270 255 275 346 367

323 286 325 389 380

600

-

200

400

600

800

1 000

1 200

1 400

1 600

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2020

Gasoline Import Volume (in kt)

1,400

Economic burden of petroleum import

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0,00

1,00

2,00

3,00

4,00

5,00

6,00

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Fuel

Im

port

, bil.

USD

1.05

CHP-5

1.31 1.59

1.93

2.32

2.85

3.5

4.37

5.57

CTL Plant

1.26

1. Оyu Tolgoi2. Sainshand industrial park3. Railway4. Paved road5. CHP6. Cement plant …

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The level of air pollution in Ulaanbaatar had reached disaster level

Source: World bank

Ulaanbaatar 2008-2009

WHO Interim

WHO AQG

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Project objectives and resources

Coal

22 Gas fuels

Peak loaddemand

DieselGasoline

Steel products

Chemicalproducts

Exploitation proven(billion tonnes)

Coal gasification

?

Natural gas

Crude oil

Oil shale

0.043

Fischer-Tropsch

DME

Power Plant

DRI

Chemical plant

Domestic resource Industry

?

Decrease import

dependency

Decrease air pollution

Export products

Steel production

Decrease import

dependency

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Coal Industry FS Studies’ History

• All coal processing technologies were studied.• Coal gasification + FT plant was selected due to its economic performance and

strategical importance.

Thermal coal

Coking Coal

Combustion • Power generation

Gasification

Semi-coke

Coking

• Diesel• Gas fuels

• Semi-coke• Diesel oil• Others

• Cokes• Gas fuels• Chemicals

F/S completed

F/S completed

F/S completed

F/S completed

FT

MTG • Gasoline• Gas fuels

F/S completed

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CTL Project of Baganuur Energy Corporation

• Feasibility study: - (Canada)- HQCEC (China)

• EPC: - POSCO E&C and MCS international LLC

DME synthesis100 ktpa

CoalBaganuur 4.5 mtpaUHG 3.0 mtpa

Coal Gasification

FT reactor

• Diesel fuel

• Gasoline

• Gas fuel

90 ktpa

456 ktpaAir

Separation

Syngas purification

CTL Plant Layout

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Air separation Unit

Power Plant Fischer-Tropsch Unit Water

Treatment Unit

Storage and Tanks

Methanol and DME Unit

Sulfur Recovery Unit

Syngas Processing Unit

Administration Building

Gasification Unit

Coal Preparation Unit

Security Check Point

Parking Lot

Gas Cooling

Location of CTL plant

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CTL – fuel quality

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CTL fuel is very clean. Compared to convention diesel fuel, CTL diesel fuel can reduce:

NOx emission by 45% Particulate matter by 40% Hydrocarbons by 60% CO by 45%.

CTL project development

• Joint Project Team (20 persons from MCS and 15 persons from POSCO) is working on the CTL project implementation.

• Below is main timeline of the project.

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Conclusion

To reduce import dependency

• Mongolian petroleum consumption is estimated to reach 3.5 mtpa in 2020.

• It will reduce petroleum import dependency, if CTL and other coal gasification projects will be successfully completed in Mongolia.

To reduce air pollution

• First step to completely solve air pollution in Ulaanbaatar.

• 100,000 tpa of DME will cover 50% of gerdistricts in Ulaanbaatar. Also, the production capacity can be expanded if necessary.

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Thank you for your attention

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