TURKISH LIGNITE SECTOR andRESTRUCTURING of TKI

Mücella ERSOYTurkish Coal Enterprises

7th Session of Ad Hoc Meeting of Expertson Coal in Sustainable Development

7-8 December 2004, Geneva

CONTENT

General Overview of Turkish Lignite SectorBrief History of Restucturing of Coal SectorMajor Indicators of Coal Industry Restructuring (TKI)Additional Indicators Coal Industry Restructuring(TKI)Conclusion

in 200384 MTEP

Lignite : 12%

Hardcoal: 13%(12.5% of 13% imported Hardcoal)0

100002000030000400005000060000700008000090000

(x10

00 T

EP

)

1970

1973

1976

1979

1982

1985

1988

1991

1994

1997

2000

2003

OthersHydraulicN.GasOilAsphaltiteLigniteHardcoal

General Energy Consumption in Turkey

TURKISH ENERGY SECTOR-Position of Lignite

TURKISH ENERGY SECTOR-Position of Lignite

05000

1000015000200002500030000

(x10

00 T

EP)

197019731976197919821985198819911994199720002003

Primary Energy Production in Turkey

OthersHydraulic

N.GasOilAsphaltite

LigniteHardcoal

in 200323.8 MTEP

Lignite: 42%

Hardcoal: 4%

Lignite Reserves

2,5 Bt (TKI)

4,8 Bt (EUAS)

2 Bt (Private

Sect)Turkey:Total lignite reserve: 9.3 Billion ton

TKI: 27%

Exploration campaign in 2005

%56

%12

%23,5

%5,1

%3,4

1000-1500 Kcal/kg1501-2000 Kcal/kg

2001-3000 Kcal/kg

3001-4000 Kcal/kg

>4000 Kcal/kg

TURKISH LIGNITE SECTOR-Lignite Quality

Low Quality68% : 1000-2000 Kcal/kg

TURKISH LIGNITE SECTOR-Lignite Production(1970-2003)

010000200003000040000500006000070000

1970

1973

1976

1979

1982

1985

1988

1991

1994

1997

2000

2003

(x10

00 to

n)

2001 2002 2003 State% 78 79 72Private%22 21 28

Imported lignite: negligible in amount

15%20%25%30%35%40%45%

1985

1990

1995

2000

2002

2003

Share of Lignite in Total Electricity Generation

TURKISH ENERGY SECTOR-Position of Lignite

Consumption of lignite mainly for electricity generation

In total electricity generation

Share of domestic lignite in 2003 : 17%

Consumption of the Lignites by the Sectors in 2003

Household9%

Power76%

Industry15%

Source: ENERGY/GE.1/2001/4

Lignite Projects Realized by TKI to Feed Power Plants

4575.400Sivas-Kangal

670562.650TOTAL

6305.350Mugla-Yatagan+Tınaz

4203.750Mugla-Milas-Sekkoy

6305.000Mugla-Husamlar

1.0348.000Manisa-Soma

4292.450Kutahya- Tuncbilek

6007.100Kütahya-Seyitomer

3201.800Canakkale-Can

2101.500Bursa-Orhaneli

6204.300Ankara-Cayirhan

1.35518.000Afsin-Elbistan A

Installed Capacity(MW)

Consumption Capacity(x1000 t/y)

Project Name

2004-2005

Elbistan- B Power Plant having 4x360 MW electricity generation capacity will start operation

total installed capacity will be (lignite fired) 8,145 MW

Lignite Projects to Feed Power Plants

Lignite Fields Suitable for Electricity Generation in the Future

3002,500100,000Kütahya- Derin Sahalar

6003,350100,000Manisa-Eynez

10030050,000Şırnak-Silopi (leased)

1601,20067,000Bursa-Keles-Davutlar

TKI

241020,865776,000TOTAL

3002,500129,000Tekirdag-Saray

1001,50051,000Cankiri- Orta

1501,20039,000Bolu-Goynuk

1001,11526,000Bingol-Karliova

6007,200214,000Adana-Tufanbeyli

Installed Capacity(MW)

Lignite Consumption Capacity (t/y)

Reserve (1000 tonnes)

Project name

Lignite Fields Suitable for Electricity Generation in the Future

320n.a.n.a.Adana-Tufanbeyli

1251,40049,000Adiyaman-Golbasi

6,97088,9002,893,000TOTAL

EUAS

10,325114,2653,870,000General TOTAL

6254,500201,000TOTAL

5003,100152,000Konya-Ilgin

Private Sector

6,65086,4002,818,000Elbistan

3202,50075,000Cayirhan 5-6

Installed Capacity(MW)

Lignite Consumption Cap.(1000 t/y)

Reserve (1000 tonnes)

Project name

Projected Coal Demand

0

50000

100000

150000

200000

250000

2005 2010 2015 2020

(x10

00 to

n) Hard coal

Lignite

Environmental measures

All coal-fired power plants: ESP

6 of power plants: FGD Plants

Advanced & environmental friendly tech: like Circulating Fluidized Bed Combustion tech. (Çan Power Plant)

Environmental measures for Household and Industry

10 million tons/year washing capacity for usage of industry and household sectors

– 3 more Washing Plants will be in operation in 2005Coal washing capacity will reach 18 million tons/year.

– Rehabilitation studies for 2 Washing Plants

Lignite packaging plants– Compulsory for supplying coal to household sector by 2005.

Soma briquetting plant(in operation)

CONTENT

General Overview of Turkish Lignite SectorBrief History of Restucturing of Coal SectorMajor Indicators of Coal Industry Restructuring (TKI)Additional Indicators Coal Industry Restructuring(TKI)Conclusion

TKILignite + Hardcoal production

1957

TTKHardcoal production

TKILignite production1983

198919952000

Sivas-Kangal Dep.+Afşin-Elbistan Dep.+Ankara-Çayırhan Dep.

EÜAŞElectricity Generation &

Lignite production

Sivas-Kangal Deposit Private Sector-Lignite Production

Ankara-Çayırhan Deposit &Çayırhan Power Plant

Private Sector-Lign. Prod. & Elect.gen.

Afşin-Elbistan Deposit &Elbistan A Power Station

EÜAŞLign. Prod. & Elect.gen.

SARAY

Dodurga

Çan

Ilgın

Milas

Yatağan

Göynük

Tavşanlı

Keles

Soma

Orhaneli

ŞIRNAK

KONYA

MUĞLA

BURSA

ÇANAKKALE

ÇORUM

BOLU

Silopi

DAKMdBAKMd

KÜTAHYAGLİ

SKMd

GELİ

ELİ

TKİ

ANKARAMANİSA

TEKİRDAĞ

Saray

Oltu

ERZURUM

Aşkale

Müessese

İşletme

Kontrol Müdürlüğü

SLİSeyitömer

ELİ Aegean Lignite Establishment SOMA / MANİSAÇan Lignite Production Management ÇAN / ÇANAKKALE

GELİ South Aegean Lignite Establishment YATAĞAN / MUĞLAYeniköy Lignite Production Management- MİLAS / MUĞLA

GLİ West Lignite Establishment TAVŞANLI / KÜTAHYAIlgın Lignite Production Management ILGIN / KONYA

SLİ Seyitömer Lignite Establishment SEYİTÖMER / KÜTAHYABursa Lignites Production Management- ORHANELİ / BURSA

Doğu Anatolian Control Management DODURGA / ÇORUMWest Anatolian Control Management HİMMETOĞLU / BOLUSilopi Control Management SİLOPİ / ŞIRNAK

ESTABLISHMENTS OF TURKISH COAL ENTERPRISES

CONTENT

Brief History of Restucturing of Coal SectorMajor Indicators of Coal IndustryRestructuring (TKI)Additional Indicators Coal Industry Restructuring(TKI)Conclusion

Source: ENERGY/GE.1/2001/4

Major Indicators of Coal Industry Restructuring

Coal ProductionNumber of Mine/PitsEmployeesState SubsidiesProductivity GrowthInvestment

Major Indicators of the Coal Industry Restructuring-Coal Production of TKI (1990-2004)

0

5.000

10.000

15.000

20.000

25.000

30.000

35.000

40.000

45.000

50.000(1000 tonne s )

36.859 37.699 42.395 38.688 43.315 32.384 34.190 36.731 38.315 38.644 39.198 33.609 30.661 25.685

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

2004 (October)19.9 Mt

200398% opencast

2001-2004coal demand

depending on

natural gas usage.

Elbistan Lignite depositwas given to EUAS

Major Indicators of the Coal Industry Restructuring-Number of Mines (2001-2004)

0

10

20

30

Opencast 15 13 13 12

Underground 8 1 1 0

Opencast+Underground

2 2 2 1

Total 25 16 16 13

2001 2002 2003 2004

2004(December)

Total # of the deposits...: 56

Operated by TKI ............: 13Leased to privated sector: 15

Inactive mines ................: 28

Production activities of 6 mines has beenstopped

Major Indicators of the Coal Industry Restructuring-Number of Establishments (1990-2004)

Establishments1990 200412 4

decentralisation

SARAY

Dodurga

Çan

Ilgın

Milas

Yatağan

Göynük

Tavşanlı

Keles

Soma

Orhaneli

ŞIRNAK

KONYA

MUĞLA

BURSA

ÇANAKKALE

ÇORUM

BOLU

Silopi

DAKMdBAKMd

KÜTAHYAGLİ

SKMd

GELİ

ELİ

TKİ

ANKARAMANİSA

TEKİRDAĞ

Saray

Oltu

ERZURUM

Aşkale

Müessese

İşletme

Kontrol Müdürlüğü

SLİSeyitömer

ELİ Aegean Lignite Establishment SOMA / MANİSAÇan Lignite Production Management ÇAN / ÇANAKKALE

GELİ South Aegean Lignite Establishment YATAĞAN / MUĞLAYeniköy Lignite Production Management- MİLAS / MUĞLA

GLİ West Lignite Establishment TAVŞANLI / KÜTAHYAIlgın Lignite Production Management ILGIN / KONYA

SLİ Seyitömer Lignite Establishment SEYİTÖMER / KÜTAHYABursa Lignites Production Management- ORHANELİ / BURSA

Doğu Anatolian Control Management DODURGA / ÇORUMWest Anatolian Control Management HİMMETOĞLU / BOLUSilopi Control Management SİLOPİ / ŞIRNAK

ESTABLISHMENTS OF TURKISH COAL ENTERPRISES-2004

Major Indicators of the Coal Industry Restructuring-Employee of TKI (1990-2004)

2004 (October)Employee: 12629

1990-2004Size of employee has decreased 60%

No new employee appointed to replace retired ones

0

5.000

10.000

15.000

20.000

25.000

30.000

WORKER 27.855 26.099 25.364 23.849 22.392 19.192 18.263 17.396 16.559 16.137 14.478 13.489 11.949 10.407

Officer 4.431 4.369 4.269 4.128 3.906 3.335 3.164 3.054 3.079 3.013 2.855 2.780 2.696 2.579

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

No Subsidies

Major Indicators of the Coal Industry Restructuring-Subsidies (1990-2004)

Major Indicators of the Coal Industry Restructuring-Investments of TKI (1990-2004)

2004 (Oct)12 Million $

0

20

40

60

(Mill

ion

$)

Investment (Million $) 42,46 24,97 42,09 21,83 4,15 4,62 11,70 22,63 14,83 3,70 6,85 4,67 5,82 9,17

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

Source: ENERGY/GE.1/2001/4

Major Indicators of the Coal Industry Restructuring-Total Changes in per cent (2001-2003)

IndicatorTotal Change in per cent (2001-2003)

Coal Production in million tonnes (Mt) -23,51

Number of Active Mines /Pits -36,00of which (i) Opencast -13,33 (ii) Underground -87,50 (iii) Opencast+Underground 0,00

Number of Employees (thousands) -20,25

Level of State Subsides (1990=100) none

Total Productivity Growth (1990=100) na

Investment (thousands US$) 96,46

CONTENT

Brief History of Restucturing of Coal SectorMajor Indicators of Coal Industry Restructuring (TKI)Additional Indicators Coal IndustryRestructuring (TKI)Conclusion

Source: ENERGY/GE.1/2001/4

Coal Production/employee/yearLabour ProductivityInvestment per Produced Coal

Additional Indicators on LabourProductivity and Investment

Major Indicators of the Coal Industry Restructuring-Lignite Production/employee/year (1990-2004)

2004(Oct.)1578 ton/employee/year

0

500

1000

1500

2000

2500

ton/

empl

oyee

/yea

r

ton/empl/year 1145 1236 1432 1382 1647 1439 1598 1801 1955 2013 2253 2049 2100 1976

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

Major Indicators of the Coal Industry Restructuring-Labor Productivity (1990-2004)

0,0

50,0

100,0

150,0

200,0

Labor Productivity 100,0 108,0 125,1 120,7 143,8 125,7 139,5 157,3 170,7 175,8 196,7 179,0 183,4 172,6

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

1990=100

Major Indicators of the Coal Industry Restructuring-Investment per ton (1990-2004)

0,00

2,00

4,00

6,00

8,00

10,00

12,00

14,00

16,00

18,00

20,00($/ton)

Series1 10,22 19,33 11,53 11,63 10,31 11,13 9,63 3,88 2,18 0,53 1,15 0,66 0,99 0,56 0,10 0,14 0,34 0,62 0,39 0,17 0,17 0,14 0,19 0,36 0,67

1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Pr.

Additional Indicators Total Change in per cent

Coal Production, ton/employee/year 72,60

Labor Productivity, 1990=100 72,60

Investment per Mt of Produced coal -69,01

Additional Indicators of the Coal Industry Restructuring-Total Changes in per cent (1990-2003)

CONTENT

Brief History of Restucturing of Coal SectorMajor Indicators of Coal Industry Restructuring (TKI)Additional Indicators Coal Industry Restructuring(TKI)Conclusion

CONCLUSION

Lignite is major energy source of Turkey

About 75% of produced coal is stated owned

Progress in restructuring on coal industry is slow and uneven since middle of 1980s

Coal sector was affected directly from uncertainties / changes in electricity sector

Favoring gas-fired power stations have affected seriously to coal demand for the last 3 years and will continue to affect.

CONCLUSION

Number of mines have decreased from 25 to 13 between the years 2001-2004

In 2002, 6 mines which were uneconomic and in loss were closed and leased to private sector. This policy is being considered to apply for the mines already not in operationAn exploration campaign will be initiated in 2005.

Increase in use of domestic lignite resources are under agenda. But main concern how to realize new coal and coal related projects

Investments have declined sharply. Financial resources are also needed for renew machinery and qualified person for the existing mines

P os s . P robable P roved Ready Tota l Moi(%) As h(%) S (%) V.M.% Cal.(Kcal/kg)

Es kihis ar 43.435 874 44.309 40 20 3 27 2070

Tınaz 30.893 173 31.066 32 29 2,3 25 2070

Bağyaka 8.069 8.069 38 26 1,3 25 1790

Taş kes ik 51.843 51.843 30 24 2660

Bayır 26.431 26.431 26 24 2,8 31 2670

Turgut 6.165 6.165 39 21 3,1 2130

Total 166.836 1.047 167.883

Sekköy 27.342 665 28.007

İkizköy 74.632 209 74.841

Hüs amlar 82.070 1.850 83.920 30 33 3,1 28 1650

Karacahis ar 85.770 85.770 28 28 4,3 2260

Total 269.814 2.724 272.538

To tal 436.650 3.771 440.421SLİ

Seyitömer 162.783 8.877 171.660 32 43 1,2 22 2080

Orhaneli 38.746 246 38.992 24 24 2 34 2500

Keles 27.897 110 28.007 34 26 1,5 26 1900

Davutlar 1.560 19.945 17.557 39.062 31 26 4,5 2340

Total 1.560 19.945 84.200 356 106.061

To tal 1.560 19.945 246.983 9.233 277.721

GLİ Tunçbilek 309.290 1.465 310.755 15 41 1,6 25 2560

ILİ Ilgın 8.322 985 9.307 50 11 1,1 26 2180

To tal 317.612 2.450 320.062

Soma 6.300 94.023 4.866 105.189 15 36 1,2 26 2940

Deniş 11.000 174.880 5.342 191.222 18 40 1,2 20 2080

Eynez 22.439 60.200 202.125 880 285.644 13 33 1,3 27 3150

Toplam 22.439 77.500 471.028 11.088 582.055

ÇLİ Çan 89.515 100 89.615 23 25 4,2 30 3000

To tal 22.439 77.500 560.543 11.188 671.670

Adana-Tufanbeyli 23.684 190.476 214.160 44 26 2,2 20 1350

Konya-Beyş ehir 81.011 71 81.082 48 25 1,1 17 1110

Çankırı-Orta 50.710 50.710 48 26 0,6 17 1090

Tekirdağ-Saray 105.570 23.581 129.151 45 16 1,9 20 2080

Bolu-Göynük 1.000 37.927 38.927 24 26 1,8 25 2750

Bingöl-Karlıova 88.221 441 88.662 47 24 0,6 16 1460

Mardin-Silopi(As faltit) 1.000 16.210 32.040 49.250 6 31 4 30 5310

Şırnak (As faltit) 6.300 13.260 11.013 30.573 6 31 4,5 39 5330

Other s mall depos its 5.308 24.573 69.297 56 99.234

Tota l 12.608 184.297 584.276 568 781.749

36.607 281.742 2.146.064 27.210 2.491.623T K İ (Tota l)

SLİ BLİ

GLİ

ELİ

ELİ

Oth

ers

GE

Lİ

GELİ

YLİ

ESTABLISHMENTSRe se rve (1000 Ton) Che mica l Prope rtie s

3,2 29 219034 26

TKI’s LigniteReserves