While foreign attention has largely focused on Central Asia`s largely untapped riches of oil and natural gas, another indigenous fuel source is largely overlooked -- coal.

Since Soviet times, coal in the Central Asian republics has been used to fuel massive electrical production stations and given its relatively high volume and low cost, coal is unlikely to become an export source of revenue in the near future. In Central Asia, coal powers power stations, not only providing energy to local inhabitants but also frees up more valuable natural gas and oil assets to sell abroad in an era of record-high energy prices.

Environmental concerns have roiled Central Asia along with the rest of the globe since the collapse of communism in 1991, so the twin concerns for Central Asian states are how to increase domestic output while simultaneously mitigating the deleterious environmental effects of coal usage for energy production. Reconciling these two contradictory tendencies will prove an increasing challenge as Central Asian nations seek to integrate their economies in the global marketplace. Overall, Central Asia`s concerns are to increase production, attract investment and dampen the environmental impact of extracting more coal.

Coal remains the world`s No. 1 source of fuel for generating electricity and is mined in more than 100 countries.

While it is one of the most polluting sources of energy, it is the world`s largest latent reserve of fossil fuel. In its annual report last year BP estimated there were 909,064 million tonnes of proven coal reserves worldwide, producing a 155 years reserve-to-production ratio, and the data only included ’proven’ reserves.

Central Asia`s reliance on coal resulted from decisions taken during the 1970s by the Soviet Union`s politburo to develop western Siberia`s oil and natural gas fields as the nation`s primary energy sources and a source of valuable hard currency. This left Central Asia dependent on coal and hydroelectric power. Since the Soviet collapse in 1991, all former Central Asian nations have struggled to diversify their energy options, using their Soviet legacy to provide local power while developing hydrocarbon exports as a source of hard currency. As a rough rule of thumb, the farther east, the more difficult it is to export energy assets; Uzbekistan is one of only two nations -- the other being Lichtenstein -- that is landlocked, requiring the crossing of two sovereign nations to achieve access to the sea.

Combined with the relatively low value and high volume of coal exports, geography and distance have largely locked Central Asia`s coal assets into the regional market.

Of Central Asia`s coal markets, Kazakhstan, as with oil exports, is the regional giant and the No. 9 producer in the world; it is also the 10th-largest global exporter, leading the region with an estimated 34.5 billion short tonnes of recoverable coal reserves, located primarily in the major coal fields in Bogatyr and Severny, with exports primarily directed to the Russian Federation, followed by Ukraine. As with most gigantic projects dating from the Soviet period, Kazakhstan`s Bogatyr Access Komir Co. produces approximately 35 percent of Kazakh coal output.

But coal is needed at home. Kazakhstan`s 71 power plants generate 17 gigawatts, nearly 85 percent of the country`s electricity, from coal-fired plants located in the northern coal-producing regions. Besides Russia, a possible additional export market is China.

Kyrgyzstan`s coal-mining industry produces about 250,000 tonnes per year, but the nation remains primarily dependent on hydroelectric power. The industry has been repeatedly criticized by labor groups, and a recent BBC report found children as young as 10 employed in the mines, and miners earning as little as $10 per month. The work is certainly risky, with official figures stating that since 2004, 30 miners have been killed in industrial accidents. Unofficial sources put the number far higher.

Tajikistan`s geography, added to its isolation and its reliance on hydropower, has left the nation in the unique position of exporting electricity.

During the Soviet period, many Tajik enterprises were coal-fired. Coal in Tajikistan sells for $10-$33 per ton, depending on the quality from the country`s 18 mines, making it one of the country`s cheapest energy resources. In 2006 estimated output was 100,000 tonnes, a dramatic decline from the Soviet period, when Tajikistan`s Shurob facility alone produced 600,000 tonnes annually. Many Tajik economists argue that reviving the use of coal for power generation would free up electrical assets for export, particularly to energy-starved neighboring Afghanistan.

Turkmenistan under President Saparmurat Niyazov was a closed society that nevertheless, according to the decree of the Peoples` Council of Aug. 14, 2003, provided free electricity, natural gas, water and salt to citizens up to 2030. It remains the wildcard of Central Asian energy producers, according to the U.S. Energy Information Administration. Since independence, Turkmenistan has virtually ceased coal production, with its energy plants now being solely powered by thermal sources. Again, like Kyrgyzstan, Turkmenistan is seeking to export electrical energy surpluses to neighboring countries.

Uzbekistan`s government remains optimistic about its coal industry, with Uzbekkomir Director General Ulugbek Abdullaev predicting that fulfilling governmental decrees Uzbekistan will mine more than 3.15 million tonnes of coal in 2007, a 4-percent increase over 2006 figures; domestic consumption is for power generation.

As always, Russia looms large over Central Asia`s destiny, having the second-largest coal reserves in the world. In Russia, coal makes up about 15 percent of the fuel used at power stations to generate electricity.

Although coal`s bulk and low value largely preclude exports, many foreign companies are seeking to invest in regional Central Asian supplies to proposed power projects. For example, the Chinese company GNTI has announced plans to assist in the construction of a 100 MW capacity thermoelectric power station close to large Tajik coal deposits, which would be used to supply electricity during the autumn and winter.

Central Asian coal provides domestic electrical production, while freeing up more valuable natural gas and oil production for export. The foreseeable future there will see Central Asia pursue a two-fold strategy -- seeking foreign investment to improve environmental concerns about coal`s dirty Soviet legacy while seeking to persuade global investors to go for combined industrial packages similar to Tajikistan`s GNTI, where local coal resources can be used to power local industrial concerns. In the meantime, coal provides Central Asians with the most important industrial energy source of the 20th century -- electricity.

Source: UPI