Overview
Our client wished to erect a new oil refinery and therefore required a coal gasification unit. The main issue was the area was in a remote location and it would be a challenge to source thermal coal and therefore the most efficient way to bring the coal to site had to be considered. Core Consultants was therefore charged with the following tasks:
- Source coal that was suited to the particular coal gasification technology that had been proposed
- Forecast the price of such a coal
- Provide logistics options to bring the coal from the source to the refinery’s location
- Provide a forecast of the cost of the various freight routes
Methodology
Core Consultants canvassed various coal companies and logistic providers and asked whether they had the specific coal available or were able to transport the coal to the desired location. Core Consultants further enquired of the coal providers whether they would be amenable to engaging in a long-term off-take agreement with our client and the financial terms of such an arrangement.
Our Recommendation
Core Consultants recommended that the client use an alternative gasification unit that could accommodate coal with slightly lower volatile matter. This type of coal was available near the desired location and therefore the company could be spared the logistics costs.
Outcome
The company has taken our recommendation and is now conducting a feasibility study which incorporates the use of the low volatile thermal coal.
