China’s New Coal Project in Context of Turkey’s Energy Profile

1. China’s New Coal Project in Context of Turkey’s Energy Profile Jude Clemente, MBA, MS JTC Energy Research Associates Principal judeclemente21@msn.com December 2011

2. Turkey: Rising Power on the Bosporus “The Turkish economy expanded 8.8% in the second quarter, far exceeding economists' expectations and underscoring its reputation as Eurasia's rising tiger” . Wall Street Journal , 9/12/11 “Coal power stations remain an important energy source for Turkey, and there is renewed interest in exploiting Turkey’s domestic coal resources” U.S. Energy Information Administration 2011

3. Zhejiang Energy/Polat Mining Project • China’s Zhejiang Energy Group will invest $1 Billion to open a coal mine and build a coal power plant in the western province Manisa, Turkey • 3,000 jobs are expected to be created • Whole project should take 5 years • The initial capacity of the coal pit is expected to be around 3 million tons, and the power capacity of the coal plant could be 660 megawatts • The agreement marks the biggest investment ever made by a Chinese firm in Turkey NOTE: Tanzania

4. Some Macro Points About Turkey • The debate over Turkey’s membership into the European Union (EU) largely centers on a question about Turkey’s adoption of “Western values.” • Turkey has been an associate member of the EU and its predecessors since 1963. • Turkey is a country of 75 million people and has a $1.2 trillion Gross Domestic Product. • Turkey’s geographic position alone makes it a vital player in global energy markets; Turkey is see as the “gateway” between Europe and Asia. • With a economy growing at around 8% a year, however, Turkey’s energy consumption outlook is becoming more globally significant. • Reserves of lignite coal in northwestern Turkey have increased to 1.5 billion tons after discovery of new coalbeds, enough to meet energy demands for the reason for 50 years. The value of the reserves is $50 billion .

5. Turkey’s Primary Energy Supply Million Tons of Coal Equivalent (Mtce) 5

6. Turkey’s Electricity Profile “ increasing exposure on natural gas to produce electricity , increases Turkey’s exposure to volatile gas prices and supply disruption” POWER magazine, 2009 Source: EPDK, (Government Site) 2011

7. Title TWh Text box here • Generation – 200 Billion USD • T + D – 14 Billion USD Investment Required Source: IEA, 2011

8. Turkey’s Energy Balance, 2010 “Increasing dependence on natural gas to produce electricity , increases Turkey’s exposure to volatile gas prices and supply disruption” POWER magazine, 2009

9. Fuel Prices to End Users In Turkey Source

10. Turkish Coal Reserves Turkey Must Use Coal For Power Million Short Tons Million Short Tons 2,600 Million Short Tons 2,000 600 + = Coal Lignite Total Note: Hard coal is mined at only one location (Zonguldak) while lignite mined at multiple locations. Total hard coal production is 23 million tons and lignite production about 50 Source: EIA, 2011 10

11. Turkey’s Coal Balance Has Changed Mcte

12. Turkey Imports 27 Million Tons of Coal Source:

13. Source: U.S. Energy Information Administration, 2011

14. Turkey’s GDP and Coal Generation “When electricity consumption alone is considered there is a strong causality running from electricity consumption to the real GDP in Turkey” Energy Economics Source: IEA, 2011 14

15. Turkey’s Dramatic Population Growth Number of People 105 Million 75 Million 38 Million 64 Million 1973 2000 2010 2035 Source

16. Source: CIA World Factbook, 2011

17. Turkey: on the Socioeconomic Upswing in 2010 Source

18. But Still a Long Way to Go Source

19. The Coming Rise in Electricity Demand “Turkey must have immediate and substantial investment in its electricity generating infrastructure “ Global Business Reports, TWh Projections from Turkish Government Energy Market Regulator Source: EPDK (Govt. Site) - 2011 19