S. Korea, Mongolia to seek 'clean coal' production

SEOUL, Jan. 17 (Yonhap) -- South Korea and Mongolia will seek to jointly build a pilot synthetic natural gas (SNG) production facility that can make better use of low-grade coal, the government said Monday.

The memorandum of understanding reached between Seoul and Ulan Bator, to be signed next month, plans for a SNG plant to be built in the coal-rich, landlocked country, the Ministry of Knowledge Economy said.

South Korea will provide the technology and facility support while Mongolia has pledged to provide the necessary land for the plant plus coal that can be converted to make fuel oil and various chemical products, the ministry said.

"The project is designed to improve use of low-quality coal that can cause large amounts of greenhouse gases to be released into the atmosphere if it is just burned," a ministry official said.

The project is a win-win arrangement that can benefit both sides, but the overall plan has not been fully finalized, he said.

The ministry said the Mongolia plan is part of a larger "clean coal development work" being pursed by the government and the private sector since 2009.

As part of the coal project, POSCO and SK Energy plan to invest 1 trillion won (US$899 million) and 550 billion won, respectively, by 2013 to build their own SNG plants in South Korea.

In long run, up to 1.8 trillion won may be injected into this field that could allow up to 6 million barrels of synthetic transportation fuel to be made from coal that is equivalent to 2.5 percent of domestic demand, according to the ministry.

yonngong@yna.co.kr