thar coal- a new horizon for investment coal- a new horizon for investment.pdf · thar coal- a new...

By Mohammad Younus DaghaManaging Director Thar Coal & Energy Board/Secretary Coal & Energy Development Department,Government of [email protected]

Thar Coal- A new Horizon for Investment in Pakistan

Review of Pakistan Coal Industry Now & the Future

www.sindhcoal.gos.pk 2

Coal’s Significance in Global Energy Scenario

q Global energy consumption will rise by 50% by 2030. In non-OECD region, it will rise by 85% (International Energy Outlook Report 2008)

q Coal use is likely to grow from 40% to 44%, as a source for power generation, by 2030* due to energy security and price volatility.

q Besides use in power generation, various countries have initiated projects to produce Coal-to-Liquids, that entail producing diesel and other liquid products and Coal gasification projects in China, US, India and South Africa.

q World Proven Coal Reserves – Over 860 billion tons.

* Source IEA Report 2009

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Coal Used in Electricity Generation & Lignite Reserves% age of Electricity

Generated from CoalLignite Reserves

Billion tonnesSouth Africa 94 30.15*

Poland 93 1.37

China 81 18.6

Australia 76 37.2

Israel 71 -

Kazakhstan 70 12.1

India 68 4.5

Czech Republic 62 0.98

Morocco 57 -

Greece 55 3.02

USA 49 30.16

Germany 49 40.6

World Average 41 195.38

Pakistan 0.1 186.2**

* Sub bituminous & Anthracite reserves only** Thar Coal Resources are 175 billion tonnes Proven Reserve in 9 explored Blocks alone is 20 billion tonnes

( Source,2008, IEA)


Hydel, 30.3%

Coal, 0.1%

Oil, 35.4%

Gas, 32.4%

Nuclear, 1.8%

Pakistan Power Generation Fuel Mix 2008-09World Power Generation fuel Mix 2008-09

World Pakistan

A Comparison of Power Generation fuel Mix

Nuclear

Hydel

Gas

Oil

Coal

others

Nuclear 15%

Hydro 16%

Gas 20%

Oil 6%

Coal 41%

Others 2%

Widening Demand & Supply Gap Projection for Pakistan

Current Installed Capacity (MW)

Project DemandGap (MW)

Year MW

19,566

2010 24,474 6,577

2015 36,217 18,320

2020 54,359 36,462

2025 80,566 62,669

2030 113,695 95,798

Future Energy Demand Supply Gap is Alarming!Source: Pakistan Electric Power Company (PEPCO)

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Pakistan’s Coal ReservesSindhSindh

186 billion tons

PunjabPunjab235 million tons

BalochistanBalochistan217 million tons

KPKP90 million tons

Azad KashmirAzad Kashmir9 million tons Thar

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Thar Desert contains the world’s 7th largest coal reserves: 175 Billion Ton = 50 Billion TOE = 2000 TCF

Total Thar Coal Reserve More than Saudi Arabia 68 times higher than& Iranian Oil Reserves Pakistan’s total gas reserves

All Coal Fields of Sindh

Coal FieldReserves Bn tons

Moisture %

Fixed Carbon

VolatileMatter %

Ash %Sulphur

%

Calorific ValueBtu/lb

Rank

Lakhra 1.328 28.9 28.0 25.2 18.0 4.7 to 7.0 4622 to 7,552

Lignite A to B

Sonda 7.112 34.0 27.9 25.2 15.0 1 to 2.8 6762 to 11029

Lignite A to B

Badin 1.35815.4 to

29.8 29.8 to

39.8 31 to 36.3

8.2 to 14.6

3.4 to 7.4 6740 to 11100

Lignite A to B

Thar 175 46.8 23.4 16.7 6.2 0.9-1.2 5,774 Lignite A


Thar Coalfields Blocks Layout

Thar Coal ReservesBlock Total

Drillholes

Cumulative Coal Seam

Meters

Over Burden Top of first Seam

Meters

Chemical Analysis as

Received basis BTU/Kg

Estimatedreserves

Min Max Min Max

I 41 8.08 36 137.04 189.00 6398 3566.91

II 120 7.52 30.89 123.89 164.70 5780 2000.00

III A 41 7.15 24.58 114.40 203.02 5875 2008.04

IV 42 10.74 33.45 117.80 165.30 5971 2471.51

V 35 7.55 24.60 108.00 165.65 - 1394.00

VI 35 4.25 27.00 127.40 186.65 12360 1655.00

III B 14 3.78 30.78 140.23 171.15 4808 1453.00

VII 52 6.82 24.44 111.36 218.95 5441 2175.95

VIII 58 1.45 42.60 121.31 176.53 5302 3035.86

www.sindhcoal.gos.pk9

CHEMICAL ANALYSIS OF THAR COALFIELDSCHEMICAL ANALYSIS OF THAR COALFIELDS

Blocks

Weighted Average chemical Analyses of Thar Coal

As Received Values (%) Heating Values (Btu/lb)

Moisture AshVol.

MatterFixed

CarbonSulphur As Rcvd Dry

I 43.13 6.53 30.11 20.11 0.92 6,398 10,461

II 48.89 5.21 26.55 19.37 1.05 5,780 11,353

III-A 45.41 6.14 28.51 19.56 1.12 5,875 10,880

IV 43.24 6.56 29.04 21.13 1.20 5,971 10,723

V 36.82 8.92 38.24 28.22 1.20 4,748 -

VI 38.32 7.62 36.22 30.13 1.52 10,514 -

III-B 47.72 9.30 25.49 16.79 1.15 4,808 -

VII 48.27 8.03 25.30 19.56 1.16 5,441 -

VIII 49.57 7.78 24.32 18.10 1.44 5,302 -


GENERAL GEOLOGY OF THAR COALFIELDGENERAL GEOLOGY OF THAR COALFIELD

BASEMENT COMPLEXWeathered GraniteGranite

BARA FORMATIONClaystoneCoalSiltstoneDirty Coal

Carby Claystone

SUB-RECENT DEPOSITSSandstone SiltstoneClaystoneKaolin / Granite Wash

RECENT DEPOSITDune Sand: Light grey, loose and friable, very fine to fine grained, sub angular to sub rounded, well sorted to moderately sorted,few Fe, Mg grains observed.

Sub Recent: Mix lithology, Silty, sandy, and clayey at places. Oxidized, iron concretion,yellow limonitic staining.

Bara Formation: Mainly medium gray to dark blackish grey claystone, coaly, carby, in betweencoal seams

Granite Basement : Mainly pink granite of Precambrian age.

KGS-12

42.67m

153.74m

TD=249.02 m


Deposit Stripping Ratio

(m³ : t) Heating Value

(MJ/kg) Thar 6.6 : 1 11.6

Kosovo 1 : 1 7.8

Rhenish Area, Germany

4.9 : 1 8.9

Hambach, Germany 6.3 : 1 10.5

Hungary 9 : 1 7.1

Greece 10:1 5.02

COMPARISON OF THAR LIGNITE WITH OTHER COUNTRIES

CREDIBILITY OF RESERVES

Studies Conducted By:

§ United States Geological Survey§ John T. Boyd§ RWE of Germany§ M/s Shenhua of China§ Sindh Engro Coal Mining Company(SECMC)§ Geological Survey of Pakistan§ Sindh Coal Authority

► All studies confirm presence of huge coal reserveswww.sindhcoal.gos.pk 13

Lignite

Coal

Combustion (Steam)

Gasification

AshTarNaphtaPhenolCatecholsCarbon DioxideDephenolized Cresylic Acid

CH4

CO2

H2

H2S

NH3

CO

H2

EthanolJet FuelDieselPetrolParaffinChemicals (Ethylene àPolymers

AmmoniaFertilizerExplosives

Fisher Tropsch Synthesis

Crude Oil -Refinery

Electricity (Steam Turbines)

Coal to Liquid

Source: Syngas and Coal Technology, R & D, SASOL – Mr Johannes Van Heerdeen

Uses of Lignite


“To develop Thar Coal as a major source of power generation for Energy & Economic Security of the country and as a Hub of Petro Chemical Industry”

GoalTo generate at least 10,000 MW by 2020

offer• Huge proven reserves with attractive incentives• Higher returns for investors• Business friendly policies & environment• Excellent incentives, concessions & protections

Vision for Thar Coal


Strategy to attract Private Investment

• Attractive incentives Concessions & protections for Investors

• Power Purchase guarantee Scheme

• Provision of Robust Infrastructure


Thar Coalfield is declared as Special Economic Zone, and projects of development of Thar declaredas ‘Projects of National Security’

20% ($ Based) IRR to firms which achieve Financial Close before Dec 2015 for Mine & Power Plantsbased on indigenous coal and 20.5% IRR for firms which Financial Close by or before Dec 2014.

Zero percent customs duties on import of coal mining equipment and machinery including vehiclesfor site use.

Exemption on withholding tax on dividend for initial 30 years.

Exemption on withholding tax on procurement of goods and services during project constructionand operations.

Exemption for 30 years on other levies including special excise duty, federal excise duty, WPPF andWWF.

Coal based Power and Mining Projects in Sindh shall have the sameincentives, concessions, protections etc. as that available to IPPs developed under PowerGeneration Policy 2002

TCEB to function as the Coal Pricing Agency

Fiscal Incentives for Coal Development



ProtectionsCurrency Exchange Rate Protection

Mining & Power Producers are protected fromthe impact of exchange rate variation up toCommercial Operation Date (COD).

EPC Cost EscalationCost escalation between the date of applicationand the Financial Close permissible as per PowerPolicy 2002

Return on EquityUS Dollar based Return on Equity


Power Purchase Guarantee Scheme • GoP guarantees obligations of power purchaser• GOP provides protection against political force

majeure, change in law and change in duties &taxes

• Payment of compensation in case oftermination due to GOP default

• Tariff adjustments for variation in currencyexchange rates, fuel prices and inflation

• Government ensures conversion of Pak Rupee& remittance of foreign exchange for project-related payments


INFRASTRUCTURE AVAILABLE AT THARROAD NETWORK

70 tonnes load carrying capacity metalled road isavailable up to Coal field area.ELECTRICITY

11 KV feeder emanating from Islamkot to Thar CoalProject areas with 200 watts transformer is available.COMMUNICATION

Telephone & Internet communication through Optic fibercable is available up to Thar Coalfield area.DRINKING WATER

29 Reverse Osmosis Plants in Thar are available forprovision of portable water to residents as well as projectstaff free of cost.RESCUE STATION

Rescue Station in coal mining area at Thar coalfieldcovering an area of 8,200 sq. ft. is completedLIBRARY

A Coal library is situated at office of Sindh Coal Authority,Karachi.

TRANSMISSION LINENTDC has conducted feasibility study for lying of Transmission Line forevacuation of 10,000 MW from Thar. In the first Phase they areplanning to evacuate 1200 MW.AIRPORTThe GoS has approved a scheme at the cost of Rs.972.070 million forthe construction of Airport at Thar for Coal Fields of Sindh by the CivilAviation Authority. Ground Breaking is due in current month.PROVISION OF HEAVY DUTY ROADThe W&S Deptt. is upgrading the road from Karachi to Islamkotthrough Hyderabad- Mirpurkhas- Naukot for facilitating transportationof heavy machinery by Dec. 2012.RAILWAY LINKPRACS has prepared feasibility for broad gauge rail link from PortQasim to Islamkot.LODGE AT THARLodge at Thar with 20-bedded accommodation to facilitate foreign andlocal investors is being constructed at Islamkot.PROVISION OF WATER:The GoS has planned to construct a water carrier to provide 300 Cusecs waterto Thar. Alternately, the option of provision of water from LBOD is alsobeing evaluated.

INFRASTRUCTURE PLANNED AT THAR

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Thar Coal Block Status

Block-II Sindh Engro Coal Mining Company(JV: 40% Sindh Government; 60% Engro)2X600 Power Plant plannedOpen Pit Mining @ 6.5 Mtpa

Bankable Feasibility completed 31st August 2010Project financing activity continued.Chinese Funding through JEWG is being solicited

Block III-ACougar Energy (UK) 400 MW PlannedUnder Ground Coal Gasification ProjectErgo Exergy Technology planned

Pilot Burn planned in 36 MonthsDesktop studies under process.In active negotiation with M/s Fouji Foundation forjoint collaboration

Block-VUCG ProjectUnder Ground Coal Gasification Project2X50 MW IGCC Power Plant Planned

Unit gasifier design prepared,Technical team mobilized and desktop studies under process. Drilling Process has been completed, 36 bore holes have been drilled.Test Burn Planned on 19th September 2011

Block-VIOracle Coalfields, PLC (UK)Strip mining; MoU signed with KESC for 300MW

Geotechnical drilling in process through DRDESIA completedBFS completion September 2011Mine development phase to begin mid 2012

Status of Allocated Thar Blocks

www.sindhcoal.gos.pk


BUSINESS FACILITATIONStrategic alliance between Coal & Power sector

► High powered Thar Coal Energy Board (TCEB)established as one stop org. with Federal and Provincialagencies to facilitate investors.

► TCEB is a decision making body on Thar Coal Miningand Power Generation Projects.

► TCEB facilitates and coordinates with all the projectsrelated to Thar Coal.

► Causing concerned agencies to improve infrastructure

► To act as coal Pricing agency

Composition of the Board is:

i. Chief Minister Sindh Chairmanii. Federal Minister for Water & Power Vice-Chairmaniii. Federal Minister for Finance Memberiv. Federal Minister for Law and Justice Memberv. Deputy Chairman, Planning Commission Membervi. Provincial Minister (Irrigation) Membervii. Provincial Minister (Revenue) Memberviii. Provincial Minister (Finance) Memberix. Female MNA from Thar Region Memberx. Federal Secretary, Ministry of Water and Power Memberxi. Chief Secretary, Govt. of Sindh Memberxii. Secretary, Coal & Energy Development Dept. Memberxiii. One eminent Person Memberxiv. Managing Director, TCEB Member/Secretary

Thar Coal & Energy Board


1. Coal MiningInvestors interested only in mining may apply for a minelease for mining the coal.

2. Integrated Coal & Power Generation ProjectInvestors may also opt for investing an integrated coalmining and power generation projects.

3. Mine Mouth Power ProjectThar coalfields present best opportunity for mine mouthpower projects in view of the great demand for energy inthe country.

Investment Options


Investment Options4. Briquetting

Investors may plan Briquetting to support existing Power generation

and meeting coal demands of local industry

5. Coal Gasification

Investors may propose to convert coal into gas and market the

syngas and bye products in open market, or may develop a forward

integrated project on any one or more bye products from

gasification project

6. Coal to Liquid Projects

Investors may propose to convert coal into Liquid and market the

byproducts in open market, or may develop a forward

integrated project on any one or more bye products from CTL projectwww.sindhcoal.gos.pk 26

Thar today



Thar Tomorrow

Thank You

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