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March 21, 2015

Work on $1.3 billion Thar coal project to begin in May

Business

March 21, 2015

ISLAMKOT: The large-scale mining at Thar coalfield, involving $1.3 billion, is expected to commence in May 2015, Sino Sindh Resources Ltd (SSRL) Chief Executive Officer Chaudhary Abdul Qayyum said on Friday.
SSRL, which holds mining lease rights through international competitive bidding (ICB), struck a deal with the Industrial and Commercial Bank of China (ICBC) for providing $1 billion for the mining operations, the SSRL CEO said while briefing media at the project site.
The remaining amount of about 25 percent will be raised as equity. And the first phase of the financial close will be achieved in the second quarter of the current year.
The company has been allotted Thar coalfield’s Block-I, which is spread over 150 square kilometres. In the first phase, 6.5 million tons of coal will be produced per annum from the block. The estimated minable coal present at this site is 2.5 billion tons. Along with open-pit mine, four coal-fired power plants, having cumulative generation capacity of 1,400MW (4x350MW) will be set up with a total investment of $2 billion. Two of these planned power plants are scheduled to start generating power by 2018, Qayyum said. SSRL and Shenghai Electric Corporation have entered into a coal supply agreement, in which SSRL will extract coal and supply it to China Power International (CPI). In the next couple of months, specialised machinery for mining is scheduled to start reaching Block-I of Thar coalfield near Islamkot District, some 400km from Karachi.
Eventually, coal production from Block-I will touch the mark of 20 million tons per year, he said, adding that much of the coal will be used for other power plants as well as exporting. He maintained that indigenous coal is ideal for power generation plants, keeping in view the low cost of readily available fuel. That is why the power projects have been made part of the CPEC.
He maintained that the reliance on indigenous sources would enhance the energy security of the

country, which is why these projects are being given strategic importance by the government.
There is no cost of transportation involved in Thar coal, making it a far cheaper option compared to imported coal.
Moreover, its price and supply will be smooth, contrary to the price fluctuations and supply-side constraints associated with the international market. As the mine achieves economies of scale and debt is paid off, the unit cost of coal will continue to decline, stabilising at $3.73 per million British thermal units from the 11th year. The levelised cost for Block-I is $5.71 per mmbtu, thus the power generated with coal will be about 40 percent less if compared with furnace oil fired thermal plants, he said.
The SSRL CEO said that the cost of electricity for the initial 10 years will be 8.5 cents per unit and when the loan period ends, the cost will come down to just six cents per unit. So, supply of electricity will be improved significantly with Thar coal, which will, in the end also ensure affordability for the end consumers, he observed.
The Thar Desert in the South East of Pakistan is host to the seventh largest coal reserves in the world. It is spread over 9,000 square kilometres. SSRL enjoys mining lease for over 30 years for Block-I of the Thar coalfields. Leveraging local resources would entail lower cost of extraction and consequently lower cost of electricity. Development of mining industry would further stimulate economic activity in the region via multiplier effect, enhancing economic and social prospects of the communities involved.
SSRL is a subsidiary of Global Mining China Ltd (GMC) that enjoys 55 percent stakes with Asiapak Investments, which holds 40 percent shares, whereas the remaining five percent are owned by a Dubai-based company.

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