Sindh Engro Coal Mining Company (SECMC) was formed in 2009 as a public-private partnership between Government of Sindh (GoS) and Engro Powergen Ltd to undertake mining and power projects in Block II of the Thar Coal Field. Lateron, other private sector companies, described hereunder, joined hands with Engroto take up a total of 49% equity in the Mining project. Block II, which is spread over an area of 95.5 sq. km, contains 1.57 Bn tons of mineable lignite reserves which can produce up to 5,000 MW for the next 50 years! Initially, SECMC plans to set-up a 3.8 million tons per annum (Mt/a) mine which will begin commercial operations by early 2019 at a cost of US $845Mn.
GoS is the majority shareholder in SECMC with a 51% stake while the remaining 49% is divided between Private sector companies including Engro Powergen Ltd, Thal Ltd (a subsidiary of House of Habib), Hub Power Co (Hubco), Habib Bank Limited (HBL), China Machinery & Engineering Corporation (CMEC) and SPI Mendong of China. Engro is one of the largest private sector business corporations in Pakistan with a variety of interests in the country, including fertilisers, foods, chemicals storage, power generation, petrochemicals and trading. HOH is a renowned group with business interests in automobiles, construction, banking, IT and chemicals with several equity and technical collaborations with British, Japanese and Norwegian companies. Another important investor, Hubco, is the largest Independent Power Producer in the country. Pakistan's largest private sector bank, HBL, which has presence in 25 countries, is another important shareholder.
SECMC's Chinese EPC contractor, CMEC, is a world renowned engineering contractor with triple-A credit rating and business presence in more than 150 regions is also a stake-holder. Lastly, SPI Mendong, one of China's top-5 public sector companies in power sector is a strategic investor in SECMC.
Project Background
Coal was first discovered in Thar by chance in 1991 by Sindh Arid Zone Development Authority (SAZDA) during drilling activity for water wells in the region. After the initial discovery, in 1992, Geological Survey of Pakistan began detailed exploration in the region and estimated the coal reserves in Thar to be approximately 175 billion tons. This was later verified in 1994 by an American mining company, Johnt Boyd, who did a comprehensive study on the most feasible mining techniques to be used in Thar. Between 1992 and 2015, several feasibility studies were conducted on various coal blocks in Thar by internationally renowned mining experts who verified the quantity of coal in Thar, its quality, mining techniques as well as the technical, environmental and commercial viability of open-pit mining. To facilitate mining operations in Thar, GoS divided a small region of the Thar Coal Field into 13 blocks, each containing about 2 Billion tons of coal reserves. In 2003, GoS engaged RWE Germany, who are Europe's largest lignite mining and power generation companies to conduct a detailed feasibility study in Block-I. In parallel, they allocated Block II to Shenhua, China's largest coal and mineral mining company, who carried out a comprehensive drilling and exploration program in the block. Shenhua intended to set up an open-pit mine and mine mouth power plant in Block II, however, the project could not go through due to a disagreement over the proposed power tariff. That was the first major set-back in the development of Thar Coal. In 2005, a Hong Kong based businessman by the named of Gordon Wu came to Pakistan intending to set up an energy park at one of the oldest sea ports in Pakistan, Keti Bandar. Mr Wu wanted to fuel the proposed power plants by exploiting Thar coal and transporting it to Keti Bandar via new rail link. Unfortunately, that project didn't see the light of day either causing another damning blow to Thar coal.
Realizing that Thar coal could not be developed by either the Public or Private sector on its own, in 2008, GoS initiated an International Competitive Bidding for Thar Block II. The idea was to form a J-V partnership between the Public and the Private Sector to develop Thar coal mining project. That really was a master stroke by the Government of Sindh which later proved to be the recipe for success factor for Thar. Engro was selected as the Joint venture partner leading to the formation of Sindh Engro Coal Mining Co Ltd (SECMC) in 2009.
In 2010, SECMC completed the Bankable Feasibility Study for a 6.5 Mtpa mine and an associated 1200 MW mine mouth power plant at an estimated cost of USD3 billion. Financing this mega project was a big challenge considering that no western bank was willing to finance coal based projects in Pakistan. After tremendous efforts, in 2012 SECMC with the whole-hearted support of GoS, convinced GoP to issue a Sovereign Guarantee worth USD 700 Million for the mining project. That was a major boost for Thar coal project without which financing of the multi-billion dollar project was not possible. In 2014, Thar Coal Project was included in the China Pakistan Economic Corridor (CPEC) which was instrumental insecurity Chinese financing for the project.
Another major milestone for Thar Coal mining project was achieved in April 2014 when the groundbreaking ceremony of the project was performed jointly by Honourable Prime Minister Mian Muhammad Nawaz Sharif and ex-President Mr Asif Ali Zardari.
Project Details
SECMC has been granted a 30-year mining lease for open cast mining in Thar Block-II which is extendable by another30 years. Since 1991 to present, 169 boreholes have been drilled in Block II on the basis of which RWE issued a Competent Person Report based on JORC standard confirming presence of 2.0 tons of lignite resources out of which 1.57 Billion are minable and 196 million tons of proven reserves. It will take approximately 113 million bank cubic meters (BCM) of overburden to be removed to get to the coal, which lies between 135 meters to 190 meters below the surface. The overburden in Thar Block II consists of dune sand and various types of clay and mud stones. According to studies, the cumulative thickness of coal seams in Block II is 32 m whereas the thickness of the single thickest coal seam is up to 22m.
Thar's coal reserves are completely untapped while those in India, Germany, Bulgaria, Turkey, Greece and other European countries, despite being of a similar or inferior quality, are being utilised to generate massive amounts of electricity. The quality and stripping ratio of coal in Block II compares favourably with other countries as shown in the attached table.
Thar's coal reserves are completely untapped while those in India, Germany, Bulgaria, Turkey, Greece and other European countries, despite being of a similar or inferior quality, are being utilised to generate massive amounts of electricity.
Comparison of Thar Block II with other international mines
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Deposit Heating value Sulphur(%) Ash (%) Moisture(%) Stripping
(Kcal/kg) Ratio (m3/t)
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Thar Block II 2770 1.07 7.8 47.46 6.72
Gujrat, India 2600-3000 3.4-5.9 9-12 38-40 9-14
Hambach, Germany 1911-2747 0.2-0.4 2-5 48-52 6.3
Maritza East - Bulgariat 1550 4.5 19-35 54 1.7
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Hydrogeology is undoubtedly a major challenge in mining in Thar Block II. SECMC appointed Chinese and RWE specialists to conduct detailed hydrological exploration and modelling which confirmed that there are 3 aquifers in Block II of which the 3rd and the deepest acquifer is the biggest in terms of volume and pressure. For the initial phase of mining, approximately 30 million cubic meters per annum (Mm3/a) of subsoil water will have to be dewatered. This water is highly saline or brackish with a total dissolved solids (TDS) content of around 6000 ppm. SECMC plans to use most of this water, after treatment, to cater the cooling water requirements of the adjacent power plants as well as for general water usage at the mine. The volume of water in Block II is considerably less than Germany where up to 350 Mm3/a (10 times more than Thar) is being dewatered annually from the Hambach lignite mine near Cologne.
In the first phase of mining project, SECMC intends to start with a comparatively smaller mine with box cut width of 600m and overall pit dimensions of 1.44 km x 1.3 km. The box cut will be expanded to 1500 m as the mine expands to its ultimate capacity. SECMC plans to use conventional Shovel and Truck methodology for the first phase of mining and will use 125 trucks of 60-ton capacity and 20 excavators of 6.5cubic meter capacity. Procurement of shovels and trucks has already begun and the first lot of 22 trucks is already at Site. In the second phase, truck size will be increased to 100 tons and excavators to 12-15 million cubic meters. SECMC also plans to use state-of-the-art, In-pit Crushing and Conveying (IPCC) system and later move to Bucket Wheel Excavators & spreaders as the mine scales up beyond 15 Mtpa.
Environmental and Social Impact
Under its Environmental Management Plan, SECMC will plant hundreds of thousands of indigenous trees to maintain the natural ecosystem of the desert. It will incorporate wind and water erosion control measures, inclusive of dune management where necessary, in project design. The mining activities require pits of up to 135 meter depths to be dug. However the ecology of the desert will not be affected as these pits will be filled back once the coal has been extracted.
Additionally, Hagler Bailley's Environmental and Social Impact Assessment (ESIA) shows that there is no immediate risk to groundwater resources. SECMC will provide alternate water supply source for domestic uses to those affected by the Project. Storage Ponds and Effluent Disposal System being constructed by Sindh Government will ensure that underground water is extracted from the aquifers according to conventional industrial practise before any contact with coal. Moreover, the ESIA report has determined the risk of air pollution to be minimal and manageable. The company will take dust management measures to further minimise the environmental impact.
Progress Summary
All groundwork for the project has been completed and approximately, 4 million cubic meters of overburden has already been removed, with the current mine depth at 10 m. SECMC has completed acquisition of 6,000 acres of land for Phase I. An additional 8000 acres of land for Phase II of the mining project is under the process of acquisition. All major work on mine engineering has already been done and required NOC and regulatory approvals have been granted. Moreover, the construction of temporary site facilities has also started by the Chinese EPC contractor who has already been given the Notice to Proceed subject to Financial Close of the project. The mine is ready for full fledged construction activities starting April 15, 2016. Inshallah, by early 2019 SECMC will achieve the Commercial Operation (COD) of the first ever, large scale, open-pit coal mine in Pakistan and soon after power will start to flow from Thar to the rest of the Country, putting Pakistan on the road to prosperity.