Thar coal can help produce fertiliser, steel and gas

ISLAMABAD: A power plant has been inaugurated recently in Thar and many other projects of the total capacity of 5,000 megawatts are in the pipeline.

However, electricity production is not the only possible use of Thar coal. Gas, fertiliser, and steel can be produced out of it - in some, it is used directly as raw material and in some, it is used as a source of energy.

Thar coal can also be used in extractive industry like cement, tiles, and glass-making directly. The economy can be energised and industrialised by saving foreign exchange and bringing growth in the economy.

Gas resources are depleting fast. There is a limit to LNG imports which drain foreign exchange. There has been no discovery of a significant gas field in Pakistan for a long time. Kekra-1 offshore may be a welcome development after many years.

Fertiliser production is mainly based on Mari gas. Mari gas can only last 10 more years, assuming no further fertiliser plant is added. What happens when Mari gas runs out as 200 billion cubic feet (bcf) of additional gas would be required per year.

The fertiliser is being produced in China from coal. In China, 50 million tons per annum (mtpa) of urea is produced from coal gasification, out of a total urea production of 70 mtpa. Mainly, Anthracite and sub-bituminous coal are used reportedly.

It should be noted that it is above-ground coal gasification that is being discussed here and not underground coal gasification (UCG) - the latter was unsuccessfully tried by local scientists in Thar and had to be closed down. Lately, lignite has also been included in the list of suitable raw material.

In North Dakota, they have started producing urea from lignite. They have been producing 12 other chemicals for a long time now. Urea production from lignite in North Dakota is of special significance if it is competing with cheap shale gas in the US. Also, all the doubts regarding the suitability of lignite for urea production have been removed. In earlier times, NLC in India used to produce urea from lignite, but the plant was closed down due to the emergence of natural gas as a better input, as has been the case with Pak-American Fertiliser (now renamed Agritech), which used to produce urea from local sub-bituminous coal, long before the emergence of Thar coal.

Alternatives

A number of alternatives are possible. Coal gasification may be done in Thar and synthetic gas may be transported to fertiliser plants near Ghotki. Alternatively, Thar coal can be transported to the existing fertiliser plants and one or two large coal gasification plants can be installed as a common facility or separate plants may be installed for every fertiliser unit.

There can be integrated power plants which may utilise waste heat, resulting in a lower cost of electricity for fertiliser production and other users. A feasibility study should be commissioned to assess all these options.

Earlier, the energy ministry had commissioned a study which was premature as Thar coal mining had not started and there was not an actual project. Also, natural gas was too much cheaper and RLNG was not there as an expensive reference justifying coal gasification.

Coal gasification may be a route midway between the local gas and imported LNG. An actual feasibility study would settle the cost issue. Thar coal may have to be sent for testing in Batch plants to establish process suitability and parameters.

Similarly, gas is being produced in China out of coal. Two major synthetic natural gas (SNG) projects have been launched - one producing SNG in Uygur and transporting it to other provinces.

Amazingly, a Danish company has provided technology to China to install a coal-to-SNG plant, which was commissioned in 2014 with a capacity of 146 bcf per year and with an investment of $1.1 billion.

The iron and steel industry is highly energy-intensive (25% share in cost), requiring cheap energy. There are possibilities of using Thar coal in producing iron and steel. In steel production, iron ore (Fe2O3, FE3O4) has to be reduced either through pure carbon (Coke), H2 and CO2 or a mixture of the two.

Pakistan’s steel consumption is growing fast due to increased construction and infrastructure projects. It will grow to 8 mtpa. Pakistan Steel is virtually closed and even if revived may not be able to cater to all the demand. In addition to the proposed Chiniot ore-based plant, small steel plants in the private sector can utilise Thar coal to fill the gap.

Annual consumption of coal in Pakistan has increased to 18 mtpa, an increase of 5-6 mtpa due to the installation of two imported coal-based power plants. Another 3 mtpa of coal imports would be added by next year. In the short run, nothing can be done to utilise Thar coal in these power plants.

However, in cement and other industries, coal import requirements of about 10 mtpa can be substituted by Thar coal. If existing fertiliser plants are converted, 20 mtpa of Thar coal would be required.

Fertiliser plants would be a comparable consumer of Thar coal. If one adds it all, Thar coal can produce more output than of electricity in terms of energising the larger economy with an output of some 40-50 mtpa.

While in the power sector, many alternatives are emerging such as solar and wind, for fertiliser production, RLNG is too expensive and local gas would no more be there very soon. Reportedly, Chinese investors are exploring the possibilities of entering into Pakistan’s fertiliser sector. China has a lot of experience in fertiliser production from coal. In Pakistan, we have large organised companies which may be encouraged to have joint ventures with their Chinese counterparts.

However, the production cost at $47-60 per ton of Thar coal is not very encouraging. It has been responsible for the high cost of electricity with a levelised tariff of 8.5 US cents as compared to the international price of 5-6 cents.

Technology issues such as continuous mining and competitive bidding may be able to bring down the cost of Thar coal production.

The writer is a former member energy of the Planning Commission

Published in The Express Tribune, April 22^nd, 2019.

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