Largest coal miner to boost output

CEO says SECMC aims to up production by 50% to 11.5 million tonnes in 2024


October 01, 2023
The country of more than 230 million people depends chiefly on natural gas to produce electricity, but has been looking to boost coal-fired output to save costs. photo: file

print-news
NUSA DUA, INDONESIA:

Pakistan’s largest coal miner Sindh Engro Coal Mining Co (SECMC) expects to boost its output by 51.3% in 2024, its Chief Executive said, as the South Asian economy seeks to reduce imports, cut fuel costs and shore up its finances.

Faced with a crippling foreign exchange crisis, the government is trying to preserve its depleted foreign exchange reserves and cushion itself against geopolitical shocks.

SECMC aims to help by boosting coal production to 11.5 million tonnes in 2024, from an expected 7.6 million tonnes this year, said CEO Amir Iqbal on Friday.

The company will seek to push power plants currently operating fully on imported coal to use 20-25% domestically mined coal, Iqbal said.

“We have done some initial work (on imported coal-based power plants). It is very much possible,” he said.

SECMC has funds to finance the expansion of mining for 2024, but faces challenges in boosting output after that as Chinese lenders have stopped funding coal projects, Iqbal said.

“That is one challenge for which we are seeking support from the government of Pakistan. They need to come up with some financial instrument so that we can continue expanding,” he said.

The country of more than 230 million people depends chiefly on natural gas to produce electricity, but has been looking to boost coal-fired output to save costs.

“The other very big area is the cement industry, which is 100% imported-coal based. If we start to penetrate into that area, we can start to replace imported coal,” Iqbal said.

However, the Thar Coal project, despite its immense potential, is currently at a crossroads, grappling with a critical financial challenge. The mining company overseeing the Thar Coal Block-II project has faced a precarious situation since the second quarter of 2022 due to incomplete payments. While certain payment portions were disbursed in 2023, these disbursements ceased in the past three months, exacerbating the issue.

“At the forefront of the Thar Coal Block-II project’s challenges lies the urgency to settle dues amounting to over $43 million at this stage. Allegedly, a critical $10 million is required every month to honour Operations and Maintenance (O&M) contractors to ensure uninterrupted mine operations, prompting an urgent need for government attention,” revealed an official in discussion with The Express Tribune.

“If the critical $10 million per month payments are not cleared, the mine operations are likely to be halted, which, in turn, will impact the power generation of Thar-based Independent Power Producers (IPPs), who currently stand as the country’s most economical energy producers,” cautioned Yousuf M Farooq, Director of Research at Chase Securities.

Thar Coal Block-II currently contributes a substantial 1,320 MW of electricity to the overall 2,640 MW generated by Thar Blocks I & II combined. The repercussions of inaction extend beyond the immediate halt of mining operations.

The Thar Coal mine stands as a critical asset in Pakistan’s energy landscape, a testament to its potential to reshape the nation’s power dynamics. The incoming government should take decisive action on this critical matter to ensure its continued viability.

“Immediate action is imperative to ensure the uninterrupted operation of the mine by addressing foreign payment issues. These payments are crucial for maintaining smooth operations and preserving the integrity of the mine’s expansion plans,” stressed the official. “Neglecting this necessity not only threatens to halt a promising indigenous energy source but also endangers Pakistan’s pursuit of energy security and economic growth. This pivotal moment demands decisive action to safeguard the future of Thar Coal and, consequently, Pakistan’s energy landscape,” he added.

REUTERS WITH ADDITIONAL INPUT FROM OUR CORRESPONDENT

 

Published in The Express Tribune, October 1st, 2023.

Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.

COMMENTS

Replying to X

Comments are moderated and generally will be posted if they are on-topic and not abusive.

For more information, please see our Comments FAQ