Prospects for thermal coal imports into Pakistan

by Pakistan Seatrade Group chief executive Muhammad Najib Balagamwalla

Pakistan 's geographic location is in South Asia , bordering the Arabian Sea , India on the East, iIran and Afghanistan on the West and China to the north.

It has an area of 803,940sqkm. Population of 150.7 Million

Coal reserves in Pakistan

180,000 million tonnes total reserves

1,200 million tonnes Baluchistan

940 million tonnes Punjab / NWFP

178,000 million tonnes Sindh

Annual Production

Total annual production : 4,450,000 million tonnes

Coal usage in Pakistan

450,000 tonnes for various uses

1 million tonnes cement factories

3 million tonnes brick kilns

Primary energy supplies in Pakistan

Fuel Oil - 43%

Gas - 34%

Coal - 8%

Hydro - 15%

Energy Source / Supplies

Pakistan 's energy consumption

Domestic - 23.1 %

Commercial - 3.2 %

Industrial - 34.1 %

Transport - 33.8 %

Agriculture - 2.7 %

Government, others - 3.1 %

Pakistan 's total steaming coal imports are on the rise

2002 - 700,000 million tonnes per year

203 - 1,050,000 million tonnes per year

2004 - 1,800,000 million tonnes per year

2005 - 2,150,000 million tonnes per year

2006 - 3,000,000 million tonnes per year

2007 - 3,500,000 million tonnes per year

2008 - 3,800,000 million tonnes per year

2009 - 4,250,000 million tonnes per year

Reasons for increase in coal imports

Demand since 2002-2003 can be attributed to:

- The country's cement industry is in a major boom due to economic boom being experienced in Pakistan .

- Construction of major government bridges, fly-overs, residences and general economic growth of minimum 6% per annum.

- Afghanistan reconstruction/rebuilding cement demands.

- Reconstruction/rebuilding demands of Iraq .

- Conversion of most of Pakistan 's cement factories to coal, and their expansion to cater for increased demands.

Coal imports by type

Coking Coal - Pakistan Steel uses an average 1.3 million tonnes per annum. This is expected to increase to 2.4 million tonnes per annum.

Thermal and steam coal - the primary users are cement mills, brick kilns, sugar mills and chemical factories.

Balance of local and imported coal used

January to June 2002 - 52% local coal used, 48 % imported coal

June to December 2002 - 26% local coal used, 74% imported coal

January to June 2003 - 18% local coal used, 82% imported coal

2004-2005 - 14% local coal used, 86% imported coal

2005-2006 - 13% local coal used, 87% imported coal

2006-2007 - 10% local coal used, 90% imported coal (projection)

Major coal suppliers to Pakistan are:

- Glencore

- Coal & Oil

- Noble Energy

Coal purchased by Pakistan mills from 2002-2006

Indonesia - 50%

South Africa - 24%

China -24%

Australia - 1%

Russia - 1%

Coal trade of Seatrade Group

2002 - 2006 - Total coal traded

2002 - South Africa 498 405,675, Indonesia 930 87,998, China nil, Australia nil. This represents 74% of Pakistan 's trade.

2003 - South Africa 393,498, Indonesia 330,930, China 164,822, Australia nil. This represents 59% of Pakistan 's trade.

2004 - South Africa 80,000, Indonesia 611,000, China 844,000, Australia nil. This represents 77% of Pakistan 's trade.

2005 - South Africa 312,400, Indonesia 1,213,000, China 431,000, Australia Nil. This represents 78% of Pakistan 's trade.

2006 (estimated) - South Africa 450,000, Indonesia 1,500,000, China 400,000, Australia 80,000. This represents 70% of Pakistan 's trade.

Comparison of Pakiston coal content to imported coals

Pakistan coal - 5.5% sulphur, 12% moisture, 24% ash, 40% volatility, calorific value/kg 5000-5500

Indonesia - 1% sulphur, 14% moisture, 10% ash, 40% volatility, calorific value/kg 6500-6700

China - 0.80% sulphur, 12% moisture, 8% ash, 33% volatility, calorific value/kg 6800

South Africa - 0.80% sulphur, 8% moisture, 14.2% ash, 28% volatility, calorific value/kg 6500

Average Mill in Pakistan - comparisons of costs of gas, furnace oil and imported coal

Furnace oil - 1.80 Rs per Kcal

Gas - 1.18 Rs per Kcal revised tariff

South African coal - 1.08 Rs per Kcal

Mill Transport cost - US$15/metric tonne

Cement Industry in Pakistan

24 plants in Pakistan - 2003-2004 total capacity

Dry process - 15,480 million tonnes

Wet process - 3,158 million tonnes

Total - 18,638 million tonnes

Clinker production in Pakistan 2003-2004

Total production 16,075,762 million tonnes

*All figures are in million tonnes

Saddi 540,000; Fauji 900,000; Pioneer 600,000; DG Khan 1,650,000;

Maple Leaf 1,461,000; Dandot 480,000; Lucky 1,257,000; Cherat 750,000; Kohat 540,000; Bestways 990,000; Gharibwal 540,000; AC Nzp 1,200,000; Fecto 600,000; AC Wah 900,000; Javedan 600,000; Zeal Pak 342,857; Essa 450,000; Thatta 300,000; Dadabhoy 504,762; Pakland 750,000; Attock 720,000

Coal Consumption = 140 x Total Quantity =2.25 million tons

Planned clinker capacity expansions in Pakistan

Lucky Cement expansion to be completed October. It will produce an additional 16,800 tonnes per day with a total annual additional capacity of 5,040,000 tonnes.

Pioneer Cement completed its expansion in October last year and now produces an additional 4200 tonnes per day with a total annual additional capacity of 1,260,000 tonnes.

Cherat Cement will complete its expansion next month to produce an additional 800 tonnes per day with a total annual additional capacity of 240,000 tonnes.

Chakwal Cement will also complete its expansion next month to produce an additional 5500 tonnes per day with a total annual additional capacity of 1,650,000 tonnes.

Bestways also has its expansion scheduled for completion next month to produce an additional 6000 tonnes per day with a total additional capacity of 1,800,000 tonnes.

Mustehkum expansion to be completed in January. It will produce an additional 2000 tonnes per day with a total additional capacity of 600,000 tonnes.

Attock's expansion will also be completed in January. It will produce an additional 3000 tonnes per day with a total additional annual capacity of 900,000 tonnes.

Maple Leaf expansion to be completed by July 2008. It will produce an additional 6700 tonnes per day with a total additional annual capacity of 2,101,000 tonnes.

Kohat's expansion to be completed by July 2008. It will produce an additional 6000 tonnes per day with a total additional annual capacity of 1,800,000 tonnes.

Gharibwal's expansion to be completed by July 2008. It will produce an additional 6,700 tonnes per day with a total additional annual capacity of 2,010,000 tonnes.

Al-Abbas's expansion will be completed by January 2008. It will produce an additional 2500 tonnes per day with a total additional annual capacity of 750,000 tonnes.

D.G. Khan's expansion will be completed by October next year. It will produce an additional 7000 tonnes per day with a total additional annual capacity of 2,100,000 tonnes.

Ghalladari's expansion will be completed by July next year. It will produce an additional 3000 tonnes per day with a total additional annual capacity of 900,000 tonnes.

Total industry expansion will be an additional 70,200 tonnes per day and a total annual capacity expansion of 21,060,000

Cement mills demand in Pakistan

In 2003-2004, 24 cement mills in Pakistan produced 18,638 million tonnes

In 2006-2007, 26 cement mills in Pakistan produced 33,128 million tonnes

In 2007-2008, 27 cement mills in Pakistan produced 39,698 million tonnes

Annual demand of imported coal by cement industry from 2007

Dewan Group (2 plants) -250,000 million tonnes

Cherat Cement - 150,000 million tonnes

Dadabhoy Cement - 75,000 million tonnes

D.G.Khan (2 plants) - 700,000 million tonnes

Attock Cement - 240,000 million tonnes

Dandot Cement - 120,000 million tonnes

Pioneer Cement - 250,000 million tonnes

Bestways Group (4 plants) - 600,000 million tonnes

Maple Leaf - 480,000 million tonnes

AC NZP - 180,000 million tonnes

Kohat Cement - 250,000 million tonnes

AC Wah - 180,000 million tonnes

Lucky Cement (2 plants) - 840,000 million tonnes

Fecto Cement - 100,000 million tonnes

Gharibwal Cement - 180,000 million tonnes

Zeal Pak Cement - 100,000 million tonnes

Fauji Cement - 180,000 million tonnes

Al Abbas Group (3 plants) - 300,000 million tonnes

With all expansions etc the total demand of imported coal will reach 4,000,000 million tonnes. Mills will also use 1,200,000-1,400,000 million tonnes of local coal depending upon price of imported coal.

Future coal requirements

Pakistan industry is largely based on gas as fuel and Pakistan reserves are dwindling.

Gas prices have increased in the last two years by nearly 40%.

Gas availability will be reduced from 2009 and hence many industries thinking of converting to coal.

Potential users of coal

Power plants: Power projects in Virnder and other areas will start importing coal from 2006-2007. About seven projects are expected to start consuming more than 1,200.000 million tonnes annually. Shensua power project is based on Thar Coal - agreement signed.

Sugar mills: Some sugar mills located within 150 miles of port are contemplating conversion to coal firing. On conversion consumption would increase by 500,000 million tonnes per annum.

Solvent extraction plants: Many studying possibility of coal firing as currently based on gas or gas fired generators.

Textile Mills: Some considering conversion as reliability of gas supply by 2009 is not ensured.

Total coal potential

Total potential - 14,000,000 million tonnes

MT Solvent & others - 600,000

MT Chemical & others - 1,000,000

MT Textile Mills - 500,000

MT Power Plants - 3,000,000

MT Sugar Mills - 1,200,000

MT Brick Kilns - 2,500,000

MT Cement Mills - 5,000,000