International interest has been rekindled recently through the Indian steel giant ArcelorMittal and a US consortium.

The Thar coalfield has an estimated 175 billion tonnes of coal resource, making it one of the world’s biggest lignite coal deposits discovered in the last decade and is considered sufficient to fuel Pakistan’s energy demands for centuries.

It is a vital factor regarding its development as Pakistan’s energy needs are dire, to say the least, with a significant percentage of the country facing constant power shortages.

But whether the renewed interest will produce anything other than talk will be the concern for the energy-starved population in the months and years ahead.

While to many, the latest proposition from a group called TharPak makes common sense, it is much more than that as far as Pakistan is concerned – Pakistan is an energy-deficient country.

According to a report by the State Bank of Pakistan, the demand-supply gap stands at around 18%, with loss of power a common occurrence in all rural, urban and industrial areas.

For many, the Thar coalfield has been seen as something of a potential saviour since it was discovered in 1991 by the Geological Survey of Pakistan but despite its economic importance to the country and a great deal of discussion within various Pakistan government departments and overseas delegations, very little activity has evolved.

A white paper has been produced on the prospect and in 2001 a task force was established, while in 2003 the government of Sindh, the province where the Thar Desert is located, commissioned a mining feasibility study over a 40sq.km block.

The Pakistan government has offered a range of tax incentives to try to attract genuine developers, including concessions on machinery, asset depreciation and amortisation of pre-commencement expenses.

Lack of action has not been entirely due to lack of interest.

In 2008, the Pakistan government called for submissions to invest in the Thar coalfields and received interest from six companies but no agreements were finalised.

There has also been Chinese interest and in 2009 the Sindh government entered a joint venture agreement with Pakistani conglomerate Engro to form the Sindh Engro Coal Mining Company Limited to mine coal from Thar block II.

Engro says the company is in “its early stages of technical and economic feasibility assessments”

In December, Pakistani authorities received a $US2 billion proposal from ArcelorMittal to invest in a coal project in the Thar Desert but apparently because of the “sensitive relations between the two countries”, it was reportedly turned down.

It is not altogether surprising given the history existing between the two countries but it does beg the question as to what the Pakistan government will require in order for the coalfield to be developed in a manner that not only provides the much-needed energy requirements of the country but offers economic rewards for the developers.

Reports suggested ArcelorMittal‘s plan was to use the coal for its steel plants in India and other countries.

The TharPak consortium has stated its objective is to have an eventual aggregated production capacity of about 100 million tonnes per year to feed an 80,000 barrels per day direct coal to liquids plant, 6000 megawatts of power generation capacity, as well as urea production.

Plans are to also install a carbon capture and storage program and a liquefied carbon dioxide production and transportation system for sale to enhanced oil recovery projects.

“Pakistan is suffering from an alarming energy deficit and on a per capita basis, it ranks among the bottom of nations in terms of installed capacity,” consortium director of business development Steve Carpenter said.

He said the Pakistan economy was handicapped by unreliable power and expensive imported transportation fuels which cost the nation more than $12 billion a year.

“With this energy deficit in mind, we believe that with the combination of our deep mining and engineering expertise and the use of commercially proven clean coal combustion technologies, TharPak will deliver a solution to what is holding Pakistan back from competing on a level playing field in the global economy; dependable, abundant and affordable energy,” Carpenter said.

“Matching that effort with facilities that will use lignite for the production of liquid fuels, urea and pipeline quality carbon dioxide promises to be a winning combination for Pakistan.”

Chief engineer of the consortium Hans Naumann said when completed, the cumulative capital investment for the lignite mining operations alone was likely to exceed $10 billion.

“We are acutely aware that mining operations of this magnitude and the industrial processes attendant to them can cause social and environmental impacts if not carefully pre-planned and vigorously monitored/adapted in the course of the project life cycle,” he said.

TharPak is working with the Virginia Centre for Coal and Energy Research at Virginia Tech and West Virginia University’s National Research Centre for Coal & Energy to collaborate on educational, technical and research aspects of the project.

The consortium comprises Evan Energy, an energy investment and consulting firm; Marshall Miller & Associates Inc, a consulting and engineering firm; Advanced Resources International, a research and consulting services company involved in unconventional gas, enhanced oil recovery, environmental, engineering, and carbon sequestration; the VCCER; and the NRCCE located at the West Virginia University.