Oracle Coalfields, UK will invest $ 610 million to develop an open pit coal mine in Thar to produce 5 million tons of coal per annum for its 300 megawatt power plant, planned for KESC.

This was stated by the CEO of Oracle Coalfields, UK, Shah Rukh Khan while speaking at a press conference alongwith the Secretary Sindh Board of Investment and Coal and Energy Department Mohammad Younis Dagha here Monday.

He said that initial coal production from the mine is expected in 2014, while mine development will begin by the end of 2012.

Responding to a question, he said that equity was ready while debt portion will be financed from outside and added that since the project is tied up with the buyer -- KESC -- it is easy to find the lenders. We have investors who are keen to invest in this project, he added.

Announcing the details of the feasibility study for coal mining and power generation project at Block VI of Thar coalfield, carried out by Oracle last year, he said that these confirm the technical and economic viability of the project.

This represents a significant step towards providing the nation, Sindh province and local communities in Thar with a new sustainable source of energy for decades to come by bringing into production is first large scale open pit mine, he added.

Shah Rukh pointed out that feasibility study results concentrated on an initial mining area within Block VI of about 20 square kilometers and reported in accordance with the internationally recognized 2004 Australia JORC Code, a mineral resource of 529 million wet tonnes.

The study has estimated the presence of 113 million wet tonnes of coal in this mining area in the first phase. With further potential increase in reserves in phase II of the mining area, he added.

He said that Oracle has also signed a memorandum of understanding (MoU) with Karachi Electric Supply Company (KESC) to develop initially a 300 MW mine-mouth power plant which can be extended to 1100 MW at Block VI site.

Khan said that the company was also undertaking a comprehensive environment and social impact assessment in compliance with both local regulatory requirements and international standards (specifically Equator Principles, IFC Performance Standards, World Bank EHS Guidelines and ICMM guidelines).

Speaking on the occasion, Younus Dagha said that mine lease has been provided for 30 years, extendable for more if needed.

Responding to a question, he said that PC-1 for laying a transmission line has been completed which will be completed at a cost of Rs 20 billion between Thar and Matiari. He said investors are also demanding for transmission line.

To another question, he said electricity from coal will be cheaper by at least 40 percent compared to furnace oil based thermal units. This will be around 10 to 11 cents per unit compared to oil-fired power plants with 22 to 25 cents per unit, he noted.