Pakistan to Develop First Coal-Based Fertilizer Plant Under CPEC
Pakistan is preparing to establish its first coal-based fertilizer manufacturing facility under the second phase of the China-Pakistan Economic Corridor (CPEC), marking a significant step toward strengthening industrial development and agricultural sustainability. The project, valued at approximately $1.12 billion, will be developed by Fauji Fertilizer Company (FFC), the country’s leading fertilizer producer.
The planned facility is expected to produce around 717,000 tons of urea annually and is targeted for completion by 2031. According to the company, the project will utilize nearly 2.1 million tons of locally sourced coal every year, creating value from indigenous resources while reducing dependence on traditional feedstock sources.
The initiative gained momentum following the signing of a Front-End Engineering Design (FEED) agreement between FFC and China’s Hualu Engineering and Technology Co. Ltd. The agreement represents a major milestone in developing Pakistan’s first coal-to-fertilizer project, a venture that introduces coal gasification technology to the country’s fertilizer sector.
Industry experts believe the project could play an important role in improving fertilizer security by diversifying raw material sources. Pakistan’s fertilizer industry has historically relied on natural gas for producing ammonia and urea, making the exploration of alternative feedstocks increasingly important for long-term production stability.
Agriculture remains a vital component of Pakistan’s economy, contributing nearly a quarter of the country’s gross domestic product. With annual urea production currently standing at approximately 6.5 million tons, the additional capacity from the new plant is expected to provide greater supply assurance for the agricultural sector.
Analysts also view the project as a strategic move that could reshape the country's fertilizer market. The new production capacity is expected to eliminate occasional supply gaps that have previously required imports, potentially creating a surplus that can be directed toward international markets.
Market observers note that domestic demand for urea has remained relatively stable over the past several years, averaging between 6.2 and 6.5 million tons annually. As a result, much of the additional output generated by the new facility could support export activities and enhance Pakistan’s position in regional fertilizer trade.
Experts further suggest that the project will likely be located near the Thar coalfields in Sindh, where abundant coal reserves can provide a cost-effective and reliable feedstock source. Establishing the plant close to coal reserves would also reduce transportation challenges and improve operational efficiency.
As Pakistan advances industrial cooperation under CPEC Phase II, the coal-based fertilizer plant is expected to contribute to economic growth, strengthen agricultural resilience, encourage value-added utilization of local resources, and create new opportunities for exports in the years ahead.