04 Dec 2018

The amount of coal in Botswana has the potential to make the country among the leading coal producers.

The abundance of the mineral presents the country to grow a viable coal mining industry given the recent developments in the international coal market and indeed Southern Africa.

There is no doubt the over 200 billion coal deposits found in Botswana can be a money spinner and attract the much needed foreign income.  This argument is formed on the basis that diamonds have been the dominant component in the mineral sector since large scale diamond production started in the early 70s.

With coal continuing to defy market commentators who projected falling prices and a diminishing industry, the current favourable coal prices according to Minergy chief executive officer (CEO), Mr Andre Boje, can be the answer to calls for diversification from diamonds.

In South Africa alone, coal is even regarded as the lifeblood of the country’s economy according to South African power utility Eskom. With coal being the predominant fuel source for electricity providing over 90 per cent of the country’s energy needs, Mr Boje said the ailing power utility Eskom was in need of coal.

The demand in South Africa is estimated to be 120 to 130 million tonnes per annum, while statistics according to Minergy indicate demand in Europe, Asia and Africa to increase to 82 million tonnes per annum this year. In addition, coal demand continues to rise as it is still the most economical form of energy available.

Mr Boje put the status of the coal industry into perspective in an interview recently during a tour of Minergy plant operations that was organised for investors, media and the community to appreciate progress made at the mine’s Masama coal project operations plant in Medie in Kweneng District  where the plant is situated.

Minergy CEO has gone further to state that with producers exporting their coal to Europe, regional end users were finding it difficult to source reliable and consistent supply. This means the southern African region presents a good lucrative market.  Countries which already consume the commodity are Egypt, Kenya, Madagascar, Morocco Mauritius, Nigeria, Senegal and Zimbabwe among others.

He said they could be trusted as they were consistent in both quality and supply. As a result, he said their customers had undertaken to take their coal.

When the plant is commissioned in January, there will have purchased capacity of 1.2 million tonnes of saleable coal per annum which is already being sold in the regional market particularly in South Africa.

Mr Boje also stated that if coal prices continued to be stable they would build another coal plant to double their capacity.  Hopefully by the end of 2019 or early 2020 they will have doubled their capacity, “but our first priority right now is to get production up and running by January or February.”

Mr Boje called on coal asset holders in the country to start thinking about doing business plans to secure funding, and start moving the coal to grow the coal industry in Botswana, citing developments in the international coal market and in southern Africa.

He said Botswana could export up to 20 million tonnes of coal per annum.

What needs to be done, Mr Boje said, was that the two rail logistics providers in South Africa and Botswana could hasten to build a rail line that would connect Botswana coal fields with the South African rail infrastructure.

The proposed infrastructure will help producers in Botswana access export possibilities through various ports.
If the Mmamabule-Lephalale rail network comes through, it will be the turning point for the coal industry in the country.

This will cut a significant number of kilometres out of the current rail route, drastically reducing logistics costs to allow Botswana coal producers to compete in the international seaborne thermal coal market.

Minergy is the holding company of the Minergy Group that owns Masama Coal Project in Botswana. Ends