Shumba Energy has signed a binding coal marketing agreement with a German firm, effective 2019.
Shumba Energy was established in 2011 to provide the SADC region with coal and energy. The company is reaching its development objectives and now owns a significant portion of advanced energy projects in Botswana, including over two billion tonnes of coal for thermal energy.
Shumba has two advanced-stage coal-based independent power producer projects totalling 900MW and two earlier-stage alternative energy assets spread across central Botswana. Apart from coal trading and power exports to the region, Shumba is also planning to enter the solar energy market.
The Botswana Stock Exchange- BSE-listed company announced in a statement released this week, the execution of a binding Memorandum of Understanding (MoU) with HMS Bergbau Africa (Pty) Ltd, a full subsidiary of German-listed HMS Bergbau AG (HMS). The latter is a leading independent global trading house to its shareholders and the public in general.
Shumba Managing Director, Mashale Phumaphi noted that despite political pressure to support non-fossil fuel sources, the company believed the global long-term outlook for thermal coal demand was promising, driven by the industrialisation of emerging economies and the need to secure reliable and cost-effective baseload power supply.
“The MoU, which introduces a credible and experienced partner, is a welcome step towards exploring the export market.”
The agreement was signed through Shumba Coal Trading (SCT), a subsidiary of Shumba Energy. SCT was established in Mauritius specifically for purposes of trading Coal from Shumba Energy Mines and/or other Botswana-based coal mine operators wishing to enter the seaborne coal export market.
Under the terms of the MoU, it is intended that HMS Bergbau will be responsible for the exclusive marketing in respect of all export product produced at the mines expectedly as of 2019, estimated at over two billion tonnes of coal.
The collaboration is expected to deliver advantage of scale and combined expertise. Shumba Energy said it believes its know-how of development of coal mines in Botswana and its established trade structure with SCT combined with HMS Bergbau’s marketing and logistics expertise in the global coal markets offers a solid base for further growth for both companies, and cements its position in sub-Saharan Africa.
Shumba Energy’s primary focus however, remains on developing power stations in Botswana to address the power challenges faced by the Southern African region.
“We are delighted to wrap up another exclusive marketing agreement in Africa, which will result in a significant expansion of our operation in this region. Once again, our global marketing network and wealth of expertise in commodity logistics as well as the group’s international standing as a reliable trading partner proved its worth is the conclusion of this agreement,” founder and CEO of HMS Bergbau AG, Heinz Schernikau said.
In response to the request for an Expression of Interest last year, Shumba Energy said it partnered with co-developers, namely Mulilo, SunPower and Total after identifying opportunities to develop solar PV power plants in Botswana.
Picture credit: CSIRO