Minergy on track to hit 1.2Mt/y in Botswana mine coal output by September

MINERGY, a Botswana coal producer, says it has started production from its newly commissioned Masama facility and had been supplying the South African and Namibian industrial market. The Botswana market had also been targeted.

By mid-month, the company hoped to produce 1.3 million tons/year (Mt/y) of run-of-mine coal resulting in saleable coal of between 0.96Mt/y to 1.08Mt/y rising to 1.2Mt/y by September. 

Morné du Plessis

“From our interactions with sub-contractors, moving coal on behalf of our customers, they have experienced smooth border transitions,” said Morné du Plessis, CEO of Minergy.

“The logistics companies are highly efficient and ensure all paperwork is in place and their agents do pre-clearance at their offices at the border posts,” said Du Plessis.

Du Plessis added that Minergy hoped to list on the London Stock Exchange by year-end where investment across the board had been held in abeyance amid the uncertainty created by the prospect of Brexit. The company had raised P90m ($8.16m) to date from the Botswana Development Corporation and the Minerals Development Corporation of Botswana.

Minergy said in April that it would not attempt to hit export markets through another 1Mt/y expansion at Masama owing to a cooling in the export thermal coal price. It had fallen from $100/t last year to levels of about $65/t this year.

Minergy scores P90m funding from BDC, MDCB 

Botswana Stock Exchange-listed Minergy Limited has successfully raised P90 million funding from the Botswana Development Corporation (BDC) as well as the Minerals Development Company of Botswana (MDCB).

According to the coal miner, the funding is sufficient to bring Masama coal project into production, as they envisage a steady state of operations to be reached in September 2019.

The BDC is the government’s investment agency while the MDCB is the latter’s investment arm for minerals.

Minergy Chief Executive Officer, Andre Boje said the initial funding includes bridging finance provided by both parties amounting to P70 million for a period of six months.

Andre Boje

“This will be refinanced through long-term agreements with both parties. All the necessary regulatory approvals are in place and agreements have been signed with all paperwork completed,” he said.

To date, Minergy has extracted roughly 39,000 tonnes of coal. In excess of 340,000 tonnes is exposed in the pit, which only needs to be blasted and put through the plant. This equates to roughly three months of feedstock.  According to the mine plans, from August this year, it is envisaged that Minergy will be mining 110,000 tonnes run of mine (ROM) per month. The same quantities will be put through the washing plant and this should result in saleable coal of between 70,000 and 80,000 increasing to 100,000 tonnes per month next year.

“Masama Coal Project has an excellent quality coal product within sustainable coal seams, and as such, has received significant interest from regional companies,” he said.

“Minergy has successfully moved product to South Africa and Namibia. The smaller Botswana market is also targeted and Minergy believes it will be able to provide competitive pricing.”

The mine also seeks to tap into the South African market, as the neighbouring country is currently experiencing a short supply of coal. South Africa’s coal production has been reported to decline by 20 million tonnes from historical volumes. In addition, it is believed that Eskom will suffer a shortfall in coal supply of 470 million tonnes by 2030. However, Boje said they are not currently focused on supplying coal to the power generation market and will assess this on a case-by-case basis albeit that a business case is developing with the shortfall of coal experienced by the South African power utility, Eskom.

“We have certain coal qualities that are perfect for power producers and this can easily be accessed and utilised in the future,” he said.

Additionally, Boje noted that they are currently exploring various options for offtake, ranging from longer-term agreements for the finer duff product to spot deals for the bigger fractions.

Large players in the sector, Anglo American and South 32, are respectively withdrawing from the coal sector and disposing of their coal assets, meaning the supply will tighten even more.

Minergy previously reported in its interim result announcement on March 29, 2019 that mine infrastructure, including extensive civil work, power reticulation, water reticulation systems, access roads, weigh-bridges offices and workshops, had been completed. The mine box cut was ahead of schedule.

Source: miningmx.com / mmegi.bw

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