Botswana Stock Exchange (BSE)-listed Minergy Limited, the coal mining and trading company owning 100% of the 390-million tonne Masama Coal Project, says plans are at an advanced stage to supply coal in the region.
According to the company’s CEO Morné du Plessis, they have come a long way and are pleased with developments at the mine site.
“We are extremely excited about the future of the project. Our ability to supply coal into the region, the highly experienced team responsible for executing the plan, as well as our capacity to contribute towards a viable coal sector in Botswana,” said du Plessis.
Minergy previously reported in its interim results announcement on 29 March 2019 that mine infrastructure, including extensive civil work, power reticulation, water reticulation systems, access roads, weighbridge offices and workshops, had been completed. The mine box cut was ahead of schedule. Minergy is currently exploring various options for offtake, ranging from longer-term agreements for the finer duff product to spot deals for the bigger fractions.
“The big-ticket items have been spent. These included ensuring the mine had power and water, and that the mine box cut and the processing plant were established. For the next six months, all that we foresee is spending on water, new road construction and the maintenance of access and surrounding roads to the mine,” said du Plessis.
The company is not currently focused on supplying coal to the power generation market and will assess this on a case-by-case basis, albeit 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,” du Plessis explained.
As per the norm, the customer will be responsible for the logistics of the coal. Minergy will focus on its core strength, which is the marketing of coal.
“From our interactions with sub-contractors moving coal on behalf of our customers, they have experienced smooth border transitions. 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,” du Plessis said.
Minergy has extracted roughly 39,000 tonnes of coal to date. Over 340,000 tonnes are 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 this August, it is envisaged that Minergy will mine 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 to 80,000 tonnes, increasing to 100,000 tonnes per month next year.
It is envisaged that a steady state of operations will be reached in September 2019.
Du Plessis said demand for the product is high as a result of the short supply of coal, specifically in the South African industrial market.
“This was confirmed at the recent Coal Industry Day held in Johannesburg on 24 July 2019, where speakers highlighted the decline in South Africa’s coal production by 20 million tonnes from historical volumes,” said du Plessis.
It is also believed that Eskom will suffer a shortfall in coal supply of 470 million tonnes by 2030. 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.
The company also announced that despite extremely difficult access to funding, it has successfully raised P90 million from the Botswana Development Corporation (“BDC”) as well as from the Minerals Development Corporation of Botswana (“MDCB”). The company said funding is sufficient to bring the mine into production.
Initial funding includes bridging finance provided by both parties amounting to P70 million for six months. 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.