The country’s largest pension fund, the Botswana Public Officers Pension Fund (BPOPF), has bought about 23.3 million more shares in Minergy Limited, the company set to launch the country’s newest coal mine next January.
Minergy is developing Masama Coal Mine, which will be Botswana’s second colliery and the first open cast coal mine in the country.
The Mine and associated coal wash plant, are being developed 50 kilometres northwest of Gaborone and will involve the export of an initial one million tonnes per annum into South Africa. Masama is estimated to hold 390-million tonnes of coal.
Minergy’s 2018 Annual Report, released on Tuesday, indicates that the BPOPF has positioned itself to reap from the anticipated returns expected at the Masama project.
The pension fund upped its stake in Minergy from 30.8% last year to 34.4% this year, bringing its total holdings to 139.4 million shares.
At Minergy’s last traded price on the Botswana Stock Exchange, the BPOPF’s current stake is worth P147.8 million. Minergy’s share price sank to a low of 85 thebe in April, before recovering to a record high of P1.06 in October after the company was awarded a mining licence. The company has since hovered around its record high, where it was trading at on Wednesday.
Executives writing in the Annual Report were buoyant on Minergy’s prospects for the rest of the year and beyond, particularly as coal prices are presently sitting at high levels.
“There continues to be a high demand for coal in southern Africa for several reasons, including minimal investment in coal projects, political interference in mining in South Africa and over-capacity on
“There has also been significant and regular price escalation, with current pricing higher than previously seen before, even in the boom of 2007 when export coal reached USD 171/ton.
“There is thus a massive opportunity for Minergy to gain traction and market share,” the Annual Report reads.
Minergy CEO, Andre Boje previously told BusinessWeek that the company had already received strong demand from South Africa, which will be its prime target for Masama’s coal.
“We are going to operate within the South African spot market. We have done all our marketing and they are queuing up to buy our coal because there’s little available coal there,” he said. Minergy, like other juniors developing coal projects in Botswana’s eastern coalfields, has hopes of someday securing an Eskom supply contract.
The South African electricity utility is the largest single consumer of coal in the region.
“It’s not easy at the moment because of Eskom’s various procurement requirements such as 51% Black Economic Empowerment, the requirement to be an accredited vendor and others and at the moment, that precludes Botswana supplying coal,” Boje said.
“However, if the coal cliff continues, Eskom will have to look wherever they can for coal and they will come knocking at some point, ” he said.
Masama Coal Mine is expected to create employment for more than 600 citizens once production begins.