Mmegi Online :: Morupule, Minergy and Shumba lead as coal awakens
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Last Updated
Friday 14 December 2018, 17:40 pm.
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Morupule, Minergy and Shumba lead as coal awakens

The dream to exploit Botswana’s estimated 200 billion tonnes of coal resources appears to be taking shape at last. Morupule Coal Mine in Palapye and Minergy’s Masama Coal Mine near Lentsweletau, lead the coal revolution whose reverberations seem destined to shake the region.
By Monkagedi Gaothobogwe Fri 30 Nov 2018, 13:51 pm (GMT +2)
Mmegi Online :: Morupule, Minergy and Shumba lead as coal awakens








Minergy, Morupule, and Shumba Energy are at advanced stages of opening new mines at Medie, Palapye, and Mabesekwa respectively, all of them mainly targeting the export market.

Minergy and Morupule are scheduled to open their mines next year and 2020 respectively while Shumba Energy’ Mabesekwa Mine is at an advanced stage and due to be commissioned by 2021.

Botswana’s coal story is finally alive after a decade of frustrations that saw the ambitious Mmamabula and Mmamantswe coal dreams ending in sorry for investors and the economy.

Circumstances have changed now, as Botswana’s major trading partner, South Africa is experiencing a supply shortfall in thermal coal due to diminishing resources, competition with export markets and prohibitively high commodity prices that have forced the power utility there, Eskom to scour the market for alternative fall back options.

According to recent coal market estimates, regional exports are expected to reach 38 million tonnes by 2030, while attractive thermal coal prices over the last 18 months have been a source of joy to investors in the coal sector, increasing by over 33% over the last 18 months, to become one of the world’s top five performing minerals.

Morupule Coal Mine, the first and presently only coal mine in the country since 1973, is opening another coal mine, an open cast operation that is envisaged to create 500 jobs during construction and another 200 to 300 during production. 

The mine is designed to be a low cost truck and shovel operation to support low cost power generation, according to Morupule Mine in response to Mmegi.

The new mine, to be built not far away from the current operation, will increase Morupule’s regional export capacity to one million tonnes per annum, according to the miner.

Amongst others, the Morupule Open Cast mine project involved securing surface area land rights from 170 farmers who were due for compensation, a process that is almost complete with only five farmers still outstanding with issues of the quantum of compensation still being resolved between the affected farmers and the Ngwato Land Board.

Morupule Coal Mine is the sole supplier of coal to Botswana Power Corporation, and also the first to exploit the country’s coal export potential.

Today Morupule exports its coal products into the regional Southern African market and is actively looking at increasing its market share.

According to Morupule, the company has in the past exported into seaborne markets when international prices of seaborne coal and costs of logistics allowed.

Morupule Coal Mine says they continue to scour the environment for these possibilities and will be ready to increase production when the relevant rail expansion projects come online to increase Botswana’s coal exports.

Morupule’s washed coal products are consumed by various customers locally (hospitals, schools, breweries, abattoirs, clay brick manufacturers etc), with the bulk of the washed coal sold into regional markets in South Africa, Zimbabwe, Namibia and Zambia.

Large size washed coal (nuts and cobbles), within certain limits of phosphorus content are used in ferrochrome smelting as reductant, reducing costs of premium reductants like coke and or metallurgical coal.

Morupule’s clientele consists of the adjacent mine mouth-fed Morupule Power stations, Botswana Ash, Kgalagadi Breweries Limited, Makoro Bricks and Tiles, Botswana Meat Commission and hospitals, while regional customers include PPC Slurry Plant near Zeerust, poultry, brick and tobacco sectors, NamPower’s Van Eck Power Plant (Windhoek), amongst others.

 

Masama kicks off

At Masama Coal fields near Lentsweletau village, construction of the mine is already underway in readiness for the first sale of coal by February 2019. At least 450 people are due to be employed at the mine.

Masama’s coal will be for regional export markets and not for power generation within Botswana.

The Masama coalfields are estimated at 390 million tonnes, a figure which has been independently delineated in the mining area. The coal resources have been described as very easy to mine and of export quality. Minergy, the project promoters, are excited that they have entered the market at the best time, when their commodity saw an upswing in pricing.

Masama mining contract has been awarded to Jarcon, a joint venture between IPP, a South African company, and Giant Plant, a Botswana company. The Build-Own-Operate-Transfer contract for the wash plant has been awarded to Pentalin Processing, while contracts for the provision of site and bush clearing, civil works, power reticulation, water and waste management, road construction and weighbridges are also in various stages of appointment.

Minergy, who has a coal marketing company in South Africa, announced in their latest financials that with Botswana Railways (BR) planning to sign a memorandum of agreement with South Africa’s Transnet Freight Rail (TFR) for the Lephalale rail link to Richards

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Bay, a 13 million annual tonne capacity, will have opened for them by the end of 2019.

The existing BR Line infrastructure only allows for capacity of about two million tonnes per year.

 

Shumba scores P100m contract

The story of Shumba Energy is a unique one for Botswana mining. Shumba is a citizen-owned coal mining company boasting of assets such as Mabesekwa Independent Power Project that plans to supply the bulk of its electricity to South Africa, thanks to its partnership with a strategic partner, Lurco, which has a power supply agreement with Eskom.

Shumba’s other project is the Morupule South Mine, located about 15km from Morupule Coal Mine.

Shumba targets to mine these coal resources, estimated at 2.5 billion tonnes, for export to regional and global market, thanks to their partnership with a global trading house for the marketing of all export products.

Shumba says Morupule South’s mining costs and coal quality are predicted to be one of the lowest in the region.

Perhaps their most advanced project is Sechaba, which is located some 45km from Palapye.

Recently, Shumba Energy announced that an agreement has been reached for the establishment of a 50/50 joint venture partnership with South African black-owned Lurco Group, at the Sechaba thermal coal project.

Lurco has been trading for eight years and is an emerging South African resource business with the vision to be the leader in the international mining sector with a focus on exploration, beneficiation and trading.

The company is a supplier to Eskom and currently exports thermal coal to a number of international clients out of various ports in Southern Africa.

The deal will allow the partnership to supply Botswana coal into the region and for export.

Under the commercial terms, Lurco shall immediately commence work to conclude any feasibility work and begin work on the opencast construction spending a minimum of $10m (about P105 million).

The amount shall be paid to Shumba in phases prior to Lurco earning its 50% interest in the deal.

In addition, the parties have also agreed that coal produced at Sechaba from the open pit mine shall be toll processed through a wash plant owned by Shumba.

 

CBM opens up

The abundance of rich coal resources in Botswana has also seen investors such as Tlou Energy advancing quickly with the exploration and development of Coal Bed Methane (CBM).

In 2017, Tlou Energy announced that they were now powering generators at its Selemo pilot project in Mmashoro using CBM as it works towards advancing Botswana’s first gas-fired power station that would feed into the national grid.

CBM gas is hailed as a cheaper and cleaner alternative to diesel generation. The gas is also significantly cleaner than coal fired power generation.

 Tlou Energy has the most advanced CBM project in Botswana, the Lesedi Project, and already boasts significant, independently certified gas resources of ~3.2 trillion cubic feet and independently certified gas reserves.

The huge 212 billion tonnes of coal resources have also triggered the state-owned Botswana Oil to invest in a feasibility study for a Coal to Liquids (CTL) project.

It was reported that a 2017 tender inviting bidders to build and operate the coal to liquids facility had attracted 11 bidders.

The CTL process involves converting coal into liquid fuels, including chemicals using several liquefaction processes to produce products such as petrol, paraffin, diesel, liquefied petroleum gas (LPG), ammonia, wax and chemicals.

The development of CTL is expected to bring immense benefits such as creation of an estimated 4,000 to 5,000 jobs, potential for exports, creation of newer industries and educational opportunities.

Meanwhile, BR under the leadership of experienced mining manager, Leonard Makwinja has also been working tirelessly of late in an effort to smoothen the coal revolution.

BR has identified strategic rail expansion projects of Kazungula-Mosetse, and Lephalale rail links for the short term.

The Kazungula-Mosetse rail link will connect Botswana with Zambia, while Mmamabula-Lephalale, will make it easier for the coal resources of Mmamabula area to be ferried to and through South Africa.

BR also recently signed an agreement with Trans Namib Holdings, which will enable Botswana mines to use Namibian Railways at Gobabis to export coal and other mining resources via the Walvis Bay, where Botswana has erected a state of the art dry port facility.

Interestingly Botswana’s coal resources exploitation opportunities are taking off at a time when the long time mainstay of the country’s economy, diamonds, have reached their end stages as the mines get deeper and more expensive to mine.

While coal may not comparatively rake in the billions of pula for the economy like diamonds, as more and more miners take up the coal opportunities, there could be life after diamonds, for Botswana.

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