Gov’t sticks by Minergy despite market red flags
Lewanika Timothy | Monday June 23, 2025 13:00
This week, Minerals and Energy Minister Bogolo Kenewendoa said efforts are ongoing to find solutions for Minergy, whose Masama Coal Mine in Medie is the country’s second colliery after Morupule Coal Mine.
Government recently converted its significant debt in Minergy to equity, in an effort to restructure the company’s balance sheet and support its survival. Several government-linked entities have supported Minergy since its establishment through both equity and debt.
“I cannot end my remarks about the performance of the industry without talking about what’s happening with Minergy,” she told the Future of Mining Summit on Monday. “Government took great interest in that to convert our debt to equity, hoping to inject capital and vigour. “The reality is that coal is selling at $90 per tonne and for this mine to be profitable, we need coal to be at $200 per tonne.”
One of the options government is considering involves linking Masama to a power station. Traditionally, power stations are a form of value addition for coal, as the electricity generated is usually sold at a much higher unit price than the coal.
“It has been recognised that for this plant to be profitable, it will need a power plant and we are looking at all the options possible for that,” she said.
It is unclear how Minergy could receive a tailormade allocation of a power plant from government, as the ministry’s current procurement plans for electricity only envisage an expansion of the existing Morupule B. In addition, the amount of ongoing and planned generation projects are far in excess of what the country will require in the next 20 years, whilst the regional market is also actively advancing its own generation projects.
Analysts told BusinessWeek that it would be ethically unsound for government, being directly and indirectly Minergy’s biggest shareholder, to seek a power plant for the coal mine.
“Government should rather cut its losses or wait out the storm, without seeking to influence the natural state of affairs. “Government already owns Morupule Coal Mine and even if coal is viewed as a strategic mineral, Minergy should really be left to the private sector for the sake of domestic pricing,” an analyst said.
The Minerals Development Company Botswana (MDCB), wholly owned by government, lent Minergy P636 million, whilst another state-owned entity, the Botswana Development Corporation (BDC), pumped in P80 million. These investments were in a form of quasi debt instruments and were both convertible to equity at the choosing of MDCB and BDC.
The Botswana Public Officers Pension Fund, made up of civil service pensioners, is a major equity holder in Minergy as well.
Last month, one of Minergy Coal’s creditors took the company to the High Court, demanding it be placed in judicial management for the recovery of debt.
Minergy, through its local unit, has filed an answering affidavit.