Funders rally around Botswana's coal dreams
Mbongeni Mguni | Friday February 14, 2020 14:48
The minister told BusinessWeek bankers at the Mining Indaba, which ended last week in Cape Town, had responded well to Botswana’s plans for its mammoth coal resources.
Worldwide, major project funders such as the World Bank, International Monetary Fund, African Development Bank as well as numerous large commercial banks have cut back or stopped financing new coal projects in line with global commitments on reducing carbon emissions.
In Botswana, government and other quasi-government bodies such as the Botswana Development Corporation, have taken up the role of funding coal projects, as the country pushes ahead with unlocking the value of its massive resources.
“There are banks which confirmed to us at the Indaba, commercial banks, that they are still looking into these coal projects, on the merits,” Moagi told BusinessWeek.
“They will look into how green we want to pursue the projects and they will consider financing them, based on the greening of the exploitation.
“Apart from banks, there are people awash with cash who want to participate and this is their space and their time.”
It is understood Chinese players are amongst those interested in helping Botswana exploit its coal resources, while the United States has also indicated its readiness to partner. Canada has also resisted efforts to close the door on supporting coal and is instead focusing on supporting coal-transition efforts.
“We very much would like to work with everyone who wants cleaner, green technologies, but we are saying ‘if you are not giving us an alternative to how we will generate our power, are you saying we must collapse as an economy because power runs everything’?
“If there’s no power, the country shuts down,” Moagi told BusinessWeek.
He said there were financiers who were seeing opportunity where others had left in the coal sector and would be willing to partner with local projects.
“I’m hoping that it’s a business opportunity for those who want to finance because they could even put a premium to this,” the minister told BusinessWeek.
“We don’t want them to go that route, but it is a business opportunity to say ‘look here is money and we can add a 0.5% for you to get funding’. “If it works for our country, I’m sure we would be prepared to do that.”
The country’s most advanced coal projects include Shumba Energy, which sits on a 4.5 billion tonnes resource while Minergy started activities at its Masama Mine last year and is ramping up to a target of 80,000 tonnes per month. Several other developers are at various advanced stages across coalfields in the central and eastern districts.
Moagi said Botswana was devoted to its global climate change commitments and was rather pushing for innovation and research around cleaner fossil fuels.
He said the country was also making strides with the development and adoption of renewable energy such as solar and coal bed methane, but these would not replace coal anytime soon. “We must exploit as much innovation and research to make sure cleaner coal can be exploited. “There are technologies currently and you need to improve on them to make sure more of it can be exploited in a much cleaner fashion to reduce the carbon footprint and ensure we go green.
“Make no mistake, we all subscribe to a cleaner world and we are signatories to the protocols that have been signed, but we believe that we just can’t leave an abundance of a God-given resource like that.
“We need to exploit it cleaner for the benefit of our communities and nations.
“It is the same argument with nuclear power about how dangerous is it, but people have nuclear power everywhere and now they talk about coal.”
He added: “We believe these are transition times where as we narrow the fossil usage, building onto the renewables, we will go that route. “But if I look at the Vision 2036, we will not be completely out of fossils by that time, but there will be a significant part done by renewables.
“I also hope by that time, there will be lots of research that will have come out to make sure fossils are exploited in a much greener fashion.”
The Southern African Power Pool, a grouping of regional power producers, is still largely based on exploitation of coal with most new planned generation still around the fossil fuel, despite the paucity of funding.