Sese coal project gets key mining licence
Brian Benza | Friday March 31, 2017 16:09
The Sese coal project becomes only the third coal mining licence holder in the country after Morupule Coal Mine and Jindal’s Mmamabula project.
Announcing the milestone, African Energy said the mining licence covers an area of 51.47 square kilometres and contains 650 million tonnes (mt) of raw coal in Measured and Indicated resources.
“Granting of the ML is an important step towards finalising the permits for the Sese integrated coal and power project with the generation and export licence being the only major outstanding permit required before the project can commence,” the company said in a statement.
The Sese joint venture project is 55% owned by Zambia’s First Quantum Uranium and BSE-listed African Energy.
The approved mining licence contains more than enough coal in the higher quality SS Seam for the currently contemplated 450MW power project at Sese plus multiple expansions.
The mining licence is valid for 25 years and the company said this could be extended by a further period of up to 25 years on written application to the minister not less than 12 months before expiry of the licence.
“In conjunction with the previously approved Land Rights and Environmental Approval, the ML gives the owner the right to erect all buildings and infrastructure required to implement the project,” African Energy said.
Under the terms of the joint venture agreement, it is expected that First Quantum will take about half of the power to its Zambia copper mine operations with the rest supplied to other markets.
With coal exports currently unaviable in Botswana due to lack of infrastructure and depressed international coal prices, power generation looks to be the only viable option for monetisation of Botswana 212 billion tonnes of coal resources.
First Quantum, which will fully fund the project, is expected to commit a further A$8.7 million by July 12, 2017 to acquire an additional 20% interest in the project.
Most junior coal miners in Botswana are looking to partner with larger companies with a stronger balance sheet to develop the coal mining and power project.
Equally, most junior mining firms have balance sheets of under $10 million and it requires between $700 million and $900 million setting up a 300MW power station.
Junior Energy Company, Shumba Coal has also partnered with a South African firm, Mulilo Renewable Project Developments, for the joint development of the Mabesekwa Export Independent Power Plant (MEIPP), which will export power to the neighbouring country.
Another coal firm Jindal, which owns 2.7 billion tonnes of coal resources in the Mmamabula coalfields has shelved initial plans to offload 74% of their company to South Africa’s Glendal Trading.