Govt to take over De Beers stake in Morupule Colliery

MBONGENI MGUNI
Staff Writer | Wednesday September 15, 2010 00:00

 

The Government intends to bring in a strategic partner to replace De Beers in a process calculated to ensure that Botswana has more control over the prized national asset whose supplies are key to the crucial 600-megawatt Morupule B project.

Presently, the government indirectly owns 50 percent of Morupule Colliery Limited (MCL), which is a wholly owned subsidiary of Debswana, the diamond mining giant in which the government holds 50 percent equity. De Beers, which indirectly holds the remaining shareholding in MCL, has indicated its desire to move out of the colliery.

At the Fossil Fuel Foundation conference yesterday, the Permanent Secretary of the Ministry of Minerals, Energy and Water Resources, Gabaake Gabaake, said the government was making a move for the colliery, the one million tonne per annum operation that was sold by Anglo American to Debswana in 2000.

'We are restructuring ownership of the colliery to enable full ownership by Government,' Gabaake said. 'It's a very strategic asset. In the long term, we will invite private players.'

Gabaake told Mmegi that discussions with De Beers were centering on the valuation of the latter's stake in Morupule.

'These transactions are very complex,' he said, adding that, 'We would have hoped to be done by now, but we are still talking. We had a meeting with them last week where we agreed on many outstanding issues. We have also agreed on the process to resolve the remaining issues.'

Gabaake said the government did not intend to become a coal miner but 'wants to be in control' of the process that will bring in a new strategic partner in the colliery.

'De Beers said they wanted to get out of coal mining and we agreed.

But in terms of who comes in to replace them, we would want to be in control of the process. The plan is to make sure there's no gap between De Beers leaving and the new partner.'

Gabaake explained that the colliery was strategic to Botswana's interests. 'It would enhance our supply chain and lessen the risk because if you cannot agree on the price of coal to the power station or new capital expenditure, that would land the Morupule Power Station in problems,' he said.

Scheduled to pump 600 megawatts into the national grid beginning in mid-2012, Morupule B and the smaller Morupule A represent the country's key power generators and the solution to electricity supply shortages that have affected the country since 2008.

Presently, the colliery is expanding with a view to producing three million tonnes of coal by next year, 2.8 million of which is targeted for the Morupule A and B power stations.

The colliery and Botswana Power Corporation (BPC) have already signed a 20-year contract for the supply of 50 million tonnes of coal for the Morupule A and B power station. The contract period ends in 2023 and includes pricing, quality and other terms.

Although costs of the colliery's expansion were recently drastically reduced, the price of supplies to the power stations could have an impact on the price of energy, and consequently the economy's competitiveness, investment attraction and on domestic standards of living.

A Debswana official told Mmegi previously: 'The price and quality of delivered coal provides a fair and reasonable basis for the long-term sustainable operations of the colliery in support of the expanded power generation requirements of the BPC for the nation of Botswana until 2032.'

With Government exercising more control over the colliery, it is expected that costs could be kept to a minimum, in line with social development considerations.