The board of troubled coal mine, Minergy, has requested its suspension from trade on the Botswana Stock Exchange, as it engages a legal challenge brought by a creditor.
In a recent statement, the local bourse said trades in Minergy’s shares had been suspended from October 15 “pending finalisation of certain matters which, in the opinion of the company, warrant temporary suspension of trading in order to avoid creation of a false market”. In equities trade, a “false market” is a situation where there is material misinformation or materially incomplete information in the market that impedes the accurate pricing of a company's securities.
The BSE said more details on the matter would be published as Minergy’s board gets clarity on the legal matter before court and the price sensitive negotiations which may lead to a significant transaction. In May, Minergy revealed that one of key creditors had taken the coal producer to the High Court, demanding that the company be placed in judicial management for the recovery of debt.
Whilst details on the identity of the creditor have not been publicly revealed, industry insiders believe the difficulties may have to do with the current or former mining contractor. The funds paid to the mining contractor constitute the highest operating costs for mines such as Minergy’s Masama Coal Mine.
From a record-breaking 2022 in which global coal prices soared due to the energy crisis caused by Russia’s invasion of Ukraine, Minergy and other producers entered a downturn in 2023. As global coal prices fell, these challenges were worsened by rail export difficulties in South Africa, resulting in Minergy and other producers competing for the same, small inland market.
Executives said coal that was usually exported was now focussed inland creating pressure on prices. Government, a major creditor to Minergy, is pursuing a debt to equity conversion as well as other fundraising activities to resuscitate Masama.
