The country's sole colliery, Morupule Coal Mine, plans to ramp up production from the current 2.8 million tonnes per annum to eight million in the next seven years, in order to tap into a widening regional supply gap, BusinessWeek has learnt.
Following several years of depression in the local sector due the collapse of plans to develop coal export routes, coal players are once again buoyant as the prices of the mineral have reached level last seen a decade ago.
Morupule Coal Mine (MCM) sits on approximately 3.5 billion tonnes of coal in eastern Botswana and executives say the current rate of mining is very low, rendering the resources under-utilised.
The Mine’s business and development manager, Matthews Bagopi told BusinessWeek that the target market for the new coal would be mainly South Africa, Zimbabwe, Zambia and offshore.
“A lot of producers in South Africa are sending everything they are producing abroad, leaving a serious shortfall within their inland market,” he said in an interview on the sidelines of this week’s Botswana Resource Sector conference.
“That market is about 20 million tonnes per annum for washed coal and it’s running at serious shortages at the moment which can only get worse because new mines are not opening up and those that exist are depleting their resources and closing. “That’s the opportunity that MCM and indeed coal developers in Botswana are eyeing.”
Part of MCM’s plans to upgrade its output include a new open cast mine on one of its licences, near the existing underground operation. The new mine is due to be commissioned by mid next year ramping up production to meet the 2025 target. Earlier, Bagopi told the conference that a resource update at MCM’s licences was underway with drilling having been completed earlier this year. He said it was expected the update would lift the resource estimate from the current 3.5 billion tonnes to between 4.2 and 4.4 billion tonnes.
Another coal developer, Shumba Resources is reporting strong results from its forays into coal trading in the regional market. Shumba has approximately 4.5 billion tonnes of coal in its eastern Botswana licences and since last January, has been trading the mineral to test its marketing capacity for the several mines it plans to commission. “Botswana coal is under-utilised and there is an opportunity there in the market that can be tapped into,” Shumba chief financial officer, Thapelo Mokgathi told the conference.
“There is an increasing shortfall in the constant supply of washed coal in South Africa, Zimbabwe, Zambia and Namibia. Eskom needs 130 million tonnes per annum of coal and they are struggling.”
Coal prices are at decade-long highs driven by major cut-backs in key producing nations, the depletion of resources in previous major mines and increasing demand in Asia.