Pioneering P42bn fuel producing plant for F/town

Morupule Coal Mine
Morupule Coal Mine

CAPE TOWN: A pioneering $4.2 billion (P42.5 billion) Coal-To-Liquids (CTL) plant is set to be established in Francistown in what would be Botswana’s first step in tapping into its 212 billion tonnes of coal resources to manufacture petroleum products.

A joint venture private energy company, Coal Petroleum says it has commenced the development of a 20,000 barrels per day (bpd) Coal-To-Liquids co-generation and Fertiliser Project to be located in the Dumela industrial area of Francistown.

The project will be run over three phases from 2016 until 2020 and is expected to also deliver up to 304 MW power to the Botswana national grid. The intention is to ultimately scale the facility to a capacity of 50,000 bpd.

“The successful completion of this project will provide a foundation for a national move towards energy security and supporting continued economic growth in Botswana,” said Dr Brendon Hausberger from Holland & Hausberger, who are Coal Petroleum’s technical advisors.

Coal Petroleum is a joint venture between South Africa’s Kumvest Ltd and United Refineries Botswana, which already runs an edible oil plant in the Dumela industrial area.

The CTL process  involves conversion of coal into  liquid fuels, including chemicals using several liquefaction processing to produce products such as  petrol, paraffin, diesel, liquefied petroleum gas (LPG), ammonia, wax and chemicals. Botswana’s current demand for petroleum products stands at 1.2 billion litres per annum. “The project has been in preparation for over 18 months, during which the Baseline Technical and Economic Assessment of a Commercial Scale Coal-To-Liquid (CTL) Facility in Botswana was completed.  This study has demonstrated a technically viable and lucrative business case.

“Coal Petroleum has secured the key technology licences necessary for the project,” he said.  Botswana is currently wholly dependent on imports to meet 1.2 billion per annum liquid fuel requirements and imports just under half the power supplied to consumers.

According to Hausberger, the project will create upwards of 4,000 permanent local jobs and more than 5,000 temporary jobs during the project build-up.

“The project will offer Botswana a replacement for currently imported materials. The production cost of these will be almost entirely based on local economic impacts only. This allows Botswana the opportunity to support and boost its own economic growth, and will also have a positive impact of over $830 million per year on the Botswana balance of trade.  Coal Petroleum  will source its raw materials from Morupule Coal Mine (MCM)  with whom they secured an in-principle agreement for coal supply of the quantum and quality required for the project. 

The project requires a resource supply of 13,168 tonnes per day or 4,3 million tonnes per annum of coal and will look to utilise the run of mine feedstock from the MCM operations. Technical partners supporting the project include Holland & Hausberger (Pty) Ltd and a number of specialist technology vendors in that role. 

The project is being executed through a Coal Petroleum Hong Kong subsidiary vehicle established for the purpose of execution of this project.

The project will also be expected to provide fertiliser offtake to neighbouring states and discussions are underway in respect of offtake in this regard.  With the later envisaged expansion stages of the project, these will be expanded to include the provision of fuel into the neighbouring countries.

While government has, in principle, agreed to be the offtaker for the petroleum products, discussions over acquisition of a stake in the project are yet to resume.

“Government through Botswana Oil Limited (BOL) has signed a Non-Disclosure Agreement on the project. 

We further confirm that CP has conducted a Baseline Technical Assessment Study of the Coal to Liquids (CTL) project. Because of the magnitude of the project, government’s involvement is essential. 

“Since this is a private sector-led initiative, BOL supports the initiative in principle and discussions and negotiations for a possible acquisition of a stake in the project are yet to commence.

However, BOL in principle has agreed for an offtake agreement with CP subject to price, quality, quantity, regulatory and institutional requirements,” Botswana Oil chief executive, Willie Mokgatlhe told BusinessWeek.

To progress the project, Mokgatlhe says BOL in conjunction with the Department of Energy, has issued a tender for the appointment of a consultant who will support the two entities in the formulation of regulatory and institutional requirements to ensure an orderly development of the CTL industry in Botswana.

MCM officials said the country’s sole mine had entered into a Confidentiality and Non-Disclosure Agreement with Holland & Hausberger on investigations of conversion of coal.

“In addition, MCM has a letter of intent from Coal Petroleum for coal offtake for a coal conversion project.  We do not have details on this project and in accordance with the CNDA with Holland & Hausberger, we cannot disclose further information without their approval,” MCM chief communication officer, Boikhutso Malela said.

She confirmed that Coal Petroleum has approached the Mine for supply, via a letter of intent, but said no further work had been undertaken.

Editor's Comment
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