Shumba’s outlook positive

SHARE   |   Monday, 05 December 2016   |   By Kabelo Adamson
Piles of Coal; INSERT [Chairman Alan Clegg] Piles of Coal; INSERT [Chairman Alan Clegg]

Despite the challenges facing the coal industry, Shumba Energy – a developer of coal exploration licenses in Botswana – says its strategy remains the same, to develop the production and sustainable supply of thermal coal from these licenses for supply both domestic spot markets for third parties and for its own use in its IPP’s. Writing in the company’s latest annual report, Chairman Alan Clegg, says in the long term the company may also supply sea-borne export markets dependent on price and logistical corridors developments. “With the accelerating development of Mabesekwa for our first IPP to supply the now established cross border market to South Africa and with Sechaba for supply to spot markets and potentially the local utility, the strategic future of Shumba has been further enhanced,” Clegg says. Clegg says the potential Underground Coal Gasification (UCG) based energy future at Letlhakeng also remains to be developed which, with suitable experienced development partners yet to be selected, should begin to gain traction in the 2017/18 period. “And Shumba still has intent to add to its energy supply portfolio with the development of a solar energy future on the land holdings and under the agreements it holds in Northern Botswana. The RFP submissions Shumba made to the Botswana government for a potential 150Mw Solar PV Energy field development is still under review,” he says.

Shumba chairman assures the company shareholders that with all these developments taking place, the company’s future continues to look bright. Shumba Energy operates a number of projects which include Sechaba Coal Mine, Mabesekwa IPP Development and Letlhakeng Prospecting License. With Sechaba, Shumba intends to supply the local spot market as well as Botswana Power Corporation (BPC) and discussions with relation to this are said to be progressing well. Through Sechaba Coal Mine, Shumba is looking to follow with development of a substantial underground mine for the long term supply consideration for a 300MWe IPP potentially supplying NamPower Corporation in Namibia. Clegg says the Pre-Feasibility Study for this project was completed last year and Shumba hopes to conclude by end of first half of 2017 financial year both an off-take agreement for local supply of Thermal Coal to BPC and a JDA (Joint Development Agreement) with a strategic partner for the development of the Sechaba IPP. “I can therefore continue to assure all of our current shareholders and future investors that although the time frames have extended due to the continued depressed market conditions until the recent reverse, that the Sechaba Mine & IPP Project continues with a very clear future,” Clegg assures investors.

The Letlhakeng Prospecting License, which has been issued to Shumba for coal exploration rights over an initial period of 3 years, has been delayed to next year due to the company’s focus on accelerated development of its other assets and projects. “As a reminder Letlhakeng has significant in-situ reserves of carbonaceous material (estimated 500Mt) identified in the area and our initial efforts will be focused on confirming the presence and structure of such resources which, indicates strong possibility for the application of UCG technology application at this prospect,” he says. Shumba has also reported good progress at Mabesekwa IPP Joint Development which include Land Board lease which was issued in the second quarter of the year while waste management licence application was submitted and approval received. With all these developments, Shumba intends to address the net deficit of over 30GWe held by the Southern African power pool which is said to be still widening as older power plants either close down or need replacement.