Having recently been granted a mining license by the ministry of minerals, listed coal developer Minergy CEO Andre Boje says they are now fast-tracking the mine and getting fast as much as possible.
Boje told this publication on Tuesday after Minergy presented its financial full-year results for the year ended 30 June, 2018 that they are targeting to be in production by February next year, that is five months from now.
The mining license came later than expected, causing the company which is developing Masama Coal Mine in Media settlement in Kweneng District to also modify its timelines in relation to the development of its open-cast mine.
“One of the challenges we faced in obtaining the mining license is the regulatory delays from the Department of Environmental Affairs (DEA). They overstretched the supposed timelines and that was our major challenge,” Boje said.
Infrastructure is always pointed out as key in the development of coal mines; especially here in Botswana and Boje – with over two decades of coal experience – reckons the infrastructure that is available to them is minimal and only sufficient for the phase one production.
“But Botswana Railways has undertaken to address this situation going forward for the industry as a whole to ensure that the coal industry can develop in the country and we can evacuate coal into South Africa and the rest of the markets,” Boje said, adding that this is an issue, but takes consolation from the fact that Botswana Railways has committed to deal with the situation.
In recent years, campaigns against the use of coal have gained momentum; sponsored by environmentalists who believe its usage to generate power is contributing to global warming. Boje is however the least bothered by this, saying at Minergy they believe coal is still very much viable.
Coal is estimated to account for 41 percent of global electricity generation and 29 percent of primary energy demand and is expected to continue to play a major role in delivering energy access and security long into the future.
Minergy is looking to tap into opportunities that exist not only within SADC region, but the whole continent of power deficit.
“It is forecast that from last year 4 million tonnes of coal was exported into Africa; it is going to 38 million tonnes for 2030,” He said.
Boje said they are positioning themselves by opening the coal mine and getting Botswana Railways to open a rail link to Lephalele and then the company will have the capacity to export via Richard’s Bay into Africa.
Minergy is also buoyed by the increase in coal prices in their bid to fast-track its operations with Boje saying the prices are highest they have ever been.
“Regionally is the highest we have ever seen and internationally it’s the highest since 2007 before tha crash. The world economic crash came in 2008 and it’s the highest since then.”
In the past 18 months thermal coal prices are said to have increased by 33 percent, making it the world’s top five highest-performing commodities.
The Masama Coal Mine once fully operational will employ about 400 people and mainly from contractors as the company has sub-contracted most of its work. Boje confirmed that 95 percent of employees will be local.
The mining license is for a 25 year period with activities to be carried out through open cast mining, targeting the regional and the international market.
A mining contract has been awarded to Jarcon, a joint venture between IPP (South African company) and Giant Plant, a local company while the Build-Own-Operate-Transfer contract for the washing has been awarded to Pentalin Processing.
With the awarding of the mining license, Minergy is confident the first sealable product will be available in February.
Minergy, which is listed on the Botswana Stock Exchange (BSE), is looking forward to listing on London Stock Exchange in the first half of 2019; this is after encountering regulatory delays forcing the listing to be rescheduled.
For the past financial year, Minergy did not make any profit as it says the nature of its expenditure remains typical of an exploration company with holding company-specific head office expenditure such as salaries, listing and statutory related costs.
At the period end, Minergy has cash and cash equivalents amounting to P55.9 million; with the majority of it is being used during the first half of the 2019 financial year for mine development.
To date, Minergy has not distributed any dividends as cash has to be used to ensure operations are in place. Dividends are only expected to be paid once the company is profitable and generates the required free cash flow.