The award is later than the projected timeline of mid-2018 for the
granting of the licence as announced when the company listed. However,
it states: “this is a substantial step forward in terms of Minergy’s
intention of focusing on delivering high-quality coal to the regional
market, including Botswana and South Africa, and entering the
international seaborne thermal coal export market.”
Minergy owns 100% of the 390 Mt Masama Coal Project in the Mmambula
Coalfield, in south west Botswana, 50km north of Gaborone. The
open-cast, low-strip ratio mine has the potential to produce 2.4 Mt/y of
coal within a year after opening. The granting of the mining license
follows the completion of a feasibility study and the authorisation of
the Environmental Impact Statement by the Department of Environmental
Affairs (DEA) in Botswana.
Following dispensation from the DEA, certain pre-construction work
has already commenced on site at Masama, allowing Minergy to have the
final mine commissioning in January 2019, and producing its first
saleable coal the following month.
According to CEO Andre Bojé, the award, whilst delayed, is a
significant milestone in Minergy’s journey: “The licence is critical for
Minergy to continue as a business. This will be the first open-cast
coal mining license granted by the Government of Botswana, so the
process was not without its challenges for both parties. However,
Government was so confident in our economic model that we were never in
doubt that these could be overcome.”
Bojé goes on to explain what the award of the license means for
Minergy: “Well, first and foremost, it immediately reduces the risk for
any potential investors who view investments such as this, which often
rely on regulatory discretion, as a key risk when investing; second, we
can now go on site to break ground and invite contractors to start work;
third, we can actively engage the local communities about job creation
and a number of upliftment programmes, including improving the school
and the clinic in the village closest to the mine, Medie, as well as
bringing in electricity; and lastly, for management, the directors and
all those directly involved in the project, it is just so exciting to
finally get onto site and see the mining activity taking place.”
He adds: “Whilst the delay has brought the 2018 festive season into
the equation moving first production and AIM listing timelines out, the
license will truly enable us to reach our full potential with the Masama
Coal Project, alongside our commitment to the development of the coal
mining, marketing and distribution industry in Botswana. I reiterate
what I said at our listing in Botswana last year – this marks the
beginnings of a resurgence in the Botswana coal industry.”
With Minergy looking to list on AIM, the sustained buoyancy in the
coal market bodes well for the mine, and according to Bojé is set to
continue well into the future, given global demand. He explains:
“During the past 18 months, thermal coal prices increased by 33%, making
it one of the world’s top five highest-performing commodities. In 2016,
4 Mt of coal were exported from South Africa to the African continent,
this is forecast to rise to 38 Mt by 2030. Botswana and Minergy both
have a significant role to play in fulfilling that increase in demand.
Investors looking to invest in coal have lots of opportunity at the
moment; the price of coal is rising, there is a deficit in supply and a
strong demand, especially in the developing world which is driving up
the prices and keeping them high. In my experience, there’s never been a
better time to invest in coal.”
In conclusion, Bojé said: “I have always been an advocate for coal
power; it remains inexpensive compared to other energy sources and
world-wide demand for the commodity remains high, given population
demographics in fast-growing countries and regions such as India and
China, as well as in Asia and Africa, the latter being where our
geographic focus will initially lie.”
With the award of the licence and works now underway, Minergy is
confident that its production milestone of January 2019 for the final
commissioning of the mine will be met, with the first saleable product
available in February 2019.