Minergy awarded mining license for Masama coal mine in Botswana

Botswana-listed coal mining and trading company Minergy has been granted a mining license for its 100%-owned Masama coal project in the Mmambula Coalfield, in south west Botswana.

Minergy awarded mining license for Masama coal mine in Botswana

Following the award of the mining license by the Ministry of Mineral Resources, Green Technology and Energy Security, Minergy aims to commissioning the new mine in January 2019, and produce its first saleable coal the month thereafter.

According to Minergy CEO Andre Bojé, while the granting of the license is later than the projected timeline of mid-2018, the award remains 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.

“The license 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,” Boje says.

The company’s 390 Mt open-cast, low-strip ratio Masama mine, located 50 km north of Gaborone, has the potential to produce 2.4 Mtpa 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.

Bojé says that the granting of the mining license 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, Bojé says Minergy can now go on site to break ground and invite contractors to start work; and third, the company 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.

“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,” says Bojé.

AIM-listing in sight

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 that 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 was 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,” he explains.

Bojé, an advocate for coal power, says that coal 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 Minergy’s geographic focus will initially lie.”

With the award of the license 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.