Minergy edges closer to nameplate capacity

Botswana-based coal miner Minergy provided a voluntary update to the market ahead of releasing its interim results for the period ended 31 December 2021 in mid-March. The company cited substantial progress being made toward reaching nameplate capacity of 125,000 tonnes per month during the six-month period, with achievements having included producing the highest six-monthly volumes across all disciplines since the inception of the mine.

Minergy CEO, Morné du Plessis said, “Stage 4 of the Processing Plant was successfully commissioned early in September, resulting in benefits such as savings in processing costs, procuring expected product distribution and a stabilised supply supporting nameplate capacity. He added that Minergy is delighted with consistently demonstrating coal mining and feed to plant production volumes exceeding 105,000 tonnes since commissioning of Stage 4 which is testament to the efforts by all involved.

“Unfortunately, the new COVID-19 variant and the related effect on workforce availability and border access, as well as rain interruptions and reduced regional sales (arising from customer plant breakdowns) impacted performance late in the period. However, the higher rainfall did not result in flooding as was the case in the comparative six-month period, thanks to good drainage solutions being in place at the mine.”

Du Plessis said that following the increase in production volumes, sales tonnes increased commensurately. “Pleasingly, a better product mix was obtained from the fully commissioned plant, with increased sales of the more profitable pea product being recorded. Against the comparative six-month period, selling prices increased, attributable to a more stable South African Rand, the sales mix improved, and prices increases.”

Du Plessis cautioned that while sales remained below breakeven, further operating losses were incurred, albeit at lower levels with better cost recoveries at increased volumes. Input costs were negatively impacted by a 52% increase in diesel prices, which was difficult to pass on to customers.

Another highlight to note is that Minergy is partnering with Jarcon Power to submit a bid for a new 300MW greenfields coal-fired power plant in Botswana. The Government, through the Ministry of Mineral Resources, Green Technology and Energy Security, has invited the company’s subsidiary, Minergy Coal and three other selected local bidders to tender for the design, finance, construction, ownership, operation, maintenance and decommissioning at the end of its economic life (of such a plant in Botswana), as an Independent Power Producer.

“If the bid is successful, Minergy Coal will be responsible for providing coal to the power plant for the duration of the Power Purchase Agreement of 30 years, while other income streams are also being envisaged,” said du Plessis, adding that this profitable sale of coal will have the benefit of ensuring a steady cash flow to Minergy and diversifying income streams. “Importantly, Minergy is the only bidder to have an operational mine.”

Looking forward, du Plessis expects the international pricing for southern Africa coal to remain high, driven by the continued China/Australian standoff and Indonesian export restrictions. “Coal supply is under pressure, while demand is increasing as several majors divest from coal given the negative coal narrative. Minergy expects an undersupply in the regional market as a result.”

He added that a secondary listing on an internationally recognised stock exchange remains an important strategic objective. The ordinary share capital raise, approved by shareholders in February 2021, has garnered interest and Minergy is actively engaging with interested parties to progress this.”

Minergy believes that countries such as Botswana and Namibia will pursue power independence from South Africa (illustrated by the Botswana tender and discussions with interested parties in Namibia) and finds itself located strategically to supply both South Africa and southern African countries.

Du Plessis concluded that Minergy recognises its responsibility to mine and operate responsibly and will continue to do so, along with providing stakeholder support to the benefit of the community.

The Botswana Gazette