Minergy edges closer to nameplate capacity at Botswana mine

Botswana-based coal miner Minergy says in a voluntary update that is has made considerable progress toward reaching nameplate capacity of 125 000 t a month at its Masama coal mine during the six months to December 31.

Among the milestones achieved during this period was producing the highest six-monthly volumes across all disciplines since the inception of the mine.

“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,” says CEO Morné du Plessis.

He adds that Minergy is delighted with consistently demonstrating coal mining and feed-to-plant production volumes exceeding 105 000 t since commissioning of Stage 4.

“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 in 2020, thanks to good drainage solutions being in place at the mine,” Du Plessis points out.

He says 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 rand, the sales mix improved and prices increased,” Du Plessis highlights.

He cautions, however, 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, Du Plessis says.

Notably, Minergy is partnering with Jarcon Power to submit a bid for a new 300 MW greenfield 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 the 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,” says 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,” he highlights.

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 notes.

Du Plessis also mentions 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,” he informs.

Minergy believes 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 other Southern African countries, Du Plessis posits.

Mining Weekly, Tasneem Bulbulia