Minergy finally secures Masama coal license

02 Sep 2018

The Botswana Stock Exchange quoted Coal Company, Minergy Limited has finally been granted a mining license for its Masama project.

The coal mining and trading company was this week issued with a license by the Ministry of Mineral Resources, Green Technology and Energy Security.

The granting of the mining license follows the completion of a Feasibility Study and the authorisation of the Environmental Impact Statement (EIS) by the Department of Environmental Affairs (DEA).

With the exciting announcement, the company’s chief executive officer, Andre Boje said, “certain pre-mining construction work has already begun on site at the Masama Coal Project, allowing Minergy to have the final mine commissioned in January 2019, and producing its first saleable coal the following month.”

Minergy plans to have 250 000 tons of run of mine available for processing through the washing plant by September 2018.  That will produce 150 000 tons of saleable coal and thereafter 100 000 tons per month.

The partnership between the South African rail logistics provider, Transnet Freight Rail and Botswana government-owned Botswana Railways for a rail line that will connect the Botswana coal fields with the South African rail infrastructure will be a game changer for Minergy’s coal products and other local coal industry players.

Meanwhile, following the licensing, Boje added that Minergy is now able to break ground and invite contractors to start work immediately as well as to actively engage the local communities about job creation and several upliftment programmes. This including improving the school and the clinic in the village closest to the mine, Medie, as well as bringing in electricity.

The license enables Minergy to attain the full potential of the Masama Coal Project, alongside the commitment to development of the coal mining, marketing and logistics industry in Botswana.

He went onto add that, “the granting of the license to Minergy substantially reduces the risk for any potential investors. With Minergy set to undertake a secondary listing on AIM on the London Stock Exchange, this announcement provides the vital key to ensuring project viability, substantially underpinning the investment case.”

Non-Executive Chairman, Mokwena Morulane earlier in the company’s financial statement for the year ended 31st December 2017, expressed that due to the current favourable coal pricing and product shortages, the Company has had numerous approaches to enter into off-take agreements with both regional end users and international coal traders which could elevate the required saleable product to in excess of 200 000 tons per month. “The mine’s ability to service this increased tonnage will be dependent on factors such as the availability of capital for expansion and projected coal pricing to 2021,” he said.

Looking into the industry market internationally, coal continues to defy the market commentators who project falling prices and a diminishing industry. Regionally, prices are at levels not seen before due to the lack of investment in new projects in the dominant coal producer, South Africa.

Some pundits say, this lack of investment is partly due to policy uncertainty and the talk around resource nationalisation. However coal demand continues to rise as it is still the most economical form of energy available. There is still more hope in the industry.