Aviva Corporation, the PerthÔÇôbased energy company, is on Monday to enter the open-cry Botswana Stock Exchange (BSE) as part of its long term plans to raise capital to develop its Mmamantswe coal finds aimed at mitigating the impending southern African power shortage.
The Australian Stock Exchange listed company said in its pre-listing statement ahead of its secondary listing on the BSE that it was upbeat about the Mmamantswe project ÔÇö- which lies 110 km north-east of the capital Gaborone ÔÇô as a viable project with an estimated resource to last for 70 years.
The Mmamatswe concession area fell into the hands of Mawana Minerals (Pty) LimitedÔÇöa company owned by Paul Ramaloko and his family ÔÇö some time last year after the discoveries made by JCI and BP in the 1960 and 1980s.
And in April this year, Ramaloko invited the Aviva Corporation to a joint venture that would see the Australian company owning 90 percent subject to the fact that it covers full financial budget for prospecting up to a bankable feasibility study.
“During the year, the company entered into an agreement to earn 90 percent interest in industrialization which is guided by the mining sector and the preparations for 2010 Mmamantswe Coal Project.
“The project consists of a 600 million tonne target outlined by JCI and BP in the 1960s and 80s. The company considers it has a potential to support a 2x 800mw merchant power station and produce some low phosphorus metallurgical and coking products for exports to South Africa,” the company said in its pre-listing statement.
The Mmamatswe project falls within the southern African Power Pool (SAPP), which is an association of 12 regional countries’ power supply organizations which are frantically battling with some power shortage as the region is gearing itself for a grand industrial revolution.
The power thirsty SAPP countries include Angola, Botswana, DRC, Lesotho, Namibia, Malawi, Mozambique, South Africa, Swaziland, Zambia and Zimbabwe and are already experiencing black-outs which are attributed to aging equipment and demand and supply imbalances.
However, the situation is expected to worsen in the coming year as most of the countries will be entering the first 2010 World Cup Soccer Games to be staged in South Africa.
Aviva, with coal operations in Australia, said the SAPP, which has annual power demands of some 43, 0000 mw and dominated by Eskom of South Africa, will come under pressure in the coming years.
The move comes at a time when Eskom anticipates energy demand growth of 2,000 mw per annum for the next 18 years.
“By 2013, half of the coal is un-contracted and we anticipate increased competition for South African fuel coal from Asian markets which will squeeze domestic supply and put pressure on prices. The company believes that SAPP network is operating well below surface reserve capacity and the planned new capacity will only offer a temporary relief,” Aviva said.
Since the marriage between the Aviva Corporation and Mawana Minerals companies in April this year, 26 drilling holes have been made within the two concession areas that cover an area the size of 2000 km2. All the holes have shown the presence of coal.
“The next step would be to work on a plan that would take the resource to the reserve status. And that will start in March and it will take three months. We would be looking at coal that would last for 30 years with customers most likely to be southern African states,” Aviva Corporation’s Chief Executive Officer, Lindsay Reed, has said.
The work will entail increasing the drilled holes from 26 to 80 and is hoped that will enable the company to do a proper data assessment. So far, available records from the Department of Geological Survey indicate that the area has two different types of coal, soft coalÔÇöused for cockingÔÇö similar to that at Matimba and Grootguluk mine in South Africa at a depth of 70 meters and deeper. It has coal with similar rock in the southern African region which has the characteristics of Morupule and Mmamabula.
Aviva comes at a time when the country is estimated to have untapped coal resources of 200 billion ÔÇô enough to supply the power hungry southern African region during its initial stages of industrialization.
“We found Botswana to be very good in working with. Botswana has a wonderful reputation as a place to do mining.
“Southern Africa needs a lot of power and you need to secure a place for investment and Botswana provides for that,” Reed added.
The company is planning to start operation by 2010 and it is expected to be an open cast mine.
It further stated that some of the encouraging factors are the site, which is closer to the highway, railway line and high voltage transmission lines. The company is going to do the scoping report to determine the number of people who will be employed at the mine.