Aviva Corporation, the explorer of Mmamantswe coal project, sounded warning bells to the markets on Friday indicating that it has taken a giant leap that brings it closer to fulfilling all the conditions that will give it direct control in one of the biggest coal resources in the country.
“Aviva has almost completed a 90 percent earn-in to the Mmamantswe Coal Project in Botswana,” the company said in its annual statement that was widely distributed through its website on Friday.
The Mmamatswe concession area, which is some 110 kilometers north of Gaborone, fell into the hands of Mawana Minerals (Pty) LimitedÔÇö after the discoveries made by BP in the 1980s.
In 2006, Mawana Minerals invited 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.
“Since the end of the financial year, the company has made the final option payment and advised the vendors that it has completed the expenditure required under the earn-in agreement.
“Aviva is now required to complete a feasibility study on the project to earn its 90 percent interest,” the company said Friday.
The diversified energy company has an estimated coal resource of 1.3 billion tones and is looking for the development of coal mine supplying 4 metric tones per annum to an integrated power station.
The aim is to supply the local and regional power authorities with the much needed electricity which has been in short supply for the last two years.
“The demand for coal in southern Africa is strong as there is virtually no domestic gas reserve to compete for the energy fuel markets. Eskom’s own new build programme will require 40-50 mtpa of new coal supply in the next decade.
“At the same time international demand for South African thermal coal continues to push export prices well past domestic contract prices making it difficult for Eskom to contract new coal supplies within the current tariff structure,” Aviva pointed out on Friday.
Eskom, the South African power supplier is the biggest within the Southern African Power Pool (SAPP), which supplies a constituency that accounts 85 percent of the entire region.
SAPP is a grouping of 12 suppliers from the Southern African Development Community (SADC), region.
So far, available records from the Department of Geological Survey indicate that the area has two different types of coal, soft coalÔÇöused for cocking – similar to that at Matimba and Grootguluk mine in South Africa at a depth of 70 meters and deeper than that has coal with similar rock characteristics to that of Morupule and Mmamabula.
Aviva comes at a time when the country is estimated to be having coal resources of 200 billion ÔÇô enough to supply the power hungry southern African region which is at the initial stages of industrialisation.
“We found Botswana to be very good in working with. Botswana has a wonderful reputation as a place to do mining with.
“Southern Africa needs a lot of power and you need to secure a place for investment and Botswana provides for that,” Lindsay Reed, chief executive officer of Aviva Corporation, has said.