Monday, May 17, 2021

Botswana has the Coal that SA’s Eskom desperately need but……

The country’s sole colliery, Morupule Coal Mine will not be able to take advantage of the shortage of coal in neighbouring South Africa, the company’s Chief Public and Corporate Affairs Officer Boineelo Seitshiro has said.

While it is now old news that South Africa’s power utility company ÔÇô ESKOM is in desperate need of coal at atleast 10 of its power plants, the company has set supply requirements that have made it very difficult for MCM to export its coal to the neighbours.

On Friday, Seitshiro confirmed that the South African power utility procurement criteria have closed out MCM.

As a result, MCM its efforts to directly sell coal to Eskom are hindered by the existing procurement guidelines and processes of the neighbour’s power utility which by law require certain local South African citizen owned businesses to supply the utility company.

The coal shortage in SA was seen by some in the business circles as presenting an opportunity for local companies including MCM to increase their product export.

Seitshiro also noted that ESKOM is aware about the capability of MCM when it comes to supplying coal.

She said that though there have been negotiations between ESKOM and MCM such negotiations have not yielded coal supply contracts.

With the direct-supply door now shut, MCM is said to be working behind the scenes with a number of local entities that are in some form of partnerships with listed Eskom suppliers to supply any excess coal that MCM can avail.

Seitshiro confirmed that since MCM business profile does not qualify it to meet the ESKOM requirement, the colliery is therefore working with SA suppliers that qualify to be Eskom suppliers.

Meanwhile Seitshiro said that besides missed ESKOM opportunity, MCM is developing supply chains to satisfy other markets besides Eskom. MCM’s drive to capture emerging markets and opportunities is entrenched in its long term strategy that seeks to improve utilization of their abundant and good quality coal resources.

“Our efforts with our potential clients are still to bear fruit as negotiations are still ongoing.  MCM continues to make other inroads into regional coal markets, “said Seitshiro.

She admitted that the growth in exports by MCM or any other coal producer in Botswana require improved rail infrastructure and rail tariffs that complement the competitive ex-mine production costs that MCM is capable of  so that the delivered cost of the product is attractive for the customer.

“We continue to have discussions on this subject with Botswana Railways and their counterpart Transnet Freight Rail seeking the optimum area where such business can be conducted sustainably” she said.

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