Tuesday, October 19, 2021

Botswana on the path to monetise its coal resource

As the fast rising titans of the global economy, emerging markets rely on coal to fuel their growth. Botswana could also take advantage of its extensive, and largely unexploited, coal resources to bolster its economy.

There are currently four known very large multi-billion tonne coal deposits on the eastern edge of the Central Kalahari Karoo Basin at Morupule, Mmamabule, Sese and Mmamantswe. Jointly, these four deposits could alone result in exports of what government officials believe could be up to 90Mt per annum, an export industry larger than that of South Africa’s 70Mt in 2010.

“Coal prices have risen so dramatically on world markets over the last decade that exporting coal from the Central Kalahari to India or even China would prove profitable,” said Boikobo Paya, Permanent Secretary in the Ministry of Minerals, Energy and Water Resources.

Worldwide, as the world’s number one source of electricity production, thermal coal now accounts for about 30 percent of global energy use, the highest level since 1970.

“The quality of Botswana’s coal resources compares favourably with other coals available in the market and is suitable for export market as it is in-line with Indian requirement; it might also be accepted into European markets and compares favourably with South African Export,” Paya said. “Coal exports, power exports and domestic power are considered the most attractive routes to monetising Botswana’s coal resources, with clear synergies existing between the three.”

Coal for export has great potential within the SADC region in countries like Namibia, which have an electricity deficit of -204mw, Zimbabwe with a deficit of -709 and South Africa with a power shortage of 4104mw.

The market studies show that the global demand for seaborne thermal coal will continue to grow strongly as domestic demand in a number of key countries outstrips supply.

The growth in demand will be driven by the developing nations of Asia, especially China and India. Demand for seaborne thermal coal grew from 250 Mt in 1995 to 650 Mt by 2010, an annual growth rate of nearly 6.7 percent. This growth is expected to continue, with demand reaching nearly 1,100 Mt by 2025.

Paya said Botswana coal hasn’t reached the critical Asian markets. China’s coal consumption growth alone, the driver of world coal consumption trends, has increased by more than 180 percent since 2000. India has also seen rapid increase in consumption as demand growing by 10 percent annually in recent years buoyed by an economic growth rate averaging 7.45 percent between 2000 and 2011
“Botswana has what is estimated to be a resource of 212 billion tonnes of coal. At present, 77 percent of that is still in the so-called hypothetical and speculative categories, which means that no-one really knows if it is commercially viable,” he said.

Paya emphasised the need to develop the coal resource saying, “Diamond revenues are expected to dip significantly around the year 2022 when Jwaneng Mine is due to convert from open pit to underground mining.”

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