Friday, March 31, 2023

Botswana to flush P200 billion down the drain

PS admits expensive project will not work
If a story does not make sense, then follow the money. This seems to be the logical conclusion in Botswana government’s plan to invest USD 20 Billion ( about P200 billion) in the Trans Kalahari Railway project which experts and government officials agree is unlikely to ever recover the investment cost. Permanent Secretary in the Ministry of Minerals Energy and Water Resources Kgomotso Abbie admitted before the Public Account Committee (PAC) this week that the 1477 kilometres railway line that will run from Mmamabula through six coal producing regions in Botswana, to Walvis Bay, Namibia was not viable. The Sunday Standard was however unable to follow the money and establish the business interest behind the project. The Trans-Kalahari Railway line is expected to be used to transport coal to India and China. Tati East Member of Parliament Guma Moyo said he does not believe that the project is viable. “I do not think that it is the way to go, the cost of transportation of coal to the destination of India and China would be high, maybe ten times the cost of coal itself,” he said. Moyo said he even doubted if the Botswana government’s balance sheet could afford to finance the construction of the expensive railway line. “Are we dreaming? Why are we chasing something that will not work? The numbers tell the opposite story, the Trans Kalahari, the total estimated cost at its minimal is USD 20 billion, and it is not viable,” said Moyo. Abbie told PAC that he is alive to the fact that the railway line will not benefit Botswana because of the current low coal prices. However he said it was important to go ahead with the project “with the hope that one day coal prices will do better.” “At the current prices of coal, Trans-Kalahari Railway line won’t work but we are hoping that at some point coal prices will improve,” he said. Towards the end of last year Australian based Trans Kalahari railway line consultants, Aurecon, handed over to Government, a preliminary assessment of the viability and modalities surrounding the development of the rail line. The assessment revealed that the price of Coal will disadvantage Botswana as far as making profits is concerned. To achieve the standard or the target export sale quality underground mining was preferred but with a challenge of high cost of production. “Botswana coal typically is deposited in a number of seams at varying depths; Coal quality varies across these seams, with the higher quality coal typically lower in the deposit; at a high level two mining techniques are typically considered; Underground,” the consultant’s report stated. The challenge with underground mining as stated in the report is that the process of mining will be more expensive at approximately $25 per tonne ROM,
Another disadvantage stated in the report is that underground mining does not extract all of the coal, the mining technique leaves more than 30 percent of the coal un-extracted, meaning that more resources is required for any given output level. The problem with the cheaper technique of mining coal, “the Open cast”, is that it produces a lower quality coal. The open cast technique is expected to cost government approximately $12 per tonne ROM but with a problem of miners clearing all seams and it is considered to be more wasteful as compared to underground mining.


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