The Toronto – Botswana jointly listed coal exploration company, CIC Energy Corp, appointed Investec Bank as its financial advisor as it moves closer to the mining of its Mmamabula deposits.
In a statement released last week, the company said Investec Bank will “assist the company in expeditiously concluding joint venture agreement with an independent power producer and a mining company to develop the Mmamabula energy project.”
The company which is exploring coal deposits at Mmamabula coalfields – some 120 kilometers north of Gaborone – said it has pre-listed IPP’s and mining companies as potential partners with who negotiations have commenced.
Some of the companies which were mentioned included the South African Eskom which envisaged that most of the power generated from the mine will be sold to it.
At the time of issuing its pre-listing statement, it said its aim is to create value for its shareholders by developing the Mmamabula project and it also stated that it retains Absa Bank as debt advisor and arranger.
“CIC Energy Corp’s principal business objective is to create long term shareholder value through the development and operation of Mmamabula coal project and associated coal-fired power plant in Botswana,” the company said in a statement.
It said it is embarking on a US $ 4 billion coal mining project at a time when the 14 member states of the Southern African Development Community (SADC) are expected to experience shortage by 2007.
The 14 countries of SADC namely; Angola, Botswana, Democratic Republic of Congo, Lesotho, Madagascar, Malawi, Mauritius, Mozambique, Namibia, South Africa, Swaziland, Tanzania, Zambia and Zimbabwe are expected to face significant peaking power shortages as early as 2007 and major base load generation capacity shortage as early as 2011.
“Consequently, the regional utilities that are the major regions electricity suppliers, and more particularly Eskom, are aggressively promoting new projects. For the period 2010 onwards, major base load projects are required and most new base load capacity is expected to come from coal-fired plants.
“The Mmamabula coal project is well placed to meet these requirements and the project is being pursued at an accelerated rate in order to provide sufficient time engineering, procurement and construction in order to target 2011 commercialisation date for the first unit,” it added.
It further stated that the first phase of the project will be primarily export based and it is intended to supply Eskom and the southern African power grid. It said its subsidiary Meepong Energy Pty has concluded a memorandum of understanding with Eskom which envisage that majority of the power generated from the mine would be sold to it.
It also stated that CIC Energy has been working closely with Botswana Power Corporation so that both the company and the country get maximum benefits from the project.
The project will be coupled with the construction of a railway line linking Botswana with Namibia that will connect it with the international markets.
Recently, officials from the SADC region met where they pondered over the issue of future power needs of the region in the coming years and countries were urged to work shoulder to shoulder to deal with the problem.
The appetite for future regional power demands are being increased by the positive international sentiments towards Africa- especially the SADC region and developmental projects that will follow.