Sunday, July 3, 2022

Morupule Coal Mine sees opportunities in Europe energy crunch

PALAPYE – Botswana’s coal producer – Morupule Coal Mine (MCM) is seeking to boost exports to cash in on soaring prices since Russia’s invasion of Ukraine in February 2022.

Already, state owned MCM says it is in talks with Poland for a possible coal supply deal.

The imminent deal follows inundated inquiries from other western countries following the Russia – Ukraine war which has forced Europe to pivot more to Africa for energy.

While Botswana’s coal production has been limited, mostly exported to neighbouring countries, MCM says it is now looking into ramping up production in order to cash in on the European crunch.

Global Coal prices have more than doubled since the beginning of the year and mining companies including Morupule Coal Mine are now scrambling to pump up production and benefit from high prices.

“Our current production may not be enough for us to take advantage of the current global demand”, said MCM General Manager Edwin Elias.

Botswana has an estimated 212 billion tonnes of coal resources, with only two coal mines currently in production. While coal mining companies have been struggling to find funding due to environmental concerns, there is demand for the product. Even more instructively, there is a sliver lining in the horizon. Coal prices have more than doubled since the beginning of the year, giving coal miners more incentive to ramp up production.

Coal production in Botswana has increased over the years, with official data from Statistics Botswana showing that production has increased from the 1.4 million tonnes a year in 2012 to 2 million tonnes in 2021. According to the Index of the physical volume of mining production report for the fourth quarter of 2021, coal output increased by 9.3 percent from 429, 382 tonnes during the fourth quarter of 2020 to 469, 481 tonnes in the last quarter of 2021.

“The increase came as a result of the efforts made to meet increased demand from both domestic and international markets, particularly that new markets have been identified,” Statistics Botswana said in the report.

MCM, which is wholly owned by MDCB, in April shipped its first coal export to Mozambique port to supply global markets. The state coal miner last year November commissioned its Motheo project which will expand the mine’s production capacity from 2.8 million tonnes to 4.2 million tonnes per annum of coal.

The black diamond…

Besides MCM, privately owned coal miner Minergy that operates the Masama coal mine has a capacity of churning out 125,000 tonnes per month and has seen a 50 percent increase in sales for the six months ended 31 December 2021. Minergy has received financial support from the Botswana government through the state-owned Minerals Development Company Botswana (MDCB), which borrowed the miner P63 million in July 2021.

On the other hand top Indian industrialist, Jindal Steel and Power, announced in November 2021 plans to start a coal mine in the Mmamabula area, famed for its large deposits of coal. Jindal is looking at an annual production of 4.5 million tonnes of coal. Construction of the mine is expected sometime this year.

Botswana’s coal industry could benefit from the Polish government’s decision to produce energy from coal until 2049 despite signing a declaration at COP26 to reduce use of goal.

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