Debswana’s wholly owned coal company, Morupule Colliery, is looking at a ten-fold production increase to meet an enormous leap in demand from Botswana’s only power station as well as supplies of coal to the country’s north, said Frank Wookey, financial controller of Morupule.
Morupule currently produces around 900,000 to 970,000 tonnes of coal a year, the bulk of which goes to the 120 MW power station. There are plans to add another 600 MW of capacity to the plant by the turn of the decade and to potentially add another 600 MW at a later stage.
A little explored issue is the shortfall South African power utility Eskom is expecting around 2014 as it embarks on a massively expensive expansion programme. Eskom will have an estimated shortfall in contracted supplies of up to 14 million tonnes per annum (mtpa), something Wookey said offered a growth avenue to Morupule since “we have a geographical advantage.”
At the moment, however, Morupule envisions its output growing to between 10 mtpa and 12 mtpa from domestic demand, exports and other off-take agreements. The Botswana mines ministry reckons the country will produce 20 million tonnes of coal by 2014.
“Our feeling is that Morupule, which in the past 34 years has not produced more than a million tonnes in any one year, will do 10 to 12 million tonnes a year on its own if our plans come off,” Wookey said.
CIC Energy and International Power are to build a 2,400 MW power plant and develop a 9 mtpa mine to supply it. The plant will begin commercial operations in the first quarter of 2012.
The two expansions at the power plant will consume about five million tonnes per annum. There are potential off-take agreements Morupule is negotiating with at least two parties that could account for another four to six mtpa and there are smaller contracts for 500,000 tonnes/year.
“Our focus is to the north where we have a geographic advantage,” Wookey told Miningmx on the sidelines of the Botswana Resource Sector Conference. “The Wankie colliery in Zimbabwe is going through very difficult times amid an economic meltdown in that country, while the Mamba colliery in Zambia is also having some difficulties.
“We have established a reputation as a reliable supplier,” he said. Funding the leap in production will be through Debswana, the world’s single largest source of rough diamonds jointly owned by De Beers and the Botswana government.
“We will be entirely relying on them to provide the funding, even if it is just to facilitate meetings with those who can,” Wookey said. He declined to speculate how much the increase would cost.
The expansion would come from moving to long-haul underground mining and potentially open cast mining. Morupule will know at the end of this year on the opencast prospects. SRK and DRA have been appointed to investigate mining methods and surface requirements. Their reports should be presented by September.
A study into the geology of Morupule’s deposits will give the Botswana power utility ease of mind that the company can supply coal for both expansion projects for 40 years. Morupule currently has 40 million tonnes of in situ coal.
The major bottleneck in supplying customers to the north is the Botswana railway, which has planned a major capital investment programme.
Morupule sees this as a major step towards it becoming a significant exporter into Africa.
Wookey was unable to give any details on the railway plans.
Morupule is commissioning a coal washing plant in November this year to increase washed coal output to 75,000 tonnes a month. Deliveries will start in January next year.