Monday, October 25, 2021

Shumba Energy goes for Botswana’s black gold

The rush at Botswana’s rich coal resource has been observed in line with recent progressive developments of the energy industry and one particular company, Shumba Energy, has been making swift moves to tap on the changing energy legislation.

Last week Shumba Energy announced in the local bourse its partnership with Fraser Alexander, a mining services partner that is said to be delivering world-class outsourced services across the entire mining value chain with an established footprint in the southern African mining industry as well as in other selected countries globally.

“Shumba Energy has partnered specifically with Fraser to provide coal processing solutions for Shumba Energy’s coal projects in Botswana. Since 1912 Fraser has been growing its innovative business across the globe with operations on over 200 mining sites in South Africa, Botswana, Brazil, Cote d’Ivoire, Democratic Republic of Congo, Ghana, Mali, Namibia and Tanzania. In addition to materials handling, tailings deposition, rehabilitation, water management and water treatment solutions, Fraser offer end-to-end breaking, crushing, screening, pelletising, briquetting and mineral processing services that are tailored to the specific ore, waste or run-of-mine needs,” read the announcement.

The statement by Shumba Energy Chairman Alan Clegg emphasises the moves of the company in positioning itself for opportunities identified in energy distribution in both the local market and outside.

He commented: “As I have previously underlined in statements regarding our strategy, the execution of this MoU further demonstrates that at Shumba Energy we state clearly our intent and always action it in the best interests of our stakeholders. Once again, we are moving aggressively forward in selecting our operational partners to support our business model of using specialised outsourced services to execute our projects.

“I am very pleased with the addition of Fraser to the team who will bring a particular world class set of skills to ensure that the promised tactical execution of our plans presented to shareholders remains on track in preparation for execution and ultimately startup of our formal mining operations for thermal coal production and market entry.

 

“This remains core to ensure earliest possible revenue streaming from our developed thermal coal assets in Botswana without further significant capital raising just for this purpose and to move actively towards having the ability to fund required equity for further development of its projects.”

Two weeks ago the company listed new ordinary shares on the local stock exchange as well as in Mauritius where it has its primary listing bringing its total number of shares to 264 604 249. The listing was done so as to obtain funds to acquire the remaining shares in Shumba Resources Ltd which the company did not already own. This indicates that the company’s positioning is not only in terms of strategy and tact but also in the way it is structurally organised.

Shumba Energy will not have the opportunities offered on a silver platter as other companies in the same industry such as Tlou Energy, African Energy and First Quantum Minerals and Minergy Limited are vying for the coal industry.

Minergy joined others two months ago when it listed on the Botswana Stock Exchange as the first local mining company. In addition, according to a report by Statistics Botswana on indices of volume of mining production over the first quarter of 2017, coal recorded a positive growth in production, increasing by 14.7 percentage in the first quarter of 2017 as compared to the corresponding quarter of 2016 but between the first quarter of 2017 and fourth quarter of 2016 a decline of 9.6 percent was registered.

“It is important to note that though Morupule power plant demand for coal resulted in the year-on-year increased demand for the commodity; the closure of the BCL mine in the last quarter of 2016 (one of the local markets for the commodity) negatively affected the coal production leading to low coal production in the first quarter of 2017,” reads the SB report.

With the heightened interest in coal expressed by the mentioned companies it could be anticipated that the production of coal will continue with an upward trend.

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