Botswana-listed coal miner Minergy announced last month that, despite extreme difficulty in accessing financial backing, it has successfully raised funding of P90-million from the Botswana Development Corporation, as well as from the Minerals Development Corporation of Botswana.
Initial funding includes bridging finance provided by both parties amounting to P70-million for a period of six months. This will be refinanced through long-term agreements with both parties. All the necessary regulatory approvals are in place and agreements have been signed with all paperwork completed.
The funding is sufficient to bring the company’s 390-million-tonne Masama coal mine, in the Mmambula coalfield, into full production.
“We have come such a long way and are pleased with developments at the mine site. We are excited about the future of the project, our ability to supply coal into the region, the highly experienced team responsible for executing the plan, as well as our capacity to contribute towards a viable coal sector in Botswana,” says Minergy CEO Morné du Plessis.
Minergy aims to extract 2.4-million tonnes of coal a year at the Masama mine, and expects the life-of-mine to be about 100 years.
The mine is operated by opencast mining contractor Jarcon Opencast Mining.
“We have a remarkable team in place who share core objectives. These include that Minergy must, in the medium-term, ensure stable cash flows, productivity, and quality end product. There is blue-sky opportunity for Minergy to increase production and supply the export market, but the building of the Lephalale rail link and export price are two factors that are outside of our control. It’s prudent for us to focus on our strengths and ensure that customers are well serviced and receive quality coal,” says Du Plessis.
The resource contains coal seams of up to six metres thick, with a shallow sub-crop from 20 m to 130 m, containing very few faults and no dolerite.
“The Masama coal project has an excellent quality coal product within sustainable coal seams, and as such, has received significant interest from regional companies. Minergy has successfully moved product to South Africa and Namibia,” Du Plessis adds.
The smaller Botswana market is also targeted and Minergy believes it will be able to provide competitive pricing.
As a norm, the customer will be responsible for logistics of the coal, while Minergy will focus on its core strength, which is marketing the product.
“From our interactions with subcontractors – moving coal on behalf of our customers – we understand that they have experienced smooth border transitions. The logistics companies are highly efficient and ensure all paperwork is in place and their agents do pre-clearance at their offices at the border posts,” Du Plessis indicates.
The company is not currently focused on supplying coal to the power generation market and will assess this on a case-by-case basis. However, a business case is developing with the shortfall of coal experienced by the State-owned South African power utility Eskom.
“We have certain coal qualities that are perfect for power producers and this can easily be accessed and utilised in the future,” Du Plessis explains.
In terms of further capital expenditure, he notes that the major expenses have already been covered. These included ensuring the mine had power and water, and that the mine box cut and the processing plant were established.
“For the next six months all that we foresee is spend on water and new road construction, and the maintenance of access and surrounding roads to the mine.”
With the expected success of the project, Minergy aims to be listed on the Alternative Investment Market of the London Stock Exchange, with retiring Minergy CEO Andre Boje overseeing this effort.
Safety and Community Involvement
Health and safety remain of paramount importance, Du Plessis adds, noting there have been no reportable incidents since mine development began in September last year.
Focus is placed on near-misses and safety protocols are enforced on site, while community relations are managed through consistent communication.
Minergy observed the need in the villages surrounding the mining operation and, to this end, is committed – with its contractors – to converting training into practical skills. Training is currently mainly related to machine operators.
Once production increases, it will include a host of new skills training, with skills transfer again being the ultimate objective.
Minergy directly and indirectly employs in excess of 250 people, 92% of whom are local citizens. About one-third is from the local Kweneng district.
The village of Medie was originally supposed to be connected to the grid in 2023. However, as part of Minergy’s corporate and social investment programme, it has paid for electricity connectivity to the village and will continue to do so in critical areas such as the clinic, the school and the kgotla, which is a community council or traditional law court of a Botswana village.
Minergy further aims to assist in ancillary business opportunities in surrounding villages including tuck shops, brick making, laundries and boarding facilities.