GREATER HORIZONS The diversification of the mining industry is seen as a mitigating step in assisting with industry diversification
Botswana coal mining company Maatla Resources, recently awarded a mining licence for the development of the Mmamabula project, says the project will offer several benefits to the country such as strengthening its coal industry, and increasing trade and government revenues.
“Botswana’s reliance on the diamond mining industry has had an adverse effect over the past few years, with diamond prices dipping and revenues significantly affected. The diversification of the mining industry is seen as a mitigating step, with copper mining project Khoemacau and the Maatla Resources project, for example, assisting with the diversification,” says Maatla Resources CEO Jacques Badenhorst.
The Mmamabula coalfield, located about 145 km north west of Gaborone and 125 km south of Palapye, is in the Central District of Botswana, with the nearest village being Mookane. The Mmamabula coal mine will employ about 470 permanent employees, with indirect and supplier development employment estimated at 1 500 employees.
“Maatla Resources will predominantly employ people from the local Mookane, Dibete, Mpashalala and Dovedale villages, and will work closely with community leaders in identifying specific short-, medium- and long-term sustainable projects to create initiatives that allow for skills transfer, as well as employment opportunities,” explains Badenhorst.
The mining licence covers three areas which total about 43 km2. The one area borders Limpopo and is about 17 km from the planned Boikarabelo rail loop.
All licences and approvals are in place, with construction expected to begin in June. Structural steel fabrication of the processing plant started in 2020 in expectation of the issuing of the licence.
With less than 18 months to commercial production, the development cost is $45-million, with a construction programme of 12 months. The estimated life-of-mine is about 25 years.
“The mining licence application was submitted in April 2018, with the licence awarded last month. One reason for the delay was that the company had not yet attained an equity capability of 30% of the project’s development costs, which has to be demonstrated by the developer in accordance with Section 30 of the Mines and Minerals Act of Botswana.”
Moreover, with the negative sentiment towards coal, attaining equity for a new coal project is extremely difficult, especially when compared with other forms of funding, such as pre-offtake funding, adds Badenhorst.
He adds that Maatla Resources did not want to list to raise equity because most listed coal companies’ market cap values were “destroyed”, as a result of the negative sentiment.
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Nevertheless, my sense is that if you follow the Mines and Minerals Act, the licensing process works and is less tedious than in other African countries,” he comments.
He adds that, because of current sentiments, raising equity for other commodities, such as diamonds and copper, is easier and that listing is a route that can be used to raise the necessary equity in compliance with Section 30.
Maatla Resources has done extensive market research and will, in its first phase, focus on delivering high-quality sized coal to the South African market. This market is significant, as traders are finding it more difficult to find a reliable and sustainable source of coal, Badenhorst explains.
The South African inland sized coal market prices have not fluctuated as much in comparison to the seaborne export API4 pricing. While there is a trend towards green energy and green financing, the demand for coal as a reductant in the steel, ferroalloys, cement and lime industries, as well as for use in boiler applications, will remain strong and possibly increase as fewer coal mines come on stream, thereby creating a supply deficit, he adds.
“For this reason, we believe that the business case is sound and Maatla Resources is looking at the development of a secondary mine for additional markets,” concludes Badenhorst.