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Fighting the Global Coal War

Background

So much of the world’s growth over the past two hundred years has been due to the discovery and ever-increasing use of affordable energy derived from fossil fuels led by coal, followed by oil, and natural gas. This affordable and predominantly coal-fuelled energy drove industrial expansion, created millions of jobs, and generated wealth for a large portion of the global population.

There is a great deal of discussion led by a largely pseudo-scientific approach to global warming, which has reached almost ‘religion’ status, and the supposed dangers of carbon dioxide gas (CO2) released from fossil fuel combustion around the world, in particular from coal. In 1988, the International Panel on Climate Change (IPCC) was set up to investigate and document the dangers associated with CO2 which is released from fossil fuel combustion, such as coal. Since then, many papers and articles have been written and international meetings held to see if agreements can be made to mitigate this supposed problem for our planet – a problem not fully defined, nor even proven to any level of certainty.

In this context, coal has been set up as the general ‘public enemy’ Number One. Coal is an easy target; by its very nature it’s black, dusty and dirty; with less powerful lobby groups and influencers than other sectors, such as oil and natural gas. These sectors are often much less visible to the public eye and easier to disguise and dismiss as threat or cause.

Targets have been set to reduce CO2 emissions for the near future; and programmes are being introduced in developed countries on how to meet them.  The goal? To shut down all coal burning power stations, followed by the source of the coal, the mines themselves. 

Stress on Developing Continents and Countries

There are still many developing countries, the rising stars of tomorrow’s industrial world that rely on this affordable source of power generation to power their growing industries and are now being forced to comply with western politically driven often unrealistic targets. These countries, many on the African continent, are now driven allocate a significant portion of their fiscus on CO2 mitigation and reduction defined and sold by them – targeting shutting down coal use in any form, while this expenditure could be put to better use and is urgently needed to develop the countries’ infrastructure and large-scale industrial business that can improve these economies and add to job creation, improve the health system and reduce environmental pollution of the air, water and soil by noxious emissions and effluents. 

Until a reliable, new and reasonably priced base-load source of energy is found, coal is required.

Quickly and drastically reducing the use of coal by a large percentage, as has been mandated by some developed economies and their governments, and the Paris Accord, creates a serious problem. It would have negative effects on the social welfare of so many people in the energy industry and related sectors and many millions more people’s lives will be threatened because funds that could be used in infrastructure and other developmental requirements are now being deployed for CO2 mitigation?

In 2016, the five biggest coal importers in the world were India, China, Japan, South Korea, and Taiwan. While the big five made up almost 70% or over 600 million tonnes of global imports, the Southeast Asia (SEA) market accounted for less than 8% or about 70 million tonnes of coal imports during the same period.  However, according to data released by the IEA for the period between 2017 and 2018, the SEA market has doubled in size.

The region’s key coal users and importers include Thailand, Malaysia, Philippines, Vietnam, and Indonesia. Even though Indonesia is the biggest coal exporter, supplying over 80% of the demand for the region, its domestic coal requirements are expected to impact the Asian demand and supply balance significantly in the coming decade by increasing its own demand. While Vietnam already appeared on the map in 2016, Myanmar will also play a bigger role in the near future as coal production rapidly increases.

“Electricity is increasing its share in total energy consumption and coal is increasing its share in power generation”, said Laszlo Varro, head of the gas, coal and power markets division for the International Energy Agency (IEA). The vast majority of the 400 GW in power generation capacity to be added in SEA by 2040 will be coal-fired. That will raise coal’s share of the SEA power market to 50% from roughly 32%, while natural gas declines to 26% from approximately 44%.

About 700 million people now live in SEA and the region is expanding quickly, especially in terms of energy demand and as a result electricity generation. IEA Southeast Asia predicts that population grows modestly to 760 million people by 2040 but urbanization increases from 46% today to 60% until then. The GDP per capita will almost triple until 2040, and this is where energy demand must step in.

As a result of this soaring energy demand, environmental pressures are increasing. At the same time, the carbon foot print of SEA is only a fraction of that of Europe and the USA.

The IEA also reports similar trends and shares of total energy consumption for the African continent which, in population terms roughly approximates SEA. With these similarities in mind, the IEA predicts that 120 million people in Southeast Asia lack electricity, while over 270 million rely on wood and dung for cooking and heating, pollutants in itself. “From 2013 to 2030, the SEA region’s primary energy demand will almost double or increase by at least 80%.” The IEA notes. The “power pie” or electricity demand increases from 790TWh to 2.210TWh from 2013 to 2040. 

That tripling in electricity demand will be primarily sourced from coal. Whilst renewables are expanding, their pace of growth is too slow to keep up with faster, more affordable thermal coal-fired power generation. Coal will be the fuel of choice. The material is easily available, the cheapest source of power and also the safest. All major SEA countries are constructing coal-fired power plants at a breath-taking pace.  We predict that with a 40GWe energy shortage already prevalent in Southern Africa, a similar trend will emerge if the 4th Industrial Revolution (4IR) is ever to gain traction in Africa.

Coal’s share of electricity generation is expected to increase from about one third today to reach 50% by 2040. This means that the SEA will pull up the global average for coal use and significantly contribute to coal continuing to be the power source for the developing world. Again, renewables, including hydro will also grow but the staggering increased power demand cannot be met economically without the use of easily available, low-cost and safe coal.

Renewable Energy Sources

New energy technologies are being funded and developed to counter the reliance on coal and coal-fired power stations. Solar panels, geothermal wells, wind farms and tidal turbines are being installed to produce electricity.  While these solutions are often portrayed as reliant green energy, geothermal and tidal turbines are only considered transient and cannot yet be used for base-load service which is driven mainly by coal; a key factor for a stable power to a city, town or industrial centre.

Solar produces no power at night and windmills only work when there is sufficient wind, while shutting down when the wind speed is too high. Thus, storage and re-distribution of extra power has become the key challenge. Only an advanced storage solution that can be applied on a global scale and is affordable, will allow for large-scale economic use of solar and wind power.  Coal fuelled power is steady, still relatively cheap and runs continuously 24 hours a day. Therefore, there might not be a way around coal fuels for many decades to come.

Key Forces Affecting Climate

The question we need to ask is, are we sure that this costly and drastic move away from coal just to reduce CO2 is urgently needed? What are the key forces that affect the Earth’s climate? Do higher CO2 levels not benefit plant growth and therefore are beneficial to our environment?

To answer this question, let us have a look at the Earth’s climate history over the past 400,000 years and the role of CO2. This contrasts with the typical 150-year time span depicted in global media and which is a major misdirect to garner public support.

The Fallacies of a Carbon Tax

To more rapidly reduce the use of fossil fuels, coal in particular; a $40/ton carbon tax was proposed and given serious consideration in Washington and similarly in other developed nations. This would affect mainly the use of coal and natural gas, oil, which make up 80% of the energy used in those countries. Based on the data available, this could be a big mistake which would force energy companies to close down otherwise productive coal fired power plants too early and increase the cost of power beyond what is economically viable.

Carbon Capture and Storage (CCS) has also been proposed to remove CO2 from coal power plant exhaust, transport it by pipeline and inject and store it in state approved deep underground sites. It is estimated that CCS could double the base cost of electricity production from coal and other fossil fuels. This would be highly prohibitive, and the costs were to fall first on the public who depend on stable energy sources and as explained above, it serves no useful purpose for controlling climate change.

NB: Another key point about CO2 is that all plant life thrives in high CO2 environments and farmers routinely pump CO2 into greenhouses to 1.500 ppm CO2, which greatly increases growth rate. It is the key nutrient for all plant life and when it drops below 150 ppm, very few plants and animals can survive. Plants also handle drought conditions better as CO2 rises as they expire less water in the process of absorbing CO2, their principal food source.

If CO2 in the air were to double, their water needs would drop by 50%. This will be an enormous boon for agriculture everywhere especially in arid regions around the world and would support feeding our growing population. The CO2 content in the air in our homes is also much higher than outside and is safe to breathe. CO2 is not a pollutant but a vital basic building block of all life on Earth, on land and in the oceans.

Conclusion

Reviewing the available data makes clear that no significant global warming from re-radiated solar energy can be created by an increase in CO2 above current levels for which coal gets most of the blame. CO2 is beneficial for our environment and is not a pollutant. It benefits plant life by increasing biomass and thus improves the basis for all human life on Earth.  So, producing and burning coal using state of the art technology can still be a sustainable development solution.

The present warm period has lasted over 8000 years longer than any of the three prior ones, giving the oceans a much longer time to warm up and release more CO2 into the atmosphere, which would also contribute to the current level of 400 ppm.  This means that coal does not carry all the blame as is stated by socio-environmentalist groups and politicians.

According to IEA Climatologists and Oceanographers tripling the present value of CO2  to 1.200 ppm will not result in ocean acidification, as has been proposed by the socio-environmental political movement (most notably Al Gore), and the pH would be about 7,8 which is still a satisfactory alkaline level in which ocean life can flourish – as it did over most of geological history when CO2 levels were several times higher than those today and when no coal was being mined or burned.

Proposed Future Energy Development Plan

Of course, coal and fossil fuel sources have a limited useful time span and technological advancement will ensure that we will no longer rely on coal, possibly latest by 2200, 180 years away. We need to develop a well-planned economic, environmental and social introduction of viable and affordable new energy sources. We need to gradually change our social infrastructures and improve the lives of people and futures of whole towns, cities and regions in every country around the world. And the reason for this is not the CO2 that coal used as a fuel emits, but because there will be more efficient and fewer polluting ways of producing energy developed in the next two centuries.

It is recognised that there are real issues related to coal and other fossil fuels that need to be addressed such as groundwater contamination and smog from release of smoke particles, and corrosive gases containing sulphur, as well as safer storage of fly ash from coal combustion. That’s where our resources should be spent, and our ingenuity used to improve existing conditions.

The billions of dollars to be spent or better wasted on CO2 mitigation could – if employed elsewhere – truly make a difference to provide cheap clean coal technology driven energy sources of base load magnitude and thus improve the health of our planet and our populations economic development.

Alan M. Clegg Pr.Eng Pr.CPM PMP FSAIMM FIOQ F.Inst.D

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Business

Grit divests from Letlole La Rona

22nd March 2023

Grit Services Limited, a member of the pan African real estate group, London Stock Exchange listed Grit Real Estate Income Group is divesting from Letlole La Rona Limited (LLR), a local real estate company established by government investment arm Botswana Development Corporation over a decade ago.

The Board of Directors of Letlole La Rona Limited this week announced in a statement to Unitholders that Grit Services Limited (‘Grit’) has informed them of its intention to exit its investment in the company.

Grit has been a material shareholder in LLR since 2019. On 07 March 2023, Grit sold 6 421 000 linked units, representing 2.29% of the Company’s total securities in issue, at a market value of BWP 22 537 710.

This trade follows previous sales of 6.79% in December 2022, as communicated to Unitholders on 10 January 2023, as well as a further sale of 4.78% (representing 13 347 068 linked units) on 24 February 2023 to various shareholders.

In aggregate, Grit has sold 13.9% shareholding in the Letlole La Rona between December 2022 and March 2023, resulting in current shareholding of 11.25% in the Company.

Letlole La Rona said in the statement that the exit process will take place in an orderly manner so as to maintain stability of the Company’s share price.

The statement explained that Grit’s sale of its entire shareholding in LLR is in line with its decision to exit investments where it does not have majority control, or where it has significant exposure to currencies other than US dollar, Euro or hard-currency-pegged revenue streams.

“Grit has announced similar decisions pertaining to certain of its hospitality assets in Mauritius recently. The Company would like to advise Unitholders that it remains focused on long-term value delivery to all stakeholders” LLR said

In July last year as part of their Go-to-Africa strategy Letlole La Rona acquired an initial 30% equity stake in Orbit Africa Logistics, with an option to increase this investment to 50%. OAL is a special purpose vehicle incorporated in Mauritius, owning an industrial asset in a prime industrial node in Nairobi, Kenya.

The co-investment was done alongside a wholly owned subsidiary of London listed Grit. The Orbit facility is situated on a prime industrial site on Mombasa Road, the principal route south of Nairobi center, serving the main industrial node, the port of Mombasa and the industrial town of Athi River and is strategically located 11 kilometers south of the international airport and 9.6 kilometers from the Inland Container Depot.

Grit shareholding in Letlole La Rona was seen as strategic for LLR, for the company to leverage on Grit’s already existing continental presence and expand its wings beyond Botswana borders as already delivered by Kenya transaction.

Media reports have however suggested that LLR and Grit have since late last year had fundamental disagreements on how to go about the Go-to-Africa strategy amongst other things, fuelled by alleged Botswana government interference on the affairs of LLR.

Government through LLR founding shareholder – Botswana Development Corporation has a controlling stake of around 40 percent in the company. Government is the sole shareholder of Botswana Development Corporation.

Letlole La Rona recently released their financial results for the six months ended December 2022, revenue increased by 4% to P50.2 million from P48.4 million in the prior comparative six months, whilst operating profit was up 8% to P36.5 million. Profit before tax of P49.7 million was reported, an increase of 8% on the prior comparative six months.

“We are encouraged by the strong results, notwithstanding a challenging economic environment. Our performance was mainly underpinned by annual lease escalations, our quality tenant base and below average market vacancy levels, especially in our warehouse portfolio,” Kamogelo Mowaneng, Letlole La Rona Chief Executive Officer commented.

LLR reported a weighted average lease expiry period of 3.3 years and escalation rates averaging 6.8% per annum for the period ended 31 December 2022.Its investment portfolio value increased by 14% year-on-year to close the period at P1.4 billion, mainly driven by the acquisition of a 30% stake in OAL in July 2022.

The Company also recorded a significant increase in other income, predominantly due to foreign exchange gains on the OAL shareholder loan. “We continue to explore pipeline opportunities locally, and regionally in line with our Go-to-Africa strategy and our interest remains on value-accretive investments,” Mowaneng said.

An interim distribution of 9.11 thebe per linked unit was declared on the 6th of February 2023 for the half-year period to 31 December 2022, comprising of a dividend of 0.05 thebe and debenture interest of 9.06 thebe per linked unit which will be paid to linked unit holders registered in the books of the Company at the close of business on 24 February 2023.

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Stargems Group establishes Training Center in BW

20th March 2023

Internationally-acclaimed diamond manufacturing company StarGems Group has established the Stargems Diamond Training Center which will be providing specialized training in diamond manufacturing and evaluation.

The Stargems Diamond Training Institute is located at the Stargems Group Botswana Unit in Gaborone.

“In accordance with the National Human Resource Development Strategy (NHRDS) which holds the principle that through education and skills development as well as the strategic alignment between national ambitions and individual capabilities, Botswana will become a prosperous, productive and innovative nation due to the quality and efficacy of its citizenry. The Training Centre will provide a range of modules in theory and in practice; from rough diamond evaluation to diamond grading and polishing for Batswana, at no cost for eight weeks. The internationally- recognized certificate offered in partnership with Harry Oppenheimer Diamond Training School presents invaluable opportunities for Batswana to access in the diamond industry locally and internationally. The initiative is an extension of our Corporate Social Investment to the community in which we operate,” said Vishal Shah, Stargems Group Managing Director, during the launch of the Stargems Diamond Training Center.

In order to participate in this rare opportunity, interested candidates are invited to submit a police clearance certificate and a BGCSE certificate only to the Stargems offices.  Students who excel in these programs will have the chance to be onboarded by the Stargems Group. This serves as motivation for them to go through this training with a high level of seriousness.

“Community empowerment is one of our CSR principles. We believe that businesses can only thrive when their communities are well taken of. We are hoping that our presence will be impactful to various communities and economies. In the six countries that we are operating in, we have contributed through dedicating 10% of our revenues during COVID-19 to facilitate education, donating to hospitals and also to NGOs committed to supporting women and children living with HIV. One key issue that we are targeting in Botswana is the rate of unemployment amongst the youth. We are looking forward to working closely with the government and other relevant authorities to curb unemployment,” said Shah.

Currently, Stargems Group has employed 117 Batswana and they are looking forward to growing the numbers to 500 as the company grows. Majority of the employees will be graduates from the Stargems Diamond Training Center. This initiation has been received with open arms by the general public and stakeholders. During the launch, the Minister of Minerals and Energy,  Honorable Lefoko Moagi, stated that the ministry fully endorses Stargems Diamond Training and will work closely with the Group to support and grow the initiative.

“As a ministry, we see this as an game changer that is aligned with one of the United Nations’ Six Priority Sustainable Development Goals, which is to Advance Opportunity and Impact for Diversity, Equity, and Inclusion (DEI). What Stargems Group is launching today will have a huge impact on the creation of employment in Botswana. An economy’s productivity rises as the number of educated workers increases as its skilled workmanship increases. It is not a secret that low skills perpetuate poverty and widen the inequality gap, therefore the development of skills has the potential to contribute significantly to structural transformation and economic growth by enhancing employability and helping the country become more competitive. We are grateful to see the emergence of industry players such as Stargems Group who have strived to create such opportunities that mitigate the negative effects of COVID-19 on the economy,” said the Minister of Minerals and Energy.

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Business

Food import bill slightly declines

20th March 2023

The latest figures released by Statistics Botswana this week shows that food import bill for Botswana slightly declined from around P1.1 billion in November 2022 to around P981 million in December during the same year.

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