Experts urge Govít to develop coal industry
Leading minds in the coal industry have reiterated that robust steps must be taken to develop a world class coal industry that can attract global capital and major investment players in turn birthing rigorous industrialization in Botswana. This they say can help in job creation and further diversification of the economy.
This emerged during the Botswana Resource Sector Conference held at the GICC this week. Latest prospected reserves indicate that Botswana sits on over 200 billion tonnes of coal deposits of which contain different segments of grade value as per economically minable mineralization. Already, a number of companies, mostly of Australian origin are on the ground exploring the economic mineralization of the coal deposits.
Andre Boje, Chief Executive Officer of Minergy, delivered a mouthwatering piece on the development of Botswana’s Coal Industry. Boje said though Coal was viewed as a non environmental source of energy its industrial value cannot go unnoticed, adding that it could be mined with environmental precautions in place. Boje said major mining companies in the world were making record profits from their coal divisions. He further cited that the International price of seaborne thermal coal was at levels last seen in 2007.
He is of the view that with regional and international shortages, Botswana with its abundant untapped reserves was better placed to emerge as a major player in the Global Coal industry. “Botswana coal is high quality and economical to mine,” he said. He also noted that the coal industry has acknowledged the impact of fossil fuels on the environment and have worked for decades on clean coal technology. According to Boje Carbon Capture and Storage (CCS), High Efficiency Low Emission (HELE) was some of the mining and coal utilization models that are regarded environmentally friendly. “Modern coal fired power plants using these technologies have reduced emissions to levels comparable to gas fired powered plants,” he said.
The International Energy Agency reported in their 2016 World Energy Outlook report that coal will remain the largest single source of electricity generation through to 2040. Boje highlighted that coal still accounted for up 41% of global electricity generation and 29% of primary energy demand.
“There are 1,600 coal fired power plants either being planned or under construction in 62 countries which will, without older plant decommissioning, expand the world’s coal-fired capacity by 43%,” he said, adding that coal will continue to play a major role in delivering energy access and security long into the future.
“All this aforementioned factors and facts about the global coal stands present a lucrative opportunity for Botswana which sits on top of one of the world’s largest untapped reserve,” he said. The Minergy Botswana Chief also added that the abundance of coal presented lucrative opportunity for Botswana to engage more independent power producers and output excess power for regional and continental export hence generating revenue and creating much needed employment. “The coal here is economical to mine. Government just needs to reduce bottlenecks and wipe off cumbersome processes which sometimes frustrate our capital mobilization efforts in the stock markets,” he said.
Boje also noted that currently 620 million Africans rely on firewood, kerosene and charcoal for cooking, heating and lighting. “600,000 Africans, mainly women and children, die prematurely annually due to illnesses caused by this.” He further added that Africa was facing alarming rates of deforestation due to firewood extraction citing that Zambia alone loses 250,000 hectares annually. “The situation in Zambia present yet another massive business opportunity for our coal –independent power producers, creating even more revenue on direct uptake, royalties and taxation,” he said.
It also emerged that traditional and long time regional supplier of electricity, South African Power giant, Eskom, was reaching coal cliff with no green fields projects on the drawing board, further presenting a major opportunity for Botswana based power producers or direct export of Coal to South Africa.
Another Coal miner, Shumba Energy, represented by its Managing Director Mashale Phumaphi revealed that significant deposits of the Botswana Coal reserves were high grade for industrial purposes apart from power production. He noted that the Coal –Liquefaction proposition can materialize and create thousands of jobs for Batswana, boost government revenue through taxation and royalties. “We are talking about a setup that will create thousands of jobs for skilled and semi skilled personnel in high volumes for this country,” he said.
Phumaphi added that other value chain business opportunities would emerge in the process wherever the plant would be set. Botswana Government has since embarked through its fuel commercial entity, Botswana Oil Limited, on a robust investment wooing quest to attract capital for the multibillion pula plant. Government said the project would be too steep to fund from public treasury.
Phumaphi also added that Botswana Coal can birth various industrial processing businesses like production of petroleum reactants, uptake on steel production, cement manufacturing in turn creating more jobs from these various industries. Government was urged to invest in the logistical infrastructure, moves to remove regulatory bottlenecks and accelerate approval timeframes. It was also underscored that review of the coal industry tax structure to negate the logistical disadvantage to RSA coal exports was long overdue.
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Grit divests from Letlole La Rona
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 (‚ÄėGrit‚Äô) 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‚Äôs 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‚Äôs share price.
The statement explained that Grit‚Äôs 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.
‚ÄúGrit 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‚ÄĚ 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‚Äôs 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.
‚ÄúWe 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,‚ÄĚ 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. ‚ÄúWe continue to explore pipeline opportunities locally, and regionally in line with our Go-to-Africa strategy and our interest remains on value-accretive investments,‚ÄĚ 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.
Stargems Group establishes Training Center in BW
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.
‚ÄúIn 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,‚ÄĚ 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.
‚ÄúCommunity 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,‚ÄĚ 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.
‚ÄúAs 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‚Äôs 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,‚ÄĚ said the Minister of Minerals and Energy.
Food import bill slightly declines
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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