Experts urge Gov’t 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.
Business
LLR transforms from Company to Group reporting
Botswana Stock Exchange listed diversified real estate company, Letlole La Rona Limited (“LLR” or “the Company” or “the Group”), posted its first set of group financial statements which comprise the Company and Group consolidated accounts, which show strong financial performance for the six months ended 31 December 2023, with improvements across all key metrics.
The Company commenced the financial year with the appointment of a Deputy Chairperson, Mr Mooketsi Maphane, in order to bolster its governance and enhance leadership continuity through the development of a Board and Executive Management Succession Plan.
At operational level, LLR increased its shareholding in Railpark Mall from 32.79% to 57.79% and proudly took over the management of this prime asset.
The CEO of LLR, Ms Kamogelo Mowaneng commented “During the period under review, our portfolio continued to perform strongly, with improvements across all key metrics as a result of our ongoing focus on portfolio growth and optimisation.
“We are pleased to report a successful first half of the 2024 financial year, where we managed to not only grow the portfolio through strategic acquisitions and value accretive refurbishments but also recycled capital through the disposal of Moedi House as well as the ongoing sale of section titles at Red Square Apartments. The acquisition of an additional 25% stake in JTTM Properties significantly uplifted the value of our investment portfolio to P2.0 billion at a Group level. Our investment portfolio was further differentiated by the quality of our tenant base, as demonstrated by above market occupancy levels of 99.15% and strong collections of above 100% for the period”.
The growth in contractual revenue of 9% from the prior year’s P48.0 million to the current year P52.2 million, increased income from Railpark Mall, coupled with high collection rates, has enabled the company to declare a distribution of 9.11 thebe per linked unit, which is in line with the prior year.
In line with its strategic pillars of ‘Streamlined and Expanded Botswana Portfolio’ as well as ‘Quality African Assets’, the Group continuously monitors the performance of its investments to ensure that they meet the targeted returns.
“The Group continues to explore yield accretive opportunities for balance sheet growth and funding options that can be deployed to finance that growth” further commented the CEO of LLR Ms Kamogelo Mowaneng.
Ms Mowaneng further thanked the Group’s stakeholders for their continued support and stated that they look forward to unlocking further value in the Group.
Business
Botswana’s Electricity Generation Dips 26.4%
The Botswana Power Corporation (BPC) has reported a significant decrease in electricity generation for the fourth quarter of 2023, with output plummeting by 26.4%. This decline is primarily attributed to operational difficulties at the Morupule B power plant, as per the latest Botswana Index of Electricity Generation (IEG) released recently.
Local electricity production saw a drastic reduction, falling from 889,535 MWH in the third quarter of 2023 to 654,312 MWH in the period under review. This substantial decrease is largely due to the operational challenges at the Morupule B power plant. Consequently, the need for imported electricity surged by 35.6% (136,243 MWH) from 382,426 MWH in the third quarter to 518,669 MWH in the fourth quarter. This increase was necessitated by the need to compensate for the shortfall in locally generated electricity.
Zambia Electricity Supply Corporation Limited (ZESCO) was the principal supplier of imported electricity, accounting for 43.1% of total electricity imports during the fourth quarter of 2023. Eskom followed with 21.8%, while the remaining 12.1, 10.3, 8.6, and 4.2% were sourced from Electricidade de Mozambique (EDM), Southern African Power Pool (SAPP), Nampower, and Cross-border electricity markets, respectively. Cross-border electricity markets involve the supply of electricity to towns and villages along the border from neighboring countries such as Namibia and Zambia.
Distributed electricity exhibited a decrease of 7.8% (98,980 MWH), dropping from 1,271,961 MWH in the third quarter of 2023 to 1,172,981 MWH in the review quarter.
Electricity generated locally contributed 55.8% to the electricity distributed during the fourth quarter of 2023, a decrease from the 74.5% contribution in the same quarter of the previous year. This signifies a decrease of 18.7 percentage points. The quarter-on-quarter comparison shows that the contribution of locally generated electricity to the distributed electricity fell by 14.2 percentage points, from 69.9% in the third quarter of 2023 to 55.8% in the fourth quarter. The Morupule A and B power stations accounted for 90.4% of the electricity generated during the fourth quarter of 2023, while Matshelagabedi and Orapa emergency power plants contributed the remaining 5.9 and 3.7% respectively.
The year-on-year analysis reveals some improvement in local electricity generation. The year-on-year perspective shows that the amount of distributed electricity increased by 8.2% (88,781 MWH), from 1,084,200 MWH in the fourth quarter of 2022 to 1,172,981 MWH in the current quarter. The trend of the Index of Electricity Generation from the first quarter of 2013 to the fourth quarter of 2023 indicates an improvement in local electricity generation, despite fluctuations.
The year-on-year analysis also reveals a downward trend in the physical volume of imported electricity. The trend in the physical volume of imported electricity from the first quarter of 2013 to the fourth quarter of 2023 shows a downward trend, indicating the country’s continued effort to generate adequate electricity to meet domestic demand, has led to the decreased reliance on electricity imports.
In response to the need to increase local generation and reduce power imports, the government has initiated a new National Energy Policy. This policy is aimed at guiding the management and development of Botswana’s energy sector and encouraging investment in new and renewable energy. In the policy document, Minister of Mineral Resources, Green Technology and Energy Security Lefoko Moagi stated that the policy aims to transform Botswana from being a net energy importer to a self-sufficient nation with surplus energy for export into the region. Moagi expressed confidence that Botswana has the potential to achieve self-sufficiency in electric power supply, given the country’s readily available energy resources such as coal and renewable sources.
Business
MMG acquires Khoemacau in a transaction valued at P23Bn
MMG Limited, the Hong Kong-based mining company specializing in base metals, has successfully concluded the acquisition of Khoemacau Copper Mine, a state-of-the-art, world-class copper asset nestled in the northwest of Botswana.
On Monday, MMG announced that the acquisition of Khoemacau Mine in Botswana was finalized on 22nd March 2024. “This acquisition enriches the company’s portfolio with a top-tier, transformative growth project and signifies a monumental milestone in the Company’s journey,” MMG communicated in an official statement published on the Hong Kong Stock Exchange.
Upon completion of the acquisition, MMG remitted to the Sellers an Aggregate Consideration of approximately US$1,734,657,000 (over P23 billion), a sum subject to potential adjustments post-Completion.
In addition to the Aggregate Consideration, MMG, in accordance with the Agreement, advanced an aggregate amount of approximately US$348,580,000 (over P4.5 billion) as the Aggregate Debt Settlement Amount, to settle certain debt balances of the Target Group (Cuprous Capital/Khoemacau).
On November 21, 2023, Khoemacau announced that the shareholders of its parent company [Cuprous Capital] had agreed to sell 100% of their interests to MMG Limited.
MMG is a global resources company that mines, explores, and develops copper and other base metals projects on four continents. The company is headquartered in Melbourne, Australia, and has a significant shareholder, China Minmetals Corporation, which is China’s largest metals and minerals group owned by the Government of the People’s Republic of China.
On December 22, 2023, Khoemacau Copper Mining (Pty) Ltd received the approval from the Minister of Minerals and Energy of Botswana regarding the transfer of a controlling interest in the Project Licenses and Prospecting Licenses associated with the Khoemacau Copper Mine, a result of the Acquisition.
The Botswana Competition & Consumer Authority (CCA) on January 29, 2024, notified the market that it had given its approval for the takeover of Khoemacau Copper Mining by MMG Limited.
On January 29, 2024, the CCA issued a merger decision to the market, stating that after conducting all necessary assessments, it was ready to proceed.
The Competition Authority affirmed that the structure of the relevant market would not significantly change upon implementation of the proposed merger as the proposed transaction is not likely to result in a substantial lessening of competition, nor endanger the continuity of service in the market of mining of copper and silver ores and the production, and sale or supply of copper concentrate in Botswana.
Furthermore, the CCA stated that the proposed merger would not have any negative impact on public interest matters in Botswana as per the provisions of section 52(2) of the Competition Act 2018.
Earlier this month, Minister of Minerals & Energy, Lefoko Maxwell Moagi, informed parliament that his Ministry was endorsing the Khoemacau acquisition by MMG Limited. He noted that not only was the company acquiring the existing operation but also committing to an expansion program that would cost over $700 million to double production, create more jobs for Batswana, and increase taxes and royalties paid to the Government.