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Morupule Mine expands to meet increasing coal demand

Botswana’s sole coal extraction mine, Morupule Colliery Mine will in no time commence yet another expansion to meet the demands of the growing local and regional coal market. This was revealed recently in Palapye by MCM officials to the Palapye leadership about the progress of the town’s largest private sector employer.


Morupule Colliery Mine which is wholly owned by the Mineral Development Company Botswana after buying out De Beers at the beginning of 2017 went thought the first phase of expansion (Morupule Coal Mine 2) in late 2012 to supply coal to Morupule B Power Station.
The Mine Chief Executive told members of the Palapye Local Authority that their expansion undertakings are influenced by the fact that Botswana currently imports power from neighboring countries. “We are driven by the country’s need for energy or power, Botswana needs to be self sufficient in power generation,” he said.


He told administrators who visited the mine that Botswana has potential to be self sufficient in power generation and can even export power to other countries thus boosting national revenue because of the sufficient coal at the Morupule deposits. Since Government‘s decision to transform the power industry and remodel Botswana Power Corporation (BPC) and transform it to only a distributer with the industry having independent power producers, the soon to start expansion of the Morupule Mine is directly aligned to the move.


According to Operations Readiness Manager of the proposed Morupule Coal Mine 3, Siyani Makwakwago, the mine will supply Unit 5 and 6 of the independent power producers with coal for Botswana to reach sufficient power. He revealed that the project was initiated in 2014 by the then Ministry of Minerals, Energy and Water Resources in order to resuscitate the country‘s power self sufficiency ambitions after the failure of Morupule B.

 

He noted that the government, after Morupule B project, introduced the Independent Power Producers (IPP) initiatives to relieve government from power production and distribution burden. “The primary reason was for the country to have security of power supply and also driven by the fact that Morupule B had not achieved that which we wanted , the plant has not been successfully in terms of getting us to where we wanted to go” Makwakwago said.


The Human Resource Manager of Morupule Coal Mine, Tom Mongale indicated that since MCM inception, the coal production has been growing over the years citing that after Morupule A and clients like BCL mine the MCM was expanded to meet coal demand at Morupule B. He noted that even after Morupule B clientele the mine has been supplying coal to South Africa and neighboring countries. He also revealed that the company has market demand spread across Southern African Region.


In addition, Makwakwago said even after the liquidation of the BCL, MCM production continued to grow because of regional demand and the Independent Power Producers initiative. Palapye District commissioner, Ernest Phiri could not hide his delight about the Mine expansion, observing that the expansion will complement government efforts and priorities of creating employment. “No one would dispute that this expansion will add more to existing jobs in Palapye and thus our town’s economy will grow and people’s lives will improve,” he said.


Lesedi Phuthego, Chairman of Palapye Sub Council explained that the mine expansion will unearth more value-chain businesses. “The mine expansion will open business opportunities and turn Palapye more commercial, we expert property business, rentals and SMMES to blossom from this undertaking,” he said. Morupule coal is consumed mainly by Botswana Power Corporation (BPC). The mine was recently awarded a contract to supply coal to Southern Africa’s leading cement supplier PPC Slurry in South Africa, making PPC the second largest MCM customer after BPC.


In June 2012, the Morupule Colliery Limited (MCL) 1 expansion project was commissioned. The project was launched in October 2010 at a cost of BWP1.7bn ($218m). It was undertaken to supply coal to the intended  600MW Morupule B power station built next to the Morupule A plant, which however turned out to be one of the country’s largest administrative scandal . Morupule Coal Mine's capacity has increased from 1 million ton per annum (mtpa) to 3.2mtpa following MCM 2 expansion.


Works expected to be carried out under the expansion project (MCM3) include the upgrade of existing conveyors, construction of an additional coal storage facility, and reconstruction of the existing crushing and screening plants. A second conveyor stream feeding the Independent Power Producer Unit 5 and 6 will also be constructed. In addition, a 750m concrete reservoir, new office buildings, pump station, workshops, control room, fire station, sewage plant and laboratory will be constructed.


Morupule is made of the Karoo Supergroup and the Palapye Group sandstones. It contains medium to low grade sub-bituminous coal. Coal is extracted from the 8m thick Morupule seam and the No.2 seam through conventional room and pillar mining methods. These operations are carried out at a depth of 85m and accessed through a single shaft. Continuous drill and blast methods were originally used after continuous miner operation commenced in 2004.


The number of continuous miners operating at the mine went up from one to four following the initial two expansions. The extracted ore undergoes primary crushing to reduce its size to 300mm and a secondary crushing which further reduces the size to less than 32mm.
The mine is equipped with a 1mt capacity coal washing plant, which has been operational since January 2008. The plant removes coal particles that are less than 15mm.

 

It uses a Dense Media Separation (DMS) process to separate high calorific value (CV) coal from low calorific value coal. The coal is fed to the plant which includes a slow rotating drum. High CV coal floats on the top and low CV coal settles at the bottom. Coal from secondary crushing and the washing plant is blended and fed into the conveyor system to feed the power station.


Morupule Colliery is an underground coal mine located in Palapye, Botswana. It is the country's only coal operating mine and has been in production since 1973. The mine is estimated to contain 70 billion tonnes of proven and probable reserves. After the expansion which is expected to commence after consultation with stakeholders is complete Palapye economy will boom to extreme heights.


The town located along the A1 road and housing the country’ second University BUIST will further become Botswana’s commercial hub. Currently construction of 2 multi-million Pula shopping malls is undergoing. The expansion of Morupule Mine which will output an open pit Morupule Coal Mine 3 will result in more direct employment as well as indirect employment and a boost to Small Medium Enterprises, thus increasing ordinary Palapye resident purchasing power and defeat the argument that the 2 shopping malls will only be used by A1 road users.

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Business

Botswana records first trade surplus since January

7th October 2021
Botswana-records-first-trade-surplus-

Botswana has recorded its first trade surplus for 2021 since the only one for the year in January.

The country’s exports for the month of July surpassed the value of imports, Statistics Botswana’s July International Merchandise Trade data reveals.

Released last Friday, the monthly trade digest reports a positive jump in the trade balance graph against the backdrop of a series of trade deficits in the preceding months since January this year.

According to the country’s significant data body, imports for the month were valued at P7.232 billion, reflecting a decline of 6.6 percent from the revised June 2021 value of P7.739 billion.

Total exports during the same month amounted to P7.605 billion, showing an increase of 6.1 percent over the revised June 2021 value of P7.170 billion.

A trade surplus of P373.2 million was recorded in July 2021. This follows a revised trade deficit of P568.7 million for June 2021.

For the total exports value of P7.605 billion, the Diamonds group accounted for 91.2 percent (P6.936 billion), followed by Machinery & Electrical Equipment and Salt & Soda Ash with 2.2 percent (P169.7 million) and 1.3 percent (P100.9 million) respectively.

Asia was the leading destination for Botswana exports, receiving 65.2 percent (P4.96 billion) of total exports during July 2021.

These exports mostly went to the UAE and India, having received 26.3 percent (P1. 99 billion) and 18.7 percent (P1.422 billion) of total exports, respectively. The top most exported commodity to the regional block was Diamonds.

Exports destined to the European Union amounted to P1.64 billion, accounting for 21.6 percent of total exports.

Belgium received almost all exports destined to the regional union, acquiring 21.5 percent (P1.6337 billion) of total exports during the reporting period.

The Diamonds group was the leading commodity group exported to the EU. The SACU region received exports valued at P790.7 million, representing 10.4 percent of total exports.

Diamonds and Salt & Soda Ash commodity groups accounted for 37.8 percent (P298.6 million) and 6.2 percent (P48.7 million) of total exports to the customs union.

South Africa received 9.8 percent (P745.0 million) of total exports during the month under review. The Diamonds group contributed 39.9 percent (P297.4 million) to all goods destined for the country.

 

In terms of imports, the SACU region contributed 62.7 percent (P4.534 billion) to total imports during July.

The topmost imported commodity groups from the SACU region were Fuel; Food, Beverages & Tobacco, and Machinery & Electrical Equipment with contributions of 33.3 percent (P1.510 billion), 17.4 percent (P789.4 million) and 12.7 percent (P576.7 million) to total imports from the region, respectively.

South Africa contributed 60.1 percent (P4.3497 billion) to total imports during July 2021.

Fuel accounted for 32.1 percent (P1.394 billion) of imports from that country. Food, Beverages & Tobacco contributed 17.7 percent (P772.0 million) to imports from South Africa.

Namibia contributed 2.0 percent (P141.1 million) to the overall imports during the period under review. Fuel was the main commodity imported from that country at 82.1 percent (P115.8 million).

During the months, imports representing 63.5 percent (P4.5904 billion) were transported into the country by Road.

Transportation of imports by Rail and Air accounted for 22.7 percent (P1.645 billion) and 13.8 percent (P996.2 million), respectively.

During the month, goods exported by Air amounted to P6, 999.2 million, accounting for 92.0 percent of total exports, while those leaving the country by Road were valued at P594.2 million (7.8 percent).

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Business

The 2021/2022 Stanford Seed Transformation Program Begins

7th October 2021

Founders from twenty companies have been accepted into the program from Botswana, Namibia, and South Africa

The 4th Cohort of the Stanford Seed Transformation Program – Southern Africa (STP), a collaboration between Stanford Graduate School of Business and De Beers Group commenced classes on 20 September 2021. According to Otsile Mabeo, Vice President Corporate Affairs, De Beers Global Sightholder Sales: “We are excited to confirm that 20 companies have been accepted into the 4th Seed Transformation Programme from Botswana, Namibia, and South Africa. The STP is an important part of the De Beers Group Building Forever sustainability strategy and demonstrates our commitment to the ‘Partnering for Thriving Communities’ pillar that aims at enhancing enterprise development in countries where we operate in the Southern African region”. Jeffrey Prickett, Global Director of Stanford Seed: “Business owners and their key management team members undertake a 12-month intensive leadership program that includes sessions on strategy and finance, business ethics, and design thinking, all taught by world-renowned Stanford faculty and local business practitioners. The program is exclusively for business owners and teams of for-profit companies or for-profit social enterprises with annual company revenues of US$300,000 – US$15million.” The programme will be delivered fully virtually to comply with COVID 19 protocols. Out of the 20 companies, 6 are from Botswana, 1 Namibia, and 13 South Africa. Since the partnership’s inception, De Beers Group and Stanford Seed have supported 74 companies, 89 founders/CEOs, and approximately 750 senior-level managers to undertake the program in Southern Africa.

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Minergy overcomes challenges – improves revenue and produces record breaking coal sales to date

7th October 2021
Minergy

Minergy, the coal mining and trading company with the Masama coal mine, this week released results for the year ended 30 June 2021. The company achieved revenue of P193 million (2020: P81 million) with significant improvement in sales volumes surpassing 415 000 tonnes sold for the year.

The performance was divided into two distinct periods with very different operating environments. The first eight-month period (July 2020 – February 2021), was negatively impacted by delayed funding, COVID-19 impacts and excessive rain; and the last four-month period (March – June 2021), was a more stable production environment moving toward nameplate capacity.

According to Minergy CEO, Morné du Plessis, production and sales initially recovered in July and August 2020 with the easing of COVID-19 restrictions and recoveries were further bolstered by the successful launch of the rail siding. Delays experienced in concluding the funding contributed to contractors limiting operations to manage arrears.

“However, the heavy rains we experienced from December 2020 through February 2021 flooded the mine pit making access difficult and impacting both production and sales. Fortunately, the rain subsided in March 2021, and we entered a more stable environment, with a positive impact on operations. Good recoveries in production and sales were experienced during the last four-month period of the year, with the mine moving closer toward a breakeven position.”

“Despite these operational constraints, including the effects of COVID-19 on logistics and manning of shifts, we expect to reach consistent nameplate capacity in the 2022 financial year,” du Plessis added.

FINANACIAL REVIEW

In addition to the revenue reported above, the company incurred costs of sales of P256 million (2020: P150 million) with operating costs of P23 million (2020: P31 million). This effectively resulted in an operating loss of P86 million (2020: P100 million). Finance costs of P51 million (2020: P17 million) were incurred, bringing the net loss before taxation to P136 million (2020: P117 million).

Du Plessis explains that the adverse conditions in the first eight-month period contributed to 86% of the gross loss, while the more stable four-month period alone contributed to 50% of total sales value, helping to decrease monthly gross losses, albeit below breakeven levels.

The company benefited from a strengthening in the South African Rand (“ZAR”) supporting higher back-on- mine sales prices.

“As announced, we’re pleased to have secured P125 million of additional convertible debt funding through the Minerals Development Company Botswana (Proprietary) Limited (“MDCB”). Minergy remains grateful for this support.”

He added that the first tranche of additional funding provided by the MDCB had been received in December 2020, which allowed Minergy to settle the majority of the contractor’s arrears and allowed their teams to be remobilised. The second and final tranche was paid post the financial year-end and will allow the business to reach nameplate capacity in the new financial year.”

COAL SALES AND MINE PERFORMANCE

Sales volumes increased by 110%, supported by increased sales in Botswana and internationally in South Africa and Namibia. Sales for June 2021 exceeded 56 000 tonnes, a record since the inception of the mine, with pricing increasing late in the financial year on the back of buoyant international prices and a strengthening ZAR.

Minergy also concluded a further 12-month off-take agreement to the existing off-take agreement, with a further agreement finalised post year end.

Overburden moved during the reporting period increased by 86% and extracted coal by 50%. Coal mined in June 2021 alone exceeded 100 000 tonnes. “This is a good performance considering the challenges faced such as sacrificing pre-stripping activities for a period to manage arrears, excessive rain and COVID-19,” du Plessis indicated.

“The wash plant was initially starved of coal due to the factors noted already. Despite this, overall plant throughput performance was 37% higher than 2020. Consistent output was supported by the completion of the Stage 2 rigid crushing section as well as the water saving dewatering screen with filter press contributing to a reduction in water usage of 60% per tonne of coal. A record throughput of more than 84 000 tonnes was achieved in March 2021 and this consistency has been maintained.”

OUTLOOK

According to du Plessis, the completion of Stage 4 of the Processing Plant, the rigid screening and stock handling section, remains a key optimisation step, which has associated benefits. “The completion was unfortunately delayed by a southern African wide shortage of structural steel but was commissioned post year-end.”

Minergy expects the positive momentum in international coal pricing for southern African coal to remain in place. Higher coal prices have resulted in coal being withdrawn from the inland market in favour of lucrative international markets. Du Plessis added that the regional market is currently under- supplied with sized coal, which supports higher pricing and new customer opportunities for Minergy.

“Our objective for the 2022 financial year is to achieve nameplate capacity by completing final ramp-up of operations. This will enable the company to generate sufficient cash flow to stabilise the business at breakeven or better. The bullish coal market is also providing support. COVID-19 will still be closely managed, and we look forward to the lifting of the State of Emergency, as announced, and trust that vaccination programmes will achieve herd immunity in Botswana during the next 12 months.”

Du Plessis expressed his excitement on prospects stating that, “The Eskom due diligence process is continuing, and we are hopeful of receiving feedback during the current financial year. In addition to this opportunity, Minergy is also investigating participation in the request by the Government of Botswana to provide a 300MW power station for which the company has been shortlisted.”

The approved process to issue shares for cash is showing positive leads and he concluded by saying that a listing in London is still being investigated.

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