Selibe Phikwe could house Botswana Oil Coal Liquefaction Plant
Selibe Phikwe might be considered for the multibillion pula Coal Liquefaction Project (CLP) by Botswana Oil Limited, Acting Minister in the Ministry of Mineral Resources, Green Technology and Energy Security, Nonofo Molefhi had told Parliament.
Minister Molefhi was addressing a question tabled by Member of Parliament for Selibe Phikwe West, Dithapelo Keorapetse, who wanted parliament to be updated on the progress of the much anticipated coal-to-liquids project, what it entails, the current stage of project implementation and timelines as well as projected employment opportunities to be created by the billion dollar petroleum end product undertaking.
The youthful Selibe Phikwe lawmaker also wanted to know the prospects of Selibe Phikwe being considered for housing the plant as part of the town’s resuscitation and economic recovery undertakings after the sudden demise of BCL mine late last year, which resulted in thousand job losses.
In response, Molefhi who was standing in for Minister Sadique Kebonang, who was reported to be abroad on BCL acquisition matters, told parliament that the Ministry of was currently going through proposals from interested petroleum companies from the private sector who put forth expressions to develop a Coal-to-Liquids (CTL) Plant. The plant is expected to convert Botswana ‘s abundant tones of coal to petroleum fluids.
“Mr Speaker, my Ministry is inundated with requests and proposals from the private sector to develop Coal to Liquids plant (CTL) in Botswana together with Botswana Oil Limited (BOL)” Molefhi said, explaining that their interest was to have Botswana Oil Limited as the anchor customer of their petroleum products.
“As you are aware, Botswana imports all her petroleum requirements (approximately 1.2 billion liters per year) from the Republic of South Africa with small quantities coming from Namibia and Mozambique” he noted. It is believed that the development of the CTL plant will go a long way in ensuring that Botswana becomes fuel self-sufficient with further potential of being a net exporter of petroleum products in Southern Africa and the African region.
Reports from parliament indicate that the coal to liquids projects require substantial investment; it is estimated that the plant which would meet Botswana’s current annual demand of 1.2 billion of petroleum products could costs between US $ 3 – 4 billion (P40 billion) over a four (4) to five (5) year construction period.
According to Minister Molefhi although the Government recognizes the importance of the project as well as its potential turn around to economic diversification efforts, the Selibe Phikwe East Lawmaker observes that it will however be very expensive for the state to develop the plant alone. “Though this would replace the current importation of approximately one billion liters of petroleum products annually, the expenditure will be too high for Government under the current financial pressures to bear” he said.
Molefhi also added that currently government through the Ministry of Mineral Resources, Green Technology and Energy Security is readying itself for assessment processes in which it will screen and come up with qualified private companies to partner with Botswana Oil Limited: “As things stand, my Ministry has developed a Pre-Qualification criteria which will be used to select companies that can be facilitated in order to realize the project. The Pre-Qualification Notice will be in the media platforms soon” He said.
The Acting Minister noted that the project will be a private sector led investment, with Government’s role limited to being that of facilitator. “Botswana Oil Limited as a company mandated to ensure Botswana‘s petroleum self sufficiency is engaging experts in the field to provide Technical Advisory Services to Botswana Government.” He revealed that currently the project was at concept stage with no detailed studies conducted as yet.
“The project schedule and timelines will become realistic once consultants are on the ground and that of course is being planned for end of this month, the private sector also continues to explore avenues of implementing the project’” Said Molefhi.
PROSPECTS OF THE CTL PLANT BEING SET UP IN PHIKWE
Following the placing of Bamangwato Concessions Limited (BCL) under provisional liquidation, Botswana government has devised economic recovery strategies to revitalize the town and the entire Region which used to be lively before the demise of its economic engine, BCL mine.
Selibe Phikwe West Member of Parliament, Dithapelo Keorapetse wants government and Botswana Oil to facilitate the Coal-to Liquids plant towards being built in Phikwe, a project he explains will make a permanent economic turnaround in the town and the entire SPEDU region. When posing a supplementary question after Minister Molefhi‘s description of the project in parliament last week “Thank you Honourable Minister.
I just wanted to find out from you, in light of what you have said about the cost of the project, whether you are working with any multilateral or bilateral development partners in that regard? Also concerning Selibe Phikwe, don’t you think that this is a project in which Selibe Phikwe must be given priority given the recent placement of BCL under provisional liquidation?”
In response however, Minister Molefhi, who is also an MP for Selebi Phikwe East, noted that the location of the project will depend largely on the feasibility studies by consultants and potential investors. He added that the availability of resources and accessibility of raw materials being coal, will influence the decision of plant location.
“The location of the CTL plant will be greatly influenced by the availability of raw materials, the distance from the plant will be critical, of course that will also take into consideration lowering of costs of production to ensure that they are manageable. My Ministry through Botswana Oil Company will work closely with the private sector and other sectors of Government to ensure that the project addresses the current challenges and facilitate the investment by the private sector” he explained.
Molefhi stipulated that considering the situation in Selibe Phikwe after closure of BCL mine, the shortlisted investors will have the discretion to decide on the location of the plant, “The consultants will manage the guideline and the framework which has been designed for the selection and the short listing of potential investors.
The decision on the location of the plant is a decision to be made by the investors. Taking into account what is also available for Selibe Phikwe as incentive packages, Government would soon be announcing the extent of packages and that is designed to motivate people to consider Selibe Phikwe as an investment zone”.
Since location of the project will also be influenced by the cost benefit analysis, if it is found that locating project in Selibe Phikwe away from where the abundance of the resources are (Palapye), can be accommodated, at that point a decision would be made by the investors and of course they will take into consideration the incentive packages which Government would extend or has decided to extend to Selibe Phikwe as a Special Economic Zone
When speaking to WeekendPost this past week, Keorapetse added that since structures and mechanism is already in place, which transported coal from Morupule to BCL mine, the same infrastructure can be sourced and used, if the plant is in Selibe Phikwe.
“Since government is somewhat constrained to immediately start the project because of unavailability of resources.
The state should amenably engage multilateral and bilateral development partners like it did with projects such as Kazungula Bridge, for instance, for sourcing out resources to immediately start this project and give Selibe Phikwe a priority, especially given that the primary raw material for the project is coal and this coal was used by BCL from Morupule Colliery and it can just be a continuation of the usage of that coal’’ he said
The Acting Minister who is also in this regard Member of Parliament for Selibe Phikwe East told this publication that consultations have been extensive in terms of looking at the scope of the project, its potential and cost of investment and therefore government will be putting up the project to public tender.
“We will be doing so, so that we are able to select the experts who will provide Government with the appropriate advice. On the basis of that, we would then progress the project to the next level where the selected companies would then determine the extent of the investment, at this point in time, it is difficult to give an estimated number of people the project can employ. Like I said, we are still at concept design stage,” Molefhi explained.
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.