This week the International Air Transport Association (IATA) has forecasted that the impact of the coronavirus could result in passenger airlines losing up to P1.3 trillion in revenues this year while listed airline prices have fallen on average of nearly 25 percent since the outbreak of the deadly virus last year.
Coronavirus (COVID-19) outbreak recorded the first case in China last year November, it has since spread across the globe, causing fatalities, fear and economic lows. China is the world’s largest exporter of goods since 2009, its coronavirus deaths have this week exceeded 3000 as the virus continues to spread across the globe. The world is anxious that the almost dependent second biggest economy will also export the coronavirus.
Coronavirus may be shipped or transported by airlines to Botswana. When the World Health Organization (WHO) defines contact with an infected person as being seated within two rows of one another, this could explain how coronavirus spreads inside an airline. National flag carrier Air Botswana just like other airlines across the globe is scanning passengers for coronavirus at airports. “Considering that this health crisis is now of global magnitude and some events are either being cancelled or differed, some business impact is to be expected,” Air Botswana Public Relations and Communications Manager Kefilwe Kebafetotse told BusinessPost this week.
Kebafetotse however explained that at this time it would not be clear to discern the impact of coronavirus on the national airline. She said as this is generally a low airline activity period (known as low season), it would be to establish a clear discernible pattern and determine how much could be attributed to this global health crisis. “This is a low season period which makes impact measurement difficult, advance bookings seem to be not significantly affected from the norm over the next 90 days. The situation over the peak travel period (June to August) will largely depend on the handling of the crisis over the next 30 days or so. Currently our level of operation is comparable to the same period in prior years,” said Kebafetotse.
On Thursday the first case of coronavirus was recorded in South Africa, Botswana’s neighbour and main importer of goods. Between South Africa and Botswana, there are 79 direct flights between Gaborone and Johannesburg covering a distance of 291 kilometres in around 56 minutes. Batswana on social media who usually travel to Botswana by road or air were worried that their neighbour may just sneeze the virus on them. But the problem comes from China where the virus has established itself as incurable and deadly. According to statistics, Botswana exports from China was P570 million during 2018, according to the United Nations COMTRADE database on international trade.
Air Botswana spokesperson Kebafetotse said passengers will note modifications to their boarding procedures so as to accommodate coronavirus control precautionary measures. She said the travelling community and the public are also urged to be vigilant and take the necessary precautions, as advised by health authorities. An eye observation at Sir Seretse Khama International Airport shows a routine check when one jumps off an aircraft, followed by a coronavirus form then few detecting machines and sterilization of hands. But this is not enough for most Batswana who have taken their panic to social media networks.
The ever calm and well-groomed Air Botswana hostess clad in blue dresses always wearing faces oozing with confidence have shown their typical class, assuring safety of passengers and that it is business as usual. However during an observation few days ago when an aircraft landed at the Sir Seretse Khama International Airport, the usual on duty classy countenance always held by air hostesses escaped one face as anxiety took over when she remarked, “where are all these Chinese coming from…I am scared, are we really safe from coronavirus.” She said these words in vernacular as she watched few face masked passengers appearing to originate from the coronavirus infested regions, holding red and black passports engraved in what seemed to be Mandarin letters.
“The approach to handling and managing CONVID-19 in this county is not limited to AirBotswana, there are other two (2) key stakeholders who are playing even bigger roles namely; Ministry of Health – Public Health Authorities and Civil Aviation Authority of Botswana (CAAB). Air Botswana on a regular basis engages with these stakeholders to monitor developments related to the CONVID-19,” reminded Kebafetotse.
She said the Civil Aviation Authority has issued guidelines on Communicable Disease Response Procedure, which the Airline adheres to. “Additional steps to provide assurances emanate from our Operations Manual on Managing Communicable Diseases. You may have noticed that Ministry of Health, through Health Port provide temperature scans on arrival and departure,” Kebafetotse told BusinessPost.
At the beginning of last month Botswana and China agreed to limit travel by citizens of both countries as part of measures to reduce the spread of the deadly coronavirus. That is when Chinese Ambassador to Botswana Zhao Yanbo said those who recently arrived from China are advised to self-house at least 14 days from time of arrival. He said about 150 Chinese who have been to China have volunteered to self-contain.
Minister of Health and Wellness Lemogang Kwape had last month assured Parliament that measures are put in place to ensure the disease does not spread into the country. At the beginning of last month WHO Representative Dr Josephine Namboze and Kwape toured key facilities including the Sir Seretse Khama International Airport in the capital Gaborone, the isolation facility in Block 8 and Sir Ketumile Masire Teaching Hospital, in case of increasing numbers of people needing isolation and management. It is reported that Dr Namboze and Minister Kwape had also toured the busiest land border post between Botswana and South Africa to monitor health facilities and staff. That is the time when the country had 5 suspected cases of coronavirus and until now no confirmed case has been recorded.
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).
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.
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.
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.”
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.