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Minergy scales down operation as SA customers invoke force majeure

Minergy Limited has curtailed operations at its Masama coal mine, Botswana’s only private coal mine in operation. This was revealed by Minergy this week as catastrophic effects of coronavirus on the supply & demand of commodities worldwide intensifies.

A statement from the BSEL listed coal outfit say as with all industry in Botswana and the neighboring countries, business has and will be adversely affected by COVID-19. “The last week of March 2020 and the entire month of April 2020 bear the brunt of industry and country-wide lock down regulations,” reads statement from the company released on Monday.

In Botswana, mining services are gazetted as essential services which allow for the continuation of Minergy’s coal mining activities. However, Minergy says more than 90% of its target market, in volume terms, is in South Africa.

In addition, industries within the target market are classified as non-essential services in South Africa and consequently, have by law, been shut down since 27 March 2020. To this end Minergy has received formal confirmation from its contract customers that the lockdown has led them to invoke Force Majeure.

That is to say the COVID-19 situation is classified as an unforeseeable circumstance that prevents fulfillment of contractual obligations. This has required Minergy, from an operational perspective, to scale down operations considerably.

Minergy Chief Executive Officer, Morné du Plessis said in the statement that where sales are permitted to South Africa and Namibian essential services customers, primarily in the food processing and energy generation sectors, product stockpiles at the end of March 2020 are sufficient and are being utilized for this supply.

“Limited material handling activities are taking place, to allow for product loading and weighbridge operations to continue on a scaled-down basis,” he said.

Permission was granted to Minergy by the Department of Mines to undertake certain mining, plant and maintenance activities. These activities ceased on 17 April 2020 due to the extended lock down in South Africa and as a result the beneficiation plant and mining operations have stopped. Only necessary health, safety and maintenance activities, as required, are performed.

Morné du Plessis noted that exposed, but unblasted coal stocks are adequate to restart mining operations in May 2020 without any delays, should lockdown rules in both South Africa and Botswana be relaxed.

“The effect on May 2020 volumes and results are dependent on how quickly customers can restart and take delivery, which is in-turn dependent on border operations too,” he said. Non-critical staff has been asked to stay at home. Other critical staff, where required are working from home.

The company says permitting process, for legal and valid travel to and from the mine, is administratively burdensome but respected and complied with as a critical step in ensuring limited spread and control of the virus in Botswana.

Currently all Minergy employees are on full pay. Morné du Plessis says balancing the cash flow and cost implications on a start-up business in the ramp-up phase, with minimal sales and cash generation opportunity, is extremely challenging.

Minergy recently reported that it received funding to alleviate historical working capital shortages and that future estimated cash flows were subsequently considered adequate to sustain the company. On Monday Morné du Plessis however revealed that this is no longer the case with the company losing a minimum of one month’s sales while still having to carry fixed cost burdens.

To this end, Minergy has been liaising with its government-linked funders and has requested additional funding and assistance during this period. According to the CEO, initial discussions reflect goodwill. He said that discussions are in progress with major suppliers, who are also battling the impact of COVID-19.

“During this period management is extensively managing cash preservation and cost minimization which includes proportional salary cuts and/or deferrals.”On a positive noted Minergy revealed that that development of the rail siding, financed by BotRail, is progressing, with the necessary work permissions in place.

According to Minergy CEO, preparations are such that it is expected that the first loading of trains will take place in May 2020, bound for South Africa and provided lockdown is not extended.


Investors inject capital into Tsodilo Resources Company

25th January 2023

Local diamond and metal exploration company Tsodilo Resources Limited has negotiated a non-brokered private placement of 2,200, 914 units of the company at a price per unit of 0.20 US Dollars, which will provide gross proceeds to the company in the amount of C$440, 188. 20.

According to a statement from the group, proceeds from the private placement will be used for the betterment of the Xaudum iron formation project in Botswana and general corporate purposes.

The statement says every unit of the company will consist of a common share in the capital of the company and one Common Share purchase warrant of the company.

Each warrant will enable a holder to make a single purchase for the period of 24 months at an amount of $0.20. As per regularity requirements, the group indicates that the common shares and warrants will be subject to a four month plus a day hold period from date of closure.

Tsodilo is exempt from the formal valuation and minority shareholder approval requirements. This is for the reason that the fair market value of the private placement, insofar as it involves the director, is not more than 25% of the company’s market capitalization.

Tsodilo Resources Limited is an international diamond and metals exploration company engaged in the search for economic diamond and metal deposits at its Bosoto Limited and Gcwihaba Resources projects in Botswana.  The company has a 100% stake in Bosoto which holds the BK16 kimberlite project in the Orapa Kimberlite Field (OKF) in Botswana.

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Global CEOs Back Plan to Unlock $3.4 Trillion Potential of Africa Free Trade Area

23rd January 2023

African heads of state and global CEOs at the World Economic Forum Annual Meeting backed the launch of the first of its kind report on how public-private partnerships can support the implementation of the African Continental Free Trade Area (AfCFTA).

AfCFTA: A New Era for Global Business and Investment in Africa outlines high-potential sectors, initiatives to support business and investment, operational tools to facilitate the AfCFTA, and illustrative examples from successful businesses in Africa to guide businesses in entering and expanding in this area.

The report aims to provide a pathway for global businesses and investors to understand the biggest trends, opportunities and strategies to successfully invest and achieve high returns in Africa, developing local, sub-regional and continental value chains and accelerating industrialization, all of which go hand in hand with the success of the AfCFTA.

The AfCFTA is the largest free trade area in the world, by area and number of participating countries. Once fully implemented, it will be the fifth-largest economy in the world, with the potential to have a combined GDP of more than $3.4 trillion. Conceived in 2018, it now has 54 national economies in Africa, could attract billions in foreign investment, and boost overseas exports by a third, double intra-continental trade, raise incomes by 8% and lift 50 million people out of poverty.

To ease the pain of transition to its new single market, Africa has learned from trade liberalization in North America and Europe. “Our wide range of partners and experience can help anticipate and mitigate potential disruptions in business and production dynamics,” said Børge Brende, President, and World Economic Forum. “The Forum’s initiatives will help to ease physical, capital and digital flows in Africa through stakeholder collaboration, private-public collaboration and information-sharing.”

Given the continent’s historically low foreign direct investment relative to other regions, the report highlights the sense of excitement as the AfCFTA lowers or removes barriers to trade and competitiveness. “The promising gains from an integrated African market should be a signal to investors around the world that the continent is ripe for business creation, integration and expansion,” said Chido Munyati, Head of Regional Agenda, Africa, World Economic Forum.

The report focuses on four key sectors that have a combined worth of $130 billion and represent high-potential opportunities for companies looking to invest in Africa: automotive; agriculture and agroprocessing; pharmaceuticals; and transport and logistics.

“Macro trends in the four key sectors and across Africa’s growth potential reveal tremendous opportunities for business expansion as population, income and connectivity are on the rise,” said Wamkele Mene, Secretary-General, AfCFTA Secretariat.

“These projections reveal an unprecedented opportunity for local and global businesses to invest in African countries and play a vital role in the development of crucial local and regional value chains on the continent,” said Landry Signé, Executive Director and Professor, Thunderbird School of Global Management and Co-Chair, World Economic Forum Regional Action Group for Africa.

The Forum is actively working towards implementing trade and investment tools through initiatives, such as Friends of the Africa Continental Free Trade Area, to align with the negotiation process of the AfCFTA. It identifies areas where public-private collaboration can help reduce barriers and facilitate investment from international firms.

About the World Economic Forum Annual Meeting 2023

The World Economic Forum Annual Meeting 2023 convenes the world’s foremost leaders under the theme, Cooperation in a Fragmented World. It calls on world leaders to address immediate economic, energy and food crises while laying the groundwork for a more sustainable, resilient world. For further information,

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Electricity generation down 15.8%

9th January 2023

Electricity generation in Botswana during the third quarter of 2022 declined by 15.8%, following operational challenges at Botswana Power Corporation’ Morupule B power plant, according to Statistics Botswana Index of Electricity Generation (IEG) released last week.

The index shows that local electricity generation decreased by 148,243 MWH from 937,597 MWH during the second quarter of 2022 to 789,354 MWH during the third of quarter of 2022.

This decrease, according to the index, was mainly attributed to a decline in power supply realized at Morupule B power station. The index shows that as a result of low power supply from the plant, imported electricity during the third quarter of 2022 increased by 76.3 percent (123,831 MWH), from 162,340 MWH during the second quarter of 2022 to 286,171 MWH during the current quarter and Statistics Botswana added that the increase was necessitated by the need to augment the shortfall in generated electricity.

In the index Statistics Botswana stated that Eskom was the main source of imported electricity at 42.0 percent of total electricity imports. “The Southern African Power Pool (SAPP) accounted for 38.4 percent, while the remaining 10.1, 9.1 and 0.5 percent were sourced from Electricidade de Mozambique (EDM), Cross-border electricity markets and the Zambia Electricity Supply Corporation Limited (ZESCO), respectively. Cross-border electricity markets are arrangements whereby towns and villages along the border are supplied with electricity from neighbouring countries such as Namibia and Zambia.”

The government owned statistics entity stated that distributed electricity decreased by 2.2 percent (24,412 MWH), from 1,099,937 MWH during the second quarter of 2022 to 1,075,525 MWH during the third quarter of 2022. The entity noted that electricity generated locally contributed 73.4 percent to electricity distributed during the third quarter of 2022, compared to a contribution of 85.2 percent during the third quarter in 2022 and added that this gives a decline of 11.8 percentage points. “The quarter-on-quarter comparison shows that the contribution of electricity generated to electricity distributed decreased by 11.8 percentage points compared to the 85.2 percent contribution during the second quarter of 2022.”

Statistics Botswana meanwhile stated that the year-on-year analysis shows some improvement in local electricity generation. Recent figures from entity show that the physical volume of electricity generated increased by 36.3 percent (210,319 MWH), from 579, 036 MWH during the third quarter of 2021 to 789,354 MWH during the current quarter. According to Statistics Botswana electricity generated locally contributed 73.4 percent to electricity distributed during the third quarter of 2022, compared to a contribution of 57.7 percent during the same quarter in 2021. This gives an increase of 15.7 percentage points.


The entity noted that trends also show an increase in physical volume of electricity distributed from 2013 to the third quarter of 2022, thereby indicating that there are ongoing efforts to meet the domestic demand for power. “There has been a gradual increase of distributed electricity from the first quarter of 2013 to the third quarter of 2022, even though there are fluctuations. The year-on-year perspective shows that the amount of distributed electricity increased by 7.2 percent (71,787 MHW), from 1,003,738 MWH during the third quarter of 2021 to 1,075,525 MWH during the current quarter.”

The statistics entity noted that year-on-year analysis show that during the third quarter of 2022, the physical volume of imported electricity decreased by 32.6 percent (138,532 MWH), from 424,703 MWH during the third quarter of 2021 to 286,171 MWH during the third quarter of 2022. “There is a downward trend in the physical volume of imported electricity from the first quarter of 2013 to the third quarter of 2022. The downward trend indicates the country’s continued effort to generate adequate electricity to meet domestic demand, hence the decreased reliance on electricity imports.”

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