25 January 2021 – As China’s thirst for Southern African coal increase in the absence of its Australian products, Botswana based coal mining company Minergy eyes a possible Eskom contract.
Botswana based coal mining company Minergy featured in the Hawks Eye section of WhyAfrica last year when it delivered its first coal to South Africa. Although coal is not exactly the flavour of the month at the moment, Southern African coal producers are sitting pretty. Not only is the coal price on the up, but the spat between Australia and China has resulted in the Chinese looking for alternative suppliers. Southern Africa’s top-quality coal is the obvious replacement. In addition, South African power utility Eskom is on the hunt for new suppliers, and Minergy is on their list. After just a year in operation, the company was shortlisted last year to supply coal to the Tutuka power station near Standerton in the Mpumalanga province of South Africa.
If Minergy wins the contract, the company will double its current output by opening a new mine in Botswana. According to Morné du Plessis, CEO of Minergy, the company’s objective is to double production capacity. “This will enable us to access a range of opportunities including increasing supply to industrial customers and export opportunities,” says Du Plessis.
Minergy is listed on the Botswana Stock Exchange and produces coal from its flagship Masama project, 60km northeast of the capital city Gaborone. In its first year of producing coal it sold 300 000 tonnes (t) of coal into South Africa, Botswana and Namibia.
Masama is close to the South African border and well-positioned to supply coal into the regional industrial market, which uses sized coal for energy generation at its operations.
“We have tendered for the Tutuka power station,” says Du Plessis, who added that an emphasis on the economic criteria of supply made it possible for the company to tender. Du Plessis says the company is proud to have been shortlisted and, if selected as the winning bidder, “it will put us into a different orbit”.
Minergy does have coal seams that hold Eskom-type coal that it does not currently mine. If its bid to supply Tutuka is successful, Minergy would open a new mine as the infrastructure required for an Eskom set-up would not be cumbersome. The company would be able to deliver coal by rail to Tutuka.
Beyond the Eskom opportunity, Du Plessis says the South African industrial market is expected to see a compound annual growth rate of 18%. At the same time, domestic coal production is declining as investment dwindles as sentiment towards fossil fuels has grown increasingly negative.
The Masama coal mine has 100 years of resource, estimated to be 390-million tonnes of high-quality coal. Minergy is targeting production of 60 000 tonnes per month, which can be scaled to 80 000 tonnes if required.