Morné du Plessis, the CEO of Minergy Limited, says his company is in a four-way race for construction of a 300Mega Watts (MW) greenfields coal-fired power station in Botswana and that it has partnered with Jarcon Power, a well placed independent power producer. Minergy’s key role in the joint bid is to supply coal into a power purchase agreement that is expected to be 30 years in duration. Du Plessis says that success would represent a major new revenue line for the company.
Four local coal developers have been shortlisted by the government to develop a 300MW power station, the last fossil-fuel-based electricity that the government plans to procure in the next 20 years. Minergy Coal, Sese Power, Jindal Africa and Maatla have extensive resources on the country’s coalfields and are at varying but largely advanced stages of development. Of the four, only Minergy is already in production while Sese, Jindal and Maatla have coal mining licences. First floated in 2013, the 300MW tender represents the only government-backed fossil fuel procurement in the 20-year Integrated Resource Plan prepared by the Ministry of Mineral Resources, Green Technology and Energy Security. The balance of projects in the plan is from sustainable sources.
Of the four shortlisted firms, industry players believe that Minergy should have an advantage as it already has a demonstrable coal mine in operation while the other bidders will have to prove both coal mining capacity and readiness as well as power station readiness.
Du Plessis says the same and notes that already having an operational coal mine should mean Minergy has greater chances of delivery because it has passed some stages that their competitors are yet to be tried and tested on. “They have only mining licences,” he says.
Further, du Plessis says Minergy has a tried and tested technical support through its Joint Venture with Jarcon Power, a tried and tested Independent Power Producer. However, bidders will be ranked primarily according to technical and financial capacity, as well as any experience that the project leaders have, pre-requisites with which Du Plessis says his company is also ahead. He says as a coal mining and trading company, Minergy is committed to becoming the supplier of choice to industrial customers and power utilities across southern Africa.
“Minergy is the holding company of the Minergy Group and the development of the Masama Coal Mine represents the first step in our strategy of becoming a mid-tier southern African coal mining company,” he explains.
Minergy was awarded a prospecting licence in 2012. In a quest to raise funding to develop its coal resource of an estimated 390 million tonnes, the company listed on the Botswana Stock Exchange Limited (BSE) in 2017. Pension funds like the Botswana Public Officers Pension Fund (BPOPF) and Debswana Pension Fund (DPF) invested and took up to 30 percent of the issued shares combined.
However, combined with retail investors, about 40 percent of the issued shares in Minergy are held by locals, which Du Plessis says gives Batswana a chance to benefit from the success of the company, should it further secure the 300MW coal-fired power plant tender. He holds that it should also be considered an added advantage, given the expected citizen empowerment benefits.
Immediately after raising the funds through equity listing on the BSE, Minergy put the funds to good use through construction of the mine soon after a successful completion of an Environmental Impact Assessment (EIA) and awarding of the mining licence in 2019. The Mine plant was completed in 12 months.
Minergy has been producing and exporting coal since August 2019. Du Plessis says the company has been selling to some smaller markets in southern Africa like cement producers in South Africa and Namibia. As a result of accelerated production, Minergy saw its employment numbers rising from 40 to over 400 at its open cast coal mine.
The jobs created benefit the community, especially in the small village of Medie. Further, considering that an open cast coal requires highly technical expertise, du Plessis says expatriates were brought in from all over the world and have done a great deal in imparting skills and knowledge to Batswana workers. “These are the skills that will come in handy even to Botswana’s mining industry in general,” he says.
Minergy is a Botswana-registered company listed on the main board of the BSE, with a proposed second listing on an internationally recognised stock exchange planned. By May this year, du Plessis expects Minergy to have sold 1 million tonnes of coal from its 100 percent owned Masama Coal Mine that is located at the Mmamabula Coalfield of Botswana, which is the Group’s cornerstone asset.
The size and location of this shallow resource supports its competitive cost structure, which is underpinned by cost-effective opencast mining of high-quality coal. The resource is near to existing rail, road and water infrastructure and has significant distance advantages over some existing coal suppliers to regional markets. Du Plessis says this advantage is the reason that South African cement producers buy from Minergy. He notes that the mine holds large tonnages of export quality coal, ideally suited for export to Africa and also India and China should the economics be attractive for thermal seaborne coal.
The coal mine is located on the southwestern edge of the Mmamabula Coalfield in southern Botswana, 60km northeast of Gaborone. Minergy’s wholly owned subsidiary, Minergy Coal, holds the mining licence (ML 2018/9L) where a 390 million tonnes of coal resource has been independently delineated in the mining licence area.
The mining licence was granted on 27 August 2018 for a period of 25 years. Minergy Coal also holds an adjacent 352km2 prospecting licence for coal and coal-bed Methane. Management has significant mine development and operational experience and a wide range of expertise underpinned by strategic and practical knowledge of coal and energy markets in the region and internationally.
Complete corporate structures with a functioning Board, including local representation and executive management, are all in place. The Minergy Masama Coal
Mine is now in production following its transition to a mine development company only 12 months after being granted its mining licence.