Botswana Coal Miner Sees Opportunity in Regional Shortages

(Bloomberg) -- Botswana’s sole operating coal mine will increase output almost threefold within seven years as it eyes export opportunities created by a shortage of the fuel that’s used to fire most of southern Africa’s power plants.

Morupule Coal Mine in the east of the country will ramp up annual production to 8 million metric tons by 2025 from 2.8 million tons now and is targeting shipments to South Africa, Zambia and Zimbabwe, Matthews Bagopi, the business development and strategy manager at Morupule Coal Mine, said in an interview Thursday in the capital, Gaborone. The mine mainly supplies the 600 megawatt Morupule B plant nearby, but also ships to South African cement-maker PPC Ltd.’s slurry plant near Zeerust in the northwest of the country, and Namibia Power Corp.’s Van Eck power plant.

“A lot of producers in South Africa are sending everything they are producing abroad,” Bagopi said. There are “serious shortages at the moment, which can only get worse because new mines are not opening up and those that exist are depleting their resources and closing.”

Eskom Holdings SOC Ltd., which accounts for about 95 percent of South Africa’s power generation, is experiencing shortages of coal at as many as six of its plants and has issued a request for proposals for the supply of an additional 100 million tons over five to six years.

New Mines

Morupule’s expansion plans include a new, open-cast mine near its existing underground operation that is due to be commissioned by the middle of next year. The new mine will have nameplate capacity of 10 million tons a year, though that level of output will depend on demand, Bagopi said.

Shumba Energy Ltd. also sees supply troubles at Eskom and the region as an opportunity. It’s developing the Morupule South Mine, also an open-cast operation, that will produce 1.5 million tons a year at full capacity. Commissioning is scheduled for 2019.

“There is an increasing shortfall in the supply of washed coal in South Africa, Zimbabwe, Zambia and Namibia, Chief Financial Officer Thapelo Mokhathi said in a separate interview. “Eskom needs 130 million tons of coal a year and they are struggling.”

©2018 Bloomberg L.P.

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