CAPE TOWN (miningweekly.com) – Botswana, South Africa and Mozambique are beginning to play a much bigger role in the Southern African domestic and export coal market, says Botswana Mineral Resources, Green Technology and Energy Security Minister Sadique Kebonang.

Speaking at the IHS Markit South African Coal Export Conference, in Cape Town, on Thursday, he pointed out that new coal export rules, as well as a specific government focus on investment and infrastructure are providing new life and growth ahead of this market, particularly in Botswana.

While the country has been entrenched as one of the major diamond producing countries in the world, with major miners such as De Beers operating several mines, the government has a national strategy to diversify away from diamonds.

Notably, the export of coal has been identified as one element of the country’s coal monetisation roadmap.

“The government of Botswana’s approach to the monetisation of a coal reserve, as well as the drive towards diversifying the mining sector, with specific reference to coal, is to focus on the domestic use and export of coal, as well as the generation of electricity for domestic users,” he said.

He stated that Botswana, in terms of the market, “offers an attractive value proposition” to meet demand in Africa and, in particular, for many inland users in South Africa, as there are electricity consumer markets in North West and in the Northern Cape.

Botswana is endowed with significant coal reserves estimated at up to 200-billion tonnes.

In 2017, industry analyst BMI Research, a Fitch Group company, forecast that “the country’s coal output will increase from 2.3-million tons in 2017 to 3.8-million tons by 2021, with the sector’s share of total mining industry value growing from an estimated 2.6% in 2012 to 6.9% by 2021”, Mining Weekly reported.

Kebonang also pointed to the country as having one of the best investment climates, particularly in terms of mining, citing the country’s partnership with De Beers, which spans almost 50 years, as a key example. The security of investments, political stability and a functional judicial system are further advantages, he enthused.

According to the Africa Investment Index 2016, which was compiled by investment management and advisory services provider Quantum Global’s independent research arm, Quantum Global Research Lab, Botswana had been named “the most attractive economy in Africa, scoring highly on factors that include an improved credit rating, current account ratio, import cover and ease of doing business in the country”.

A delegate from energy industry player Shumba Energy, which has operations in Botswana, agreed, highlighting the railway initiative between logistics providers Botswana Rail and Transnet to open a line from the Waterberg to Botswana, thereby reducing the distance to Richards Bay for coal exports.

“It is a very exciting time to look at Botswana; we do have a very competitive quality,” the delegate said.

Specialist law firm Malan Scholes director Hulme Scholes also lauded the Botswana government for its administration, efficiency and understanding of the mining industry.

While Kebonang underscored the importance of the Botswana coalfields' magnitude and quality, he highlighted its significance from a regional perspective and in an increasingly high energy demand environment.

“In the export of coal and, in particular for countries that rely on integration, and regional transport infrastructure, the regional perspective cannot be overemphasised,” he stressed, noting that significant constraints to the evolvement of the coal industry include the adequacy of infrastructure to convey the coal from the mines to ports.

It was, therefore, his hope that the conference would engender a regional perspective and cooperation.

Kebonang also suggested that it was worth noting that the South African domestic market is becoming more and more undersupplied as international demand for lower-quality coals increases.

Further, in recent weeks, South African coal export prices have reached highs not seen since early 2012. 

“We can only hope that this will be the start of a sustained upswing and a brighter future for the industry,” he said.