Govt auctions 11 blocks of coal leases
Mbongeni Mguni | Thursday October 10, 2013 21:56
The latest offer comes eight months after Anglo American beat off 23 competitors to scoop a debut coal lease auction featuring two high profile blocks in the Mmamabula area.
According to documents supplied to Mmegi Business by the ministry yesterday, the 10 blocks are along Kweneng's border with the Gantsi District near and around the Khutse Game Reserve.
While attempts to seek details of the latest auction from the Department of Mines failed by yesterday afternoon, it is known that the 11 blocks are less than 200 kilometres away from an advanced project which is estimated to contain 2.2 billion tonnes of coal.
Department of Geological Survey records also suggest that leases due to go under the hammer were unassigned to any developer as recently as 2011.
According to the ministry's notice, bidders will have to pay a non-refundable P2,500 deposit to collect tender documents and will be required to specify, which blocks they are applying for.
By comparison, the inaugural auction had a P10,000 'entry fee.'
The closing date to tender for the two blocks is 18 November 2013, following which the Department of Mines is expected to scrutinise bids before officially unveiling the new holders of the leases.
According to the Coal Roadmap's recommendations, the department will be looking for applicants offering the best exploration and development programme, in line with government's desire to ensure that prospecting licence (PL) holders optimally explore their licence areas.
The auction of prospecting licences is part of recommendations making up the Coal Roadmap, the government's blueprint for maximising returns from the country's abundant coal resources. While explorers previously applied for and were granted PLs, the Ministry tightened its allocation protocols two years ago through the auction system, which was first implemented in March 2012.
The system is designed to ensure that only serious prospectors are issued with licences in order to avoid the long-running challenge of speculative PL holders who hold onto leases and do not develop them, hoping for buy-out offers.
Wood Mackenzie, the Scottish consultants who developed the Roadmap in 2011, noted that coal PL holders were largely inactive in terms of exploration, thus stunting the country's coal sector.
'Based on evidence provided by the Department of Geological Survey, it became apparent that just nine of the 41 companies currently holding leases are actively exploring at all and even active explorers are generally not exploring on all the leases they hold,' the consultants noted in 2011. 'This situation is obviously undesirable as the government would like to ensure that as much exploration as possible is occurring'.
Government estimates that the country's coal resources could support an industry producing up to 90 million tonnes per annum. At present, the country's coal production is approximately 2.8 million tonnes, with the majority powering the Morupule power stations and minimal exports through Durban.