Shumba wins coal licences auction
Brian Benza | Thursday September 11, 2014 10:11
The company, listed on the Botswana Stock Exchange (BSE) is also currently developing the Sechaba power project near Morupule. It is the second company to win coal licences rights through a tender since the auctions were introduced by government last year.
Shumba coal managing director Mashale Phumaphi told Mmegi Business the company would spend close to P3 million in the next three years to ascertain the presence of coal reserves in the area. Coal exploration was first done by major mining companies over four decades ago.
“The company has been awarded the rights to a new prospecting licence for coal exploration rights in Letlhakeng resulting from the second of its kind open tender, in which both local and international parties participated. The new Prospecting Licence has been issued by the Ministry of Minerals, Energy and Water Resources of Botswana for coal exploration rights over an initial period of three years. The estimated expenditure to be incurred by the company during this period is $330,000 (P2.9 million),” he said. The company said during historical exploration programmes, large in-situ reserves of carbonaceous material were identified in the area. “A historical resource exists in the licence area and initial efforts by the Company in the first three years shall focus on confirming the presence of such resources,” said Phumaphi.
Shumba, which is set to list on the Mauritius Stock Exchange, is currently assessing the viability of exporting power from its proposed 300MW plant at its flagship Sechaba Energy Project (SEP) near Morupule.
It described options available to export power from the SEP to South Africa, Zimbabwe and Namibia. Shumba, which is majority owned by citizens, joins other firms such as African Energy and Jindal in making strides towards monetisation of Botswana’s estimated 212 billion tonne coal resources through exports. The SEP will be a 300MW power station with the full output injected into BPC’s 400kV high-voltage transmission grid at the nearby Morupule B 400kV sub-station. Currently, the Sechaba Project has approximately one billion tonnes of thermal coal resources. The company believes that due to the SEP’s proximity to the A1 highway, railway line and the existence of large resources of ground water and two river basins, the project is potentially well situated for the development of a mine and a power station.
Last year, Global mining giant, Anglo American beat 23 competitors to the prospecting licences of Mmamabula South and Central blocks in a first of its kind open tender for mineral exploration rights in Botswana. The blocks are endowed with about 700 million tonnes of coal. Floated last June, the tender was part of recommendation of the Coal Road Map, the government’s blueprint for maximising returns and monetisation of the country’s estimated 212 billion tonnes of coal resources.
The idea for prospecting licence tenders for known coal areas in Botswana stems from a study by Wood Mackenzie in 2011. The study indicated that coal prospective licence holders were largely inactive in terms of exploration. The study noted that the inactivity was partly responsible for stunting the growth of the country’s coal sector.
“Based on evidence provided by the DGS, 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 Scottish consultants noted.
“This situation is obviously undesirable as the government would like to ensure that as much exploration as possible is occurring,” the report said.