After just a year in operation, Botswana’s Minergy has been shortlisted to supply coal to Tutuka

Minergy, a coal miner based in Botswana, has ratcheted up coal sales to industrial South Africa customers and has now set its sights on supplying Eskom.

For a year now, the group, which is listed on the Botswana Stock Exchange and produces coal from its Masama flagship project, 60 km northeast of Gaborone, has been commercially selling coal. In this time, 300,000 tons of coal were sold to SA, Botswana and Namibia, CEO Morné Du Plessis said on Wednesday at the virtual Junior Indaba for mining.

As the most southerly coal mine in Botswana, Masama is close to the SA border and well-positioned to supply coal into the regional industrial market, which uses sized coal for energy generation at its operations.

Minergy also plans to supply coal to SA’s embattled power producer Eskom, having been shortlisted to supply coal to the Tutuka power station in Mpumalanga.

“We have tendered for the Tutuka power station,” said Du Plessis, who added that an emphasis on the economic criteria of supply made it possible for the company to tender.

Eskom has been working to bring down its spiraling coal costs, which shot up 16% to R66.6bn in the year to end-March 2020.

Du Plessis said the company is very proud to have been shortlisted and, if selected as the winning bidder, “it will put us into a different orbit”.

Minergy does have coal seams that hold Eskom-type coal that it does not currently mine. If its bid to supply Tutuka is successful, Minergy would open a new mine as the infrastructure required for an Eskom set-up would not be cumbersome. The company would be able to deliver coal by rail to Tutuka.

Beyond the Eskom opportunity, Du Plessis said the SA industrial market is expected to see a compound annual growth rate of 18%. At the same time, domestic coal production is declining as investment dwindles as sentiment towards fossil fuels has grown increasingly negative.

“It’s a nice situation when you have declining supply and increasing demand and we are looking forward to taking advantage of that,” he said.

Minergy’s momentum was disrupted by the Covid-19 pandemic as the delivery of its coal to SA or Namibia was not considered an essential service and therefore halted. Since July, however, the company has successfully resumed the export of its coal to SA and registered record sales in August.

The Masama coal mine has 100 years of resource, estimated to be 390-million tonnes of high-quality coal. Minergy is targeting production of 60,000 tonnes per month, which can be scaled to 80,000 tonnes if required.