Demand for the black rock keeps burning
After a bright 2022, Minergy are confident the good times will carry on this year as their coal continues to attract interest, both locally and abroad.
“Our objective is to secure additional long term export seaborne off take agreements now that the logistics and coal qualities have been established. At the same time, we asses funding options including enquiries to place approved equity, to reduce debt and consider expansion opportunities,” reads the company’s market update report for the six months ended 31st December.
Minergy’s Masama Coal Mine is located north of Gaborone in the small village of Medie.
With a mining licence of 25 years acquired in 2019, the mine is expected to produce 2.4 million tonnes of coal per year.
However, with 390 million tonnes of coal reserves, the estimated lifespan of the mine is set at 100 years.
According to Minergy, sales averaged close to 68, 000 tonnes a month over the second half of last year. Currently a tonne of coal fetches around P1, 797.
One of the highlights mentioned in the report include Minergy successfully delivering coal to three Europe-bound vessels, with deliveries in transit for a fourth by the close of the six-month period.
This adds to the successful loading and dispatching of six vessels ranging from 30, 000 – 55, 000 tonnes capacity since March 2022.
“Overall pricing has increased buoyed by lucrative export pricing. Coal qualities have been consistently achieved to the extent that deliveries have resulted in quality bonuses. These factors combined to achieve better revenue,” continues the report.
Further, domestic sized coal pricing has increased driven by coal shortage in the local market.
As a result, Minergy is exploring opportunities to provide more economical product offerings, which at the same will increase sellable product without the need to increase the plant’s capacity.
“This has been an exciting and busy six month period for the company. Operations are delivering according to the designed capacity, consistently reaching a production capacity of 125, 000 tonnes per month, resulting in higher monthly coal sales delivered into global and regional markets,” said Minergy Chief Executive Officer, Morné du Plessis.
It wasn’t all good news for the coal giant’s however, with logistics once again proving a challenge.
“Commodity suppliers and customers increasingly rely on trucking products to ports and end users, creating a scramble for trucks in the absence of rail,” notes the report, adding that while previous railings were made through Mozambique route they remain uneconomical and have not gained traction.
As a result, Minergy has prioritised Walvis Bay in Namibia as its preferred evacuation route for its seaborne exports, with other alternative routes being investigated.
To this end, the proposed Mmamabula-Lephalale rail line is expected to come in handy in transporting coal and other bulk commodities to the South African market and ports. Similarly, the approved tarring of the Lentsweletau-Medie Road will simplify the evacuation of coal from the mine and cut truck turnaround times.