BOTSWANA thermal coal producer Minergy said it reduced its operational loss in the six months ended December following an improvement in prices as well as higher output from Masama, its 125,000 tons a month nameplate capacity mine.
Production following the commissioning of stage 4 of its processing plant regularly exceeded 105,000 tons per month, said Morné Du Plessis, CEO of Minergy in a statement on Friday ahead of the firm’s interim results presentation in March.
Masama had headwinds, however. Heavy rainfall, lower regional sales, and reduced employee numbers on site owing to Covid-19 infections hurt operations, especially in the latter half of the six month period.
Diesel prices were also 52% higher.
“Pleasingly, a better product mix was obtained from the fully commissioned plant, with increased sales of the more profitable pea product being recorded,” said Du Plessis. “Against the comparative six-month period, selling prices increased, attributable to a more stable South African Rand, the sales mix improved, and prices increases.”
He also disclosed that Minergy was bidding with a Jarcon Power, an independent power producer, for construction of a 300MW greenfields coal-fired power station in Botswana. Minergy’s key role in the joint bid was to supply coal into a power purchase agreement expected to be 30-years in duration.
Du Plessis said that success would represent a major new revenue line for the company. Of the three preferred bidders, the Minergy/Jarcon combination is the only one with an operational mine (Masama).
“Coal supply is under pressure, while demand is increasing as several majors divest from coal given the negative coal narrative. Minergy expects an undersupply in the regional market as a result,” said Du Plessis of the thermal coal market in 2022.
Minergy has long been associated with a secondary list, most likely in London. Du Plessis said as a strategy the idea to access another capital pool was still live.
Du Plessis said in June last year that thermal coal companies received an unfairly bad press. They “unfairly” received a negative narrative which had resulted in making capital raising “extremely difficult” from commercial banks.
“The normal funding that was available ten years ago is not available. We all know that. So we have to look at new partnerships as well as the chain supply,” he said, referring to potential funding with customers and traders in return for coal supply. “I see more joint partnerships with government,” he said.
About a third of Minergy’s share register is held by retirement funds, some of which belong to the Botswana government.
Minergy listed in Botswana in 2017.