Mashale Phumaphi

You get a strange feeling of déjà vu reviewing the Shumba Energy annual report with its hugely ambitious plans to develop a range of coal projects in Botswana. These include export collieries, independent power producers, an underground coal gasification project, and even a $1bn coal-to-liquids plant in partnership with two Chinese companies. That’s because we have seen this movie before.

Between 2008 to 2015, plans by Canadian and Australian junior mining companies to capitalise on Botswana’s coal ended in a heap owing to Eskom incompetence, and a crunch in world markets. This time around the underlying premise remains the same which is that Botswana has huge, unexploited coal reserves that could be mined to provide power to the Southern African sub-region where a number of neighbouring countries face looming power deficits, in particular South Africa. Proposals to develop new coal mines in Botswana get massive domestic political support because the country is keen to diversify its economy away from diamonds. There are only two operating coal mines in Botswana - Minergy’s Masama mine and the state-owned Morupule colliery, but there have been some changes for the better.

Transnet Freight Rail has expanded capacity on the line between Lephalale and Ermelo which could handle Botswana coal destined for Eskom and the export markets via Richards Bay. But the Botswana government still has to build the link from their rail network to Lephalale. The mess that is Eskom is being tackled, but whether a workable framework will emerge that will allow power sourced in Botswana to be sold to the South African grid remains to be seen.