A CORRECTION in the coal price has had serious consequences for Minergy which said last week that operations at its Masama mine in Botswana had temporarily ceased.
According to a report by Reuters, mining contractor Jarcon Open Cast Mining downed tools owing to overdue payments.
Minergy CEO Morné Du Plessis told the newswire his company was in talks with Botswana’s government for a financial bailout, principally to settle debts.
“Talks are ongoing and we are confident that we will get help from government. Masama is a strategic asset for Botswana in its coal industry aspirations and we are hoping to turn the situation around as quickly as we can,” Du Plessis said.
Discussions were with the state-owned Mineral Development Company of Botswana (MDCB) and Botswana Development Corporation (BDC), said Reuters. The two entities previously provided more than 300 million pula ($22.35m) in funding to bring Masama into production and expand its operations.
Masama has capacity to produce 1.5 million tons of coal per year and is the smaller of two coal mines currently in operation in Botswana, the other being the state-owned Morupule Coal Mine, with 4.2 million ton capacity, the newswire said.
Minergy’s latest annual report shows that as of June 2022, the company owed the mining contractor 79 million pula after a debt restructuring exercise. It also owed BDC 125 million pula and MDCB some 295 million pula.
Strong demand, mostly from Europe due to the fallout from Russia’s invasion of Ukraine, drove Minergy’s exports up 53% in the half-year to December 31, boosting its earnings and helping it to reduce debt, said Reuters.
Du Plessis told Miningmx in October the company was hoping to revive a P125m rights issue in order to fund working capital, repay overdue creditors and help extend the mine’s output.
“There’s a lot of talk, people get excited, and then walk away,” said Du Plessis of previous investor interest in the company. “But for the first time we’ve been approached by international investors for an opportnity to invest. It’s not a stampede yet, but it’s dribbling through and these are a bit more serious,” he said.