great article.. re potential of hdg

Date:
15 July 2011
Source URL:
http://www.miningweekly.com/article/mine-investors-tipping-botswana-as-potential-regional-energy-hub-2011-07-15

Mine investors tipping Botswana as potential regional energy hub

Johannesburg: Botswana could be a regional source of electricity generated from coal, gas and the sun, say emerging foreign mining investors. South Africa's JSE-listed Exxaro, for example, is one of several mainly Australian explorers and mines showing a keen interest in Botswana's low-sulphur and low-phosphorus coal. Exxaro has plans to monetise Botswana's natural gas through coal-bed methane (CBM) projects and many others talk of Botswana's new opportunity to export low-quality thermal coal to particularly India.


Although Botswana has an estimated 212-billion tons of coal, the Morupule colliery is the country's only operating coal mine, which supplies energy coal to the Botswana Power Corporation.


Expeditious development of the proposed $10-billion TransKalahari railway project to Walvis Bay, in Namibia, is seen as "critical" to the viability of Botswana's emerging export coal operations, and eyes are also looking east to the mooted construction of a 1100 km to 1500 km railway to the deep-water port at Techobanine, in Mozambique's Maputo province, to access India.


The Botswana Power Corporation is also increasing its power generation capacity and extending its power transmission network to meet growing power demand within the country.


"We have reached the stage where we are comfortable that we can spend more money in Botswana on CBM," Exxaro energy manager Tom Garner tells Mining Weekly.


The CBM business is expected to be dynamic in the next few years, with Exxaro mulling the introduction of a low-carbon-footprint baseload power station in Botswana that works on solar power in the day and on CBM at night.


"If Botswana goes ahead and invests in the infrastructure of both gas and coal, it could really become the jewel of the Southern African Development Community (SADC)," says Garner, who estimates the potential of 60-million tons of export coal a year from Botswana, along with large volumes of gas.


He foresees Botswana building the first integrated coal gasification combined-cycle (IGCC) power plant.


With the need for lower-carbon electricity, he foresees IGCC, together with carbon, capture and storage, playing a major role in clean electricity supply.


Botswana's shallow coal is close to deep CBM coal, providing the potential to enhance the gasfields by injecting carbon dioxide into them.


"There's massive opportunity in the area and it's refreshing to see the Botswana government making the country investor friendly,"Garner adds.


African Energy, the A$160-million market value company, which listed in Australia in 2007, is one of many mining companies in Botswana that are planning a dual listing on the Botswana Stock Exchange in order to provide locals with ownership in African Energy.


African Energy's major Botswana asset is the Sese thermal coal project, prior to which the company was uranium focused.


African Energy MD Frazer Tabeart tells Mining Weekly that Sese is characterised by a thick, close-to-surface continuous coal seam.


Located 50 km south of Francistown, Sese is a 2.7-billion-ton compliant resource, of which 500-million tons is in the indicated category.


Tabeart says that the coal has the potential to wash to an export quality thermal product and a feasibility study has been designed to provide information for an initial one million ton a year operation from 2013, ramping up to an eventual operation in the 20 million to 30 million ton a year category.


The company, which anticipates a 50 to 100 year life of mine, plans to test both Beira and Techobanine as export ports, and, in the longer term, Walvis Bay.


While it could be in a position to deliver saleable coal into the Southern African region by mid-2013, it does not expect major rail to be in place prior to 2017.


African Energy may also partner an independent power producer to introduce a Botswana power station in 2015.
Hodges Resources MD Mark Major reports that the Australia listed company is gradually advancing its Botswana projects while it keeps an eye on the coal roadmap that the government is drawing.


Hodges has a 414-million-ton inferred coal resource in Botswana and a gold project in Ghana.


"We believe this Botswana coal is going to be a company maker for us," says Major, who adds to Mining Weekly that the company is also mulling the coal project's coal-to- liquids potential.


Aviva CEO Lindsay Reed, who describes Botswana as the "most friendly investment destination for mining on the planet", says the company is keen to advance its 1.3-billion ton Mmamantswe project because of the perceived changing paradigm within the seaborne thermal coal market and the perpetual shortage of electricity in the SADC region.


"As recently as the middle of last year, we didn't think we had a project, but with what's happened to coal prices and the threshold for calorific values, the whole world has changed big time," says Reed.


The company has done electricity transmission connection studies with Eskom and the Botswana Power Corporation for supply into the power networks of South Africa and Botswana.


The Australia and Botswana listed ACap Resources CEO Dr Andrew Tunks remains steadfastly focused on Botswana's other energy mineral uranium despite the Fukushima nuclear power issue decimating the com- pan's share price.


Tunks continues to see nuclear power as the way of the future, despite the world turning against it because of the energy power punch that uranium packs.


He points out tha,t while 18 MJ can be obtained from a kilogram of coal, 500 000 MJ can be obtained from a kilogram of uranium, and while one kilogram of coal can power an electric light for two days, one kilogram of uranium can power the same light for 140 years.


"We've been burning coal since the 1800s and it's time to move on," says Tunks, very persuasively, one might add.


One ton of uranium, he says, is equivalent to 16000 t of coal.


While the 132-million tons of thermal coal that Australia exported in 2009 required a multiplicity of ships, the 10 000t of uranium it exported in the same year required only one boatload.

"There's more power in one boatload of uranium ore than there is in 132-million tons of coal," he reiterates, adding that one ton of uranium is equivalent to 88 000 barrels of oil.


"We've got to move on from coal, and uranium is the way to go," says Tunks, whose company intends applying for a licence to mine uranium in Botswana early next year to enable it to be in production by 2014.


"There's no doubt that Botswana has the opportunity to have multiple uranium discoveries,"he adds.


Exploration company Minergy, which expects to stage an initial public offering in mid-2012, is focused on coal and uranium.


The company has a coal and underground coal gasification (UCG) project in Botswana and a uranium project in Mauritania, Minergy legal director Claude de Bruin reports.


Minergy exploration manager John Astrup adds that the company has confirmed the presence of coal in its area of exploration in Botswana, an area where negligible systematic coal exploration has taken place.


"As with much of Botswana, the sand cover is always a challenge," Astrup confides.


Nimrodel Resources, which was listed in Australia in 2006, has acquired the Takatokwane coal project in Botswana, where it is undertaking a drilling programme.


Nimrodel MD Damian Delaney says that his company sees itself as a solutions provider to the energy requirements of the region.


The company is exploring for energy, with thermal coal extraction seen as but one solution to the energy shortage and is not ruling out UCG.


It is also developing an export model to make use of the bulk commodity heavy-rail projects and deep-water port developments, whether going west or east.


"We find operating in Botswana a joy," Delaney tells Mining Weekly.


Tlou Energy, a public unlisted Australian company, acquired Saber Energy's Botswana assets as part of its multicountry pursuit of CBM opportunities.


Tlou's Chris Pieters reports that CBM continues to be an important part of the global energy mix, despite it being largely overshadowed by the shale-gas phenomenon.


Tlou, which is about to embark on a pilot testing stage, has built a laboratory in Francistown.


Six years ago, Capital Resources, under Rupert McCammon, embarked on a journey to increase investment into Botswana's resources sector.


Today, the Botswana Stock Exchange has an active resources sector that has attracted investment from institutional and retail investors, who see the glimmer of a new resources dawn breaking in the hitherto diamond-dominated Botswana.


The diversification of Botswana's mining industry to include coal mining was again a focal point of this year's Botswana Resource Sector Conference, in Gaborone.


The perceived paradigm shift in the seaborne thermal coal market towards lower quality coals is presenting both Botswana and South Africa's Waterberg coalfields with an opportunity to develop a globally competitive coal industry.


India and, to a lesser extent, China are the main drivers of the demand for the lower quality thermal coal.


In the case of Botswana, it is mainly Indian demand that is expected to play a pivotal role in the development of the Botswana coalfields, because of it being the closest major market.


The country is, however, poised to face competition in supplying India from Mozambique and South Africa, with infrastructure being the key constraint, not tonnage.


Substantial additional power station capacity is being implemented in India, involving several 4000 MW and larger stations' driving demand that is expected to increase the current import level of 50 million tons of thermal coal a year to more than 200 million tons a year by 2025.


There is also an opportunity for Botswana to use its coal to become a net exporter of electricity in the fullness of time.


On the one hand, Botswana has the challenge of being landlocked and, on the other hand, it has the opportunity of being central.


Botswana Minerals Permanent Secretary BK Paya tells Mining Weekly says that the objective of the Minerals Ministry is to enable private-sector investors to receive competitive returns.


"We have no exchange control and we strive to achieve the right tax and economic policy environment for investors in exploration and exploitation,"
Paya adds.


The department aims to process prospecting licences in 60 days and mining licences in 30 days.


Diamond export permits are processed in 24 hours.


Linkages with the rest of the economy are encouraged to expand value-adding activities.


The government subscribes "strongly" to minerals beneficiation and downstream growth.


Midtier diamond miner Firestone has pioneered the first diamond tender sales in Gaborone, which indicates that the country's vision of optimal value addition may be realisable.


While the Economist Intelligence Unit's democracy index of 167 countries ranks Botswana thirty-fifth and in the "flawed democracy" grouping behind South Africa, the latest Fraser Institute survey lifts Botswana to fourteenth among 79 jurisdictions surveyed, well above South Africa at sixty-seventh.


The Transparency International corruption index places Botswana thirty-third, which is well above South Africa's placing in fifty-fourth position.


Upsetting some is Botswana's decision to declare a moratorium on the issuing of coal and CBM prospecting licences until after consultant Wood Mackenzie has finalised a coal roadmap.


But being landlocked and more than 1000 km from the ports, the Botswana government wants to know the best way to monetise its estimated 212-billion-ton coal resource before it invests in logistics to get that coal to market.


The coal map is expected to culminate in the publication of a high-level implementation plan.


Additional transmission line networks must also be established to reach out to the new resource-exploration frontiers.

By: Martin Creamer
News Tags: Energy sector,
Botswana

Source: Mining Weekly