Botswana Stock Exchange (BSE)-listed coal mining company, Minergy Limited, yesterday (Tuesday) released its inaugural results for the year ended 30 June 2017, reporting a loss per share of 6,76 thebe. The company embarked on a capital-raising exercise in the first quarter of 2017, raising P70 million via a private placement prior to listing on the main board of the BSE in April this year. Minergy CEO, Andre Boje commented that, “A lot of work had been done and continues to be done since inception.
Our focus shifted to coal production for supply to the regional and export markets rather than coal for power generation. “We believe the narrative around South Africa requiring imported power will not come to fruition in the foreseeable future, if at all. This is supported by the announcement that there is a surplus of 9,000 MW capacity and that South Africa has signed off-take agreements with Botswana and other SADC countries.” The demand for coal in the southern African region continues unabated with prices escalating on an ongoing basis.
The July 2017 McCloskey Coal Report highlights that South African domestic prices were 51 percent higher than the same period in 2016 and that there is strong demand from the cement, industrial and paper industries. Boje said this situation is driven by demand exceeding supply as producers are focused on fulfilling their take or pay export agreements together with the lack of investment in new projects or expansion of existing production facilities.
“The climate of under-investment in South Africa is blamed partly on political interference in the mining sector and the rise of resource nationalisation,” he explains. Initial production at Masama is earmarked to be 1.2 million tonnes of saleable coal per annum ramping up when required, as the project will have a capacity to process 3 million tonnes of run-of-mine coal per annum from first commissioning.
Whilst the initial project plan focused entirely on the 1.2 million tonnes to the regional market, Boje emphasises that attention must be paid to the export market as the API4 index price for seaborne thermal coal has risen 67 percent since 2016 and currently trades at $82.00 to $84.00 per tonne. In addition to the projections, he said “the international traders forecast that this trend could continue, albeit at slower rate, due to production cutbacks in China and delayed investment in Greenfield coal projects.
“Noteworthy is significant investment by large multinationals in coal projects in Australia which highlights their bullish view on coal going forward.”Boje added that Botswana has a significant role to play in the seaborne thermal coal market due to its large untapped coal resources and proximity to the South African coal export infrastructure. Meanwhile, it is understood that various requirements and obligations relating to the submission of a mining licence application are also being attended to, with the target date for submission being the end of September 2017.
The company has engaged extensively with the various government departments and the response has been most encouraging. It is believed that the licence will be granted by the second quarter of 2018.Requests for information (RFI) have been issued to identify qualified suppliers of the processing and wash plant and for mining contractor. This process is expected to be complete by the end of October 2017.
Talking about the industry, Boje said that renewable energy has a role to play, but it has been proven unreliable for base lzoad electricity supply with the only alternatives being nuclear, hydro and coal. This is the first year that the group expensed certain operating expenditures, which were mostly incurred at the holding company level, which acts as an investment and holding company and sources funding for the group. Cash utilised in operations amounted to a loss of P9,4million with Exploration and Evaluation Asset Expenditure also showing a loss of P5,6 million.
‘Manufacturing holds key to economic growth’
Barclays bank’s economist Naledi Madala has urged the country to consider manufacturing, as a key tailwind to drive the economy and reduce inequality.
She was speaking at a gathering organised by the bank which focused on economic outlook for 2019. “We should not make a mistake of leapfrogging without manufacturing,” said Madala, lamenting that the country’s diversification remains a pipeline dream, as the diamond is still the economy’s mainstay. She bemoaned that mining activities in the country could not spring forward diversification, though non-mining GDP has been steady over the years.
“Extractive industries are not good stepping stones for diversification, the sector does not prepare us for the next step,” said Madala at the Barclays’ Economic Outlook Forum Review 2019. The economist further noted that government should confront head-on challenges of productivity and competitiveness to attract the much needed Foreign Direct Investment (FDI). Though diversification efforts continue to hit a brick wall, Madala said the country should expect increased activities in the mining sector hinged to ramp up in coal production in the year ahead.
She also implored government to consider a welcoming attitude towards foreign investors and generous tax incentives to businesses that set up in the country. Madala is also upbeat that the use of public private partnership model could also help diversify the economy coupled with privitisation. “Privitisation will offer opportunities for growth, through the renewed optimism from government, as business confidence has improved,” said Madala.
She implored the government and the business community to access what is going to drive and hinder growth highlighting that key headwinds to growth are income inequality, diversification challenge and productivity, among others. “The pace of poverty reduction has slowed down, while income inequality goes up,” said Madala
MINISTER BEWAILS BAD REPAYMENT BY YOUTH
Minister of Youth Empowerment, Sports and Culture Development, Tshekedi Khama has told parliament his ministry continues to face challenges on the repayment of Youth Development Fund (YDF) loans.
Recently presenting the budget to Parliament, Khama said this financial year the ministry has received a total of 2582 YDF applications and approved 983of them to the value of P98 million. He said the programme attracts a high level of interest from youth but the ministry is only limited to funding a maximum of 1200 youth projects annually due to budget limitations.
“However the greatest challenge for the Fund is the repayment of the loan component by the majority of the youth businesses. The youth have advanced number of challenges for this including high rentals for operating spaces, low market access owing to tight competition and limited production capacities,” said Tshekedi, adding that they continue to pursue beneficiaries to repay the loans.
Out of the 919 businesses funded 1058 jobs have been created. The minister highlighted that disbursements of funds will continue to be undertaken until the end of the financial year. “The YDF is currently under review in line with the pronouncement made by the President, Dr Mokgweetsi Masisi in the State of the Nation Address, to improve beneficiaries through training, and encourage consortia and cooperatives,” said Tshekedi.
The ministry assists YDF beneficiaries in marketing their products and services through fairs and exhibitions. The ministry also runs entrepreneurship-training seminars for youth and in the past year 3692 young people were trained. Over 600 youth businesses attended fairs and exhibitions to market their products and services. Currently the ministry is collaborating with Local Enterprise Authority (LEA), First National Bank Botswana and Citizen Entrepreneurial Development Agency (CEDA) on training in entrepreneurship development and mentorship of YDF beneficiaries.
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