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Botswana invites bids for coal-to-liquids project

The Botswana government is seeking prospective bidders for the establishment of a coal-to-liquids plant in the Southern African county, with support from its State-owned oil company, Botswana Oil.

Botswana Oil, which manages State-owned strategic fuel reserve facilities, says in a prequalification tender advertisement that the project aims to diversify Botswana’s economy and attain fuel self-sufficiency through the exploitation of the country’s abundant coal resources.

The invitation is extended to prospective private companies and parastatal bidders to undertake a bankable feasibility study for the design, financing, construction, ownership, operation and maintenance of a coal-to-liquids plant in Botswana, which will be facilitated by Botswana Oil.

The bids, which must be in by August 2, follow the closing on July 12 of a request for proposals for owners of coalbed methane (CBM) prospecting licences to develop a 100 MW CBM pilot power plant.

At the Botswana Resource Sector Conference in June, Mineral Resources, Green Technology and Energy Security Minister Sadique Kebonang expressed the government’s determination to better its legislative framework and policies to ensure the country becomes more investor friendly, against a backdrop of low foreign direct investment in the country.

Botswana Oil is mandated to ensure security of petroleum supply for Botswana, where it manages State-owned strategic fuel reserve facilities, strategic stocks as well as bulk storage and distribution in the petroleum sector.


Source: Mining Weekly

South32 awards R158m coal contract to 100% black-owned mining firm

JOHANNESBURG – Diversified mining company South32 has awarded a three-year, R158-million contract at the Wolvekrans Middelburg Complex to 100% black-owned Modi Mining, which aims to source up to 90% of its labour from the nearby communities.

The award marks an advance on the ASX- and JSE-listed company’s plans for a more inclusive supplier landscape.

“Transformation is central to our efforts to make a meaningful contribution to the social and economic development of South Africa,” said South32 president and COO Africa Mike Fraser in a release to Mining Weekly Online.

In an Investing in African Mining Indaba address in February, Fraser emphasised the need for a supportive legislative, regulatory and administrative environment for inclusive growth solutions to realise their full potential.

He expressed the view at the Indaba that while mining still represented a significant vehicle for driving inclusive growth, it remained legislatively challenged, with above-inflation costs rendering high-quality resources less accessible.

“If we don’t get on the same playing field and face the same goal, then regardless of the country’s natural endowments, South Africa’s mining industry is at risk of not realising its potential,” Fraser warned in his pre-Mining Charter Three address.

The triple-listed South32, with operations in Australia, Southern Africa and South America, produces coal, manganese ore, manganese alloy and aluminium locally.

Source : Mining Weekly


Glencore doubles down on coal as mining rivals head for the exit

LONDON – Glencore is doubling down on coal, even as rivals BHP Billiton and Rio Tinto Group move away from the world’s dirtiest fossil fuel.

The company, run by former coal trader Ivan Glasenberg, made a surprise eleventh-hour $3.5-billion bid for a huge patch of thermal coal-rich ground on Australia’s east coast controlled by Rio Tinto Group and Japan’s Mitsubishi Corp. Rio is considering the proposal, which trumps an agreement made with a unit of China’s

The move puts Glencore at odds with most peers as coal loses ground to renewable sources in the global energy mix. The Swiss commodity trader and biggest exporter of thermal coal, used mainly for power stations, has consistently said coal is essential to the needs of the developing world in the long term, thanks to growing demand in Asia.

“The fact that they are obviously choosing to grow that business while everyone else is running in the opposite direction — either they are geniuses or they are buying into stranded assets for the longer term, which will incur hefty costs,” Ben Davis, a mining analyst at Liberum Capital in London, said by phone.

In recent years, shareholders have pushed miners like Glencore for more disclosure on future costs related to fossil-fuel assets as the world moves to limit global warming and tackle the goals of the Paris climate agreement of 2015.

The concept of “stranded assets” has gained traction with some investors who are concerned that owners of coal or oil assets may one day hold reserves that are unable to be extracted. Some large investors, including Norway’s $950-billion sovereign wealth, France’s biggest insurer and the Church of England, have sold some holdings in coal producers to reduce that risk.

The Church of England, which owns some Glencore shares, says its reviewing the company’s coal bid. It filed a climate disclosure resolution at the company’s annual shareholder meeting last year that passed with 98% support from investors.

“Fossil fuels will continue to be an important component in the global energy mix for several more decades,” a spokesman for the church said in an emailed statement on Monday. “The key is that it will be a declining component and companies will need to manage that transition and we intend to play our part in encouraging and supporting companies to do so. We retain the right to disinvest if companies are unresponsive.”

Rio Tinto started dismantling its energy division and selling coal mines in 2015 and BHP Billiton offloaded some coal assets as part of its South32 spinoff the same year. Producers face a combined $10-billion risk to their earnings if carbon pricing tightens in the wake of the Paris climate accord, according to a report from UK non-profit organisation CDP.

Still, prices for thermal coal have recovered, surging 62% from the start of 2016.

“Global energy demand will be driven by developing economies in Asia and will be largely met by fossil fuels to 2030,” Glencore said in its annual sustainability report last month. “While it is clear that the relative share of renewable energy will grow, the absolute volume of fossil fuels will also grow due to overall growth of energy demand.”

Glencore owns coal mines in South Africa and Colombia, plus 17 operations in Australia where it produced 93-million metric tons last year.

To complete a deal for Rio’s Australian coal assets, the company has said it would sell at least $1.5-billion of assets, prioritizing coal operations, to help offset the cost of the deal.

“Investors are often skeptical about M&A in mining given the industry’s record and concerned about coal outlook,” analysts at UBS Group wrote in a report Monday. However, Glencore’s “M&A record is decent and demand for high-quality coal is robust.”

Global coal usage dropped the most on record in 2015, falling 1.8%, as the US and other major economies started turning away from the most polluting fossil fuel, according to BP’s annual review of energy trends last year.

Coal demand fell most in the US and China, with declines of 13% and 1.5% respectively. Consumption increased in India and Indonesia, where the fuel is still so cheap that utilities prefer it to natural gas for electricity generation.

Source : Mining Weekly

Renewable energy eclipsing coal – Fieldstone

GABORONE – Renewable energy is very rapidly ousting coal, which could present a blow to Botswana, which has been pinning its hopes on coal replacing the static diamond industry as its new platform for economic growth.

“Renewable energy is just about the only thing being invested in,” Fieldstone Africa MD Jonathan Berman told the first day of the heavily coal-oriented Botswana Resource Sector Conference on Monday.

Emphasising that Fieldstone was in no way anti coal, Berman pointed out that the company was delighted to still be working in the coal and thermal space, advising a consortium on the 600 MW Thabametsi coal-fired power project in South Africa and closing a very large thermal coal-to-liquids project in Ghana.

But he believed it important to point out that it had become increasingly hard to raise finance for coal projects and while the company would get Thabametsi done, he indicated that it had been a close call, owing to financial institutions shying away from funding coal projects.

By contrast, his company had seen an explosion of new investment in independent power producer projects across all technologies in the region.

It had also seen more investment in transmission lines by utilities.

With the exception of the Democratic Republic of Congo and Angola, there were high voltage connections to all countries, with smaller connections between those markets, providing the background for the power market to develop partly as an integrated regional market across the Southern African Development Community.

As massive opportunities present themselves, he said the energy industry was moving away from the large centralised traditional coal and hydropower utility model of the past 100 years towards renewables, with investment taking place very fast in the last few years.

Use of conventional energy storage techniques were also arising to ensure that renewable energy could be stored to overcome its stop-start nature of only being operative when the sun is shining or when the wind is blowing. Storage using pumped water storage and gas storage of renewable energy had already emerged in Australia.

Berman’s presentation brought a defensive retort from Shumba Energy chairperson Alan Clegg, who said that renewable energy was a developed country pursuit, which did not fulfil the developmental and employment needs of Africa, which the Botswana Stock Exchange-listed company has chosen as the place to launch coal mines and then coal-fired power stations with strategic partners.

“We’re in Africa, where the driver is not only for energy, but for energy to deliver something else,” Clegg told the conference attended by Mining Weekly Online.

Shumba would be active in Botswana, and would be involved in coal, a mineral that could also be “green”, through the lowering of emissions from coal-fired power stations.

“Let’s not just assume that coal is dirty,” said Clegg.

While there would be a place for renewables, they were not the future, as nuclear would follow coal and create demand for uranium, he postulated.

However, Berman had earlier pointed to the speed that characterised Rwanda’s first solar independent power producer project, which was project financed and built in six-month spurts.

He also drew attention to South Korea making an energy u-turn away from coal and nuclear.

No matter what views were held on global warming, Berman made the point that renewable energy was also being promoted on health grounds.

He identified solar as an obvious renewable energy generation opportunity for Botswana, which is a signatory to the Paris accord on climate change.

Econsult MD Keith Jefferis highlighted the seeming irony of the Botswana government on the one hand committing the country to a lower carbon future by being a signatory to the Paris accord, and on the other strategising to build more coal-fired power stations, which would emit more carbon.

On a more practical level, the biggest obstacle to obtaining private sector finances was the government’s struggle to come up with power purchase agreements.

“There’s a very bright future for new energy technologies,” Berman said, adding financing had shifted towards renewables, which were lowering electricity tariffs.

Zambia’s new solar tender has been awarded at US 4.7c/kWh.

“Think on that one. Compared with any traditional technology, it’s incredibly low priced,” said Berman, who added that India had just come in even lower, awarding projects at US 4.2c/kWh, in spite of its higher cost-of-borrowing environment.

Source : Mining Weekly

Hwange colliery seeks to cut workforce by half

HARARE – Hwange Colliery Company Limited (HCCL) plans to reduce its workforce by as much as half and will restart underground operations in the third quarter as the Zimbabwean miner seeks to reduce costs and return to profitability.

HCCL began a voluntary severance program in March and about 200 staff have already taken the option, MD Thomas Makore said in an interview Tuesday. The company, which employs 2 400 people, probably needs to slim down to about 1 200 to 1 400 to produce competitively, he said.

The miner is in talks with potential customers for offtake agreements from underground operations, which are expected to resume by the end of September and will boost production of more valuable coking coal, Makore said. Production from the open-pit operations has rebounded after heavy rains in the first quarter slowed activity, he said.

Output rose to 170 000 metric tons in May from 52 000 t in April and is expected to top 200 000 t this month.

HCCL hasn’t reported an annual profit since 2012, according to data compiled by Bloomberg and said in March it faced significant liquidity problems last year that constrained output, as it struggled to find money for spare parts and other production needs. Creditors last month approved a plan to convert its short-term debts to medium and long-term borrowings.

Zimbabwe’s government owns 43% of the coal miner – 37% directly and 6% through the state-owned pension fund, while 26% is owned by businessman Nicholas Van Hoogstraten, Makore said.

HCCL reported a loss of $89.9-million in the 12 months through December, compared with a $115.1-million loss a year earlier.

Source : Mining Weekly

China says 31 nationals detained in Zambia for illegal mining

BEIJING – Zambia has detained 31 Chinese nationals for illegal mining in the African country’s copper belt but has failed to provide strong proof of their crimes, a senior Chinese diplomat said as he lodged a complaint.

Lin Songtian, the Chinese Foreign Ministry’s director-general for African affairs, told a Zambian diplomat in Beijing that China understands and supports actions to crack down on illegal mining, the ministry said in a statement late on Sunday.

However, Zambia had not only not provided strong proof of the crimes of the 31 detained but had also detained a pregnant woman and two others with malaria, Lin said.

“China expresses serious concern and resolute opposition to this,” the ministry cited Lin as saying.

China hoped that Zambia could handle the incident appropriately and as soon as possible, and release those who are innocent, Lin said.

Chinese companies have invested more than $1-billion in copper-rich Zambia but there has been animosity, with some Zambian workers accusing firms of abuses and underpaying.

In 2012, Zambian miners killed a Chinese supervisor and seriously wounded another in a pay dispute at a coal mine.

Zambian police charged two Chinese supervisors at the same coal mine with attempted murder two years earlier after the shooting of 13 miners in a pay dispute.

Resource-hungry China is investing heavily in Africa, a supplier of oil and raw materials like copper and uranium, but critics have warned that its companies are taking with them their poor track record on workers’ rights and environmental protection.

Source : Mining Weekly

Eskom’s Medupi Unit 4 synchronised to the grid

State-owned power utility Eskom on Thursday said Unit 4 at the Medupi coal-fired power station project, in Limpopo, had been synchronised to the national power grid this week.

This was the third of six units to come on stream and marked a key milestone towards the full commercial operation of the unit ahead of its scheduled commercial operation in 2018.

Unit 5 achieved successful synchronisation on September 8, 2016, and had reached commercial operation in April.

Medupi Unit 6 became commercially operational in 2015.

Source : Engineering News

Molefe removed as Eskom CEO, board might go too

Government on Wednesday ordered that Brian Molefe’s return to the helm of Eskom be rescinded and conceded that it had inflicted reputational harm on the country and the power utility.

Public Enterprises Minister Lynne Brown told a media briefing she had met with the Eskom board and instructed it to remove Molefe from the post, following a decision by an inter-ministerial commission that considered the circumstances surrounding his controversial reappointment earlier this month.

Brown said she would appoint an acting CEO within 48 hours, and hinted that she could also remove the board next month over the debacle that drew criticism from the ruling African National Congress and sent the opposition to court to demand Molefe’s removal. She said she would, however, wait until after Eskom’s annual general meeting in three weeks’ time.

She would not act sooner so as not to cause “more scurrying in the markets”.

Finance Minister Malusi Gigaba concurred that “there obviously has to be some consequences for this situation that we have come out of”.

Brown said it was not clear to her at this stage whether Molefe would receive a termination pay-out, and she would discuss the issue with the board.

“I have an idea in my head but I can’t put my head on the table,” she said, adding that she had not spoken to Molefe, but left it to the board to inform him of government’s decision.

Molefe left Eskom under a cloud in November last year after he was implicated in former Public Protector Thuli Madonsela’s report on State capture.

He was reappointed to his old post two weeks ago, for the stated reason that he had mistakenly been granted early retirement which would entitle him to a pension pay-out of R30-million, a move that was vetoed by Brown.

The ministerial committee said on Wednesday it was of the view that the board could have corrected the administrative errors relating to Molefe’s contract in other ways than reinstating him.

“We are saying that the decision that was taken was unfortunate,” Gigaba said.

“The events of the last three weeks have been quite painful in a number of ways…. the board, if it sought to correct the anomalies in the issues that arose when the group CE resigned or retired, they could have done so administratively without having taken the decision that they took.

“It has caused government a lot of harm… it has caused Eskom itself a lot of reputational damage, it has caused board members a lot of reputational damage.”

Gigaba stressed that government’s decision should not be seen as a reflection on Molefe, who previously headed Transnet and served as an ANC MP for a few months this year.

“He is well capable. He has proven himself in a number of his previous responsibilities. We believe he still has an enormous contribution to make to the country, in whatever way it will be.”

He added: “There is no decision on our part of where he is going, there are no plans to appoint him anywhere else.”

Justice Minister Michael Masutha, who led the media briefing, said Eskom had been forced to make serious concessions in the papers it filed in opposing the Democratic Alliance’s court application to have Molefe removed, including that his contract wrongly allowed him to retire at the age of 50, his current age.

He said, however, the IMC’s decision should not be read as any reflection on what the outcome of the application may have been.

After the announcement that Molefe’s contract was terminated, the DA’s public enterprises spokeswoman, Natasha Mazzone, said it was imperative that a full-scale parliamentary probe be instituted into the state of affairs at Eskom.

Brown last week announced that she would be asking the Special Investigating Unit to investigate procurement problems at Eskom from 2007, to review all evidence gathered in the scope of seven separate investigations in recent years. This would include an investigation by PricewaterhouseCoopers that found that Eskom had failed to do due diligence when it hastily awarded a coal contract to the Gupta family’s Tegeta Exploration in 2015.

Molefe and Eskom chairman Ben Ngubane on Tuesday assured Parliament’s Standing Committee on Public Accounts that there had been nothing untoward about the deal as Eskom frequently concluded coal contracts without a competitive tender to prevent load-shedding.

Source : Mining Weekly

Zimbabwe plans ‘use it or lose it’ mine-permit programme for gold

HARARE – Zimbabwe may confiscate unused mining licenses from companies and liberalize gold trading as ways to boost output.

Large mines are “sitting on lots of unused claims,” the southern African country’s Chamber of Mines said in a document outlining initiatives of the proposed Command Mining program. Revisiting the Gold Trade Act “to allow for the ease of handling and transportation of gold to buying centers” and speeding up mine registration are among other recommendations.

Zimbabwe, whose economy has halved since 2000, is looking for ways to boost output growth to almost 10% next year, mainly through agriculture and manufacturing, and by giving more people access to banking services. The country, which has the world’s biggest platinum reserves after South Africa, is experiencing a liquidity crisis that’s led to limits on daily cash withdrawals and resulted in civil servants being paid late last month.

A $40-million central bank fund will buy machinery for small-scale miners, while banks will be encouraged to accept gold-sale records and geological survey reports as collateral under Command Mining, the document showed.

Gold producers in Zimbabwe include RioZim, Metallon and Caledonia Mining.

Zimbabwe also mines chrome, coal, diamonds and nickel, among other minerals.

Source : Mining Weekly

World Bank May Support African Coal Power, Kim Says

World Bank President Jim Yong Kim indicated today that African “demand for access to power” may lead the lender to support coal projects on the world’s poorest continent.

“We are very sensitive to the idea that Africa deserves to have power,” Kim said, referring to the possibility of supporting coal projects. “There’s never been a country that has developed with intermittent power.”

Africa is experiencing an “almost energy apartheid,” where two-thirds of the population lacks access to power, Kim said in a Bloomberg Television interview on the sidelines of the U.S.-Africa Business Forum in Washington.

World Bank funds will be invested in clean energy as much as possible, with a focus on hydroelectric, solar, geothermal and wind. It will “try to avoid” investing in coal, Kim said, “but at the same time, we’ve got to respect the Africans’ demand for access to power.”

The Washington-based lender said today it’s committing $5 billion to boost electricity generation in Ethiopia, Ghana, Kenya, Liberia, Nigeria, and Tanzania.

Last year, the World Bank said it would stop financing coal projects except in rare cases “where there are no feasible alternatives available to meet basic energy needs and other sources of financing are absent.”

Exiting Poverty

The proposition would force the lender and its biggest shareholder, the U.S., to make an exception in their clean-energy commitments and concede that burning coal can be the fastest route out of poverty.

The International Monetary Fund said July 24 it estimates sub-Saharan Africa’s economies will grow 5.4 percent this year and 5.8 percent in 2015, compared with 1.7 percent and 3 percent in the U.S. for the same two years respectively. Energy shortages are a major obstacle to more robust growth, with about 70 percent of the population lacking electricity, according to the International Energy Agency.

U.S. President Barack Obama’s administration has proposed a Power Africa program, which still requires action by Congress, a five-year $7 billion plan to double access to power in Ethiopia, Ghana, Kenya, Liberia, Nigeria and Tanzania.

Source – Bloomberg