Canadian company-CIC Energy has spent over P1, 4 billion exploring for coal in Botswana ever since it debuted in the local scene more than six years ago, a senior company official revealed on Wednesday.
The funds were mainly sourced from its European and Canadian investors, said CIC President Greg Kinross. “Part of the money was also used for overheads and acquisition of exploration licenses,” he stated.
Kinross was part of the South African business delegation that visited Botswana this week with President Jacob Zuma. CIC Energy has not been so lucky with its Mmamabula Energy Project (MEP) that has faced delays mainly due to South Africa’s decision not to procure power from Independent Power Producers (IPP) in the short term.
With over one billion Pula injected on exploring activities to date and nothing to show in terms of full production for sale, does this mean shareholders’ investment has gone down the drain? “I can’t say I am happy. We should have projects running by now for the benefit of shareholders,” said the disappointed Kinross.
MEP is located in the Mmamabula Coalfields of South-Eastern Botswana. It was supposed to be an export-oriented coalmine, with 80 percent of its produce exported. The project has faced many hurdles such as the economic recession, and most recently South Africa’s Integrated Resource Project (IRP) 2, which did not give the project any chance for any commercial production.
The Sandton-based company has long announced that South Africa will be its off taker, but that appears like a pie in the sky, at least up to 2020. Meanwhile, the company has somehow been given a boost by the fact that Botswana and Namibia are planning to build Trans Kalahari Railway line, which will link the two countries, providing a perfect chance for export-oriented producers. China and India are leading coal demand.
MEP, which was supposed to be the company’s flagship revenue earner has since been downscaled from the original 2400 mw to 1200 mw due to the two-year old recession which started in 2008 and ended in 2010.
Meanwhile, Kinross is very happy that the competition authority has approved their merger with Jindal Steel and Power (Mauritius), a merger for which shareholders already gave the thumbs up at a recent meeting held in Canada.
“This means we are now a subsidiary of Jindal-Africa,” he said. Jindal will provide CIC with the much needed capacity, both in terms of future exploration and coal mining. Jindal Steel and Power Limited (JSPL) is one of India’s major steel producers with a significant presence in sectors like Mining, Power Generation and Infrastructure.
With an annual turnover of over US$ 3.5 billion, JSPL is a part of the US$ 15 billion diversified O. P. Jindal Group. Jindal is still to change the current board and management of CIC Energy since it is now the only shareholder.
CIC Energy is listed in the Toronto Stock Exchange (TSX) and Botswana Stock Exchange (BSE).
Minister of Minerals, Energy and Water Resources in Botswana is still to give the company an approval letter. However, Kinross, a trained Chartered Accountant, was hopeful that “It might be granted in two weeks or so.”