Shumba Energy Chairman, Alan Clegg says fossil fuels are required in Botswana for sustainable energy production and economic growth in the next 50 to 80 years.
Clegg explained that the gross domestic product in all modern and developing countries in Africa correlates directly with consumption of energy as does life expectancy.
“Until a reliable, new and reasonably priced base-load source of energy is found, fossil fuels are required and in Botswana Coal Resources Development (CRD) is the next leg for its industrialisation and future sustainability in economic growth for the next 50 to 80 years,” said Clegg.
Recently Botswana Oil (BOL) issued a tender asking investors to build a coal to liquid (CTL) plant for production of fuel in Botswana in a bid to secure its energy supply.
Botswana’s current demand for petroleum products stands at 1.2 billion litres per annum, all of which is imported, mostly from South Africa.
Commenting on Shumba Energy financial report, Clegg explained that analysis of established coal markets has shown increase and consolidation throughout the year with prices going to US$ 105 per tonne.
Markets like South East Asia and China which are supplied mainly by Australia have bounced back with the benchmark Australian export price sustaining levels of over US$85 per tonne and they are now making return on capital of US$5 to US$10 per tonne.
Price levels are also expected to increase to US$110 to 120 dollars per tonne by mid 2018 as the Chinese government continues to shut down mines on safety and environmental concerns.
Clegg said although it is unlikely that the company will enter the seaborne coal market for some years yet, Shumba Energy retains their intentions to export onto the seaborne spot markets.
“This continues to depend largely on the logistical infrastructure establishment and transport costs, but positive signs for this have emerged in the reporting period from regional governments and parastatals like Transnet in South Africa,” said Clegg.
Shumba Energy is currently working on three mining projects, Morupule South Mine Project, Letlhakeng coal exploration project and Sechaba mine project in Botswana.