There’s never been a better time to invest in coal
Tuesday, April 24th, 2018
As Botswana-based emerging coal mining company, Minergy Limited prepares to list on the UK’s Alternative Investment Market (AIM) later this year, the scene is set for an investment in coal to deliver a promising return.
With over 1,600 coal plants planned or under construction around the world, major investment banks have revisited their pricing forecasts for coking and thermal coal and have increased their estimates, commenting that the market appears to be getting ready for a higher long-term price in contracts.
This buoyancy in the coal market is, according to Minergy CEO, Andre Boje, set to continue. Boje explains: “Last year, thermal coal prices increased by 33%, making it one of the world’s top five high performing commodities.
“In 2016, four million tonnes of coal was exported from South Africa to the African continent, this is forecast to rise to 38 million tonnes by 2030, Botswana and Minergy has a significant role to play in fulfilling that increase in demand.”
Minergy owns 100% of the 390Mt (million tonne) Masama Coal Project in the Mmambula Coalfield, in south west Botswana, 50km north of Gaborone. An opencast, low strip ratio mine is currently in the planning phase, with the potential to produce 2.4 Mtpa (metric tonnes per annum) of coal within a year after opening. The company will focus on delivering high quality coal to the regional market, including Botswana and South Africa, and entering the international seaborne thermal coal export market.
In April 2017, Minergy listed on the Botswana Stock Exchange (BSE), and has raised BWP 100 million (£7.5 million) through private placements. To date it is the first and only coal mining company listed on the Main Board of the BSE and will be only the second operating coal mine in Botswana after the government owned Moropule colliery.
The management team at Minergy has significant mine development and operational experience with a wide range of expertise in coal mining, marketing, sales and distribution and energy markets across Africa and internationally. The executive management team includes CEO Andre Boje and CFO Morné du Plessis, supported by three new appointments; Gabotshwarege Tshekiso as Project Manager, Dutch Botes as Technical Advisor and Lynette Kruger as Marketing Manager.
Boje continued: “Investors looking to invest in coal have lots of opportunity at moment; the price of coal is rising, there is a deficit in supply and a strong demand, especially in the developing world which is driving up the prices, and keeping them high. In my experience, there’s never been a better time to invest in coal.
“Whilst renewable energy has its place, it cannot provide the base load electricity supply, it’s expensive and subject to the whims of nature. Coal meanwhile, will continue to play a major role in delivering energy long into the future.”
Minergy has already made significant progress in the approval for the construction of a rail line connecting the Botswana coal fields with the South African rail infrastructure – helping to reduce the distance that seaborne thermal coal is transported.
Andre Boje has more than two decades of experience in the South African coal industry, having previously founded Chandler Coal Pty Ltd in 1997, a company which was listed on the Johannesburg Stock Exchange (JSE) as Wescoal Holdings Ltd (Wescoal) in 2005. During his ten-year period as CEO, Andre developed Wescoal from a small coal marketing company into a full-scale junior coal miner through various acquisitions and the opening of a number of new coal mines, resulting in a significant increase in shareholder value with a dividend paying company.
Boje commented: “I am delighted to confirm our intention to list on AIM later this year. AIM is the natural home for an ambitious company looking to raise long-term equity finance to fund future growth. Listing on AIM will enable us to reach our full potential with the Masama Coal Project, alongside our commitment to the development of the coal mining, marketing and distribution industry in Botswana.”
Minergy expects that following the approval of the mining license, it will commence the opening of the box cut in July 2018, with the first saleable coal from Masama available in Q4 2018.
Boje concluded: “Minergy offers shareholders an opportunity to invest in an anticipated cash generative coal mining operation which presents a platform for further growth and creation of shareholder value. Assessments of the Masama Coal Project completed so far indicate that it is a vast resource with low strip ratios ideally located close to demand markets in South Africa and Botswana.”http://www.minergycoal.com