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Minergy targets South African industrial market with production at Masama

Snapshot

  • Coal mining and trading company
  • Cornerstone asset is Masama mine in Botswana
  • Anticipated to achieve 110,000 tons run of mine per month
South 32 - Minergy pushes ahead with production at Masama

What Minergy does

Minergy Ltd (BSE:MIN) is a coal mining and trading company that owns the Masama coal mine in Botswana, its cornerstone asset.

Masama is located in the Mmamabula Coalfield, around 81 miles north of the country’s capital city of Gaborone.

The company said the Masama mine represents the first step in its strategy of becoming a mid-tier southern African coal mining company.

How it’s doing

Mine infrastructure, including extensive civil work, power reticulation, water reticulation systems, access roads, weighbridges offices and workshops for Masama were completed in 2019, and the mine box cut was ahead of schedule.

Plant upgrades have since improved efficiencies and provided consistency in both product quality and sizing.

It is envisaged that Minergy will be mining 110,000 tons run of mine per month. The same quantities will be put through the washing plant and this should result in saleable coal of between 70,000 and 80,000, increasing to 100,000 tons per month next year.

High demand anticipated

Demand for the product is high as a result of the short supply of coal specifically into the South African industrial market. It is believed that South African electricity generator Eskom will suffer a shortfall in coal supply of 470 million tons by 2030. Large players in the sector, Anglo American and South 32, are respectively withdrawing from the coal sector and disposing of their coal assets, meaning the supply will tighten even more.

Minergy is currently exploring various options for offtake, ranging from longer-term agreements for the finer duff product to spot deals for the bigger fractions.

In 2019 the company raised 90mln Botswana Pula (£6.1mln) from the Botswana Development Corporation as well as from the Minerals Development Corporation of Botswana. The funding is sufficient to bring the mine into production.

What the boss says – CEO Morné du Plessis

“We have come such a long way and are pleased with developments at the mine site. We are extremely excited about the future of the project, our ability to supply coal into the region, the highly experienced team responsible for executing the plan, as well as our capacity to contribute towards a viable coal sector in Botswana.”

“During early July 2019, the plant had successfully passed both electricity connectivity and leak tests and we are pleased to report that it is now fully operational, producing saleable coal.”

Inflexion points

  • Continued demand for coal from South African market shortage
  • Possible off-take agreements
  • Potential opportunities for expansion

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