WRITTEN BY DJAMIL BENMEHIDI

It is a simple fact; energy is the key to economic growth and throughout much of the world, coal is still the only viable source of energy. A global backlash against nuclear energy in the wake of the Fukushima disaster in Japan, improvements in clean coal burning technologies and a crippling power deficit in the Southern African regions have opened up huge potential markets for Botswana’s considerable reserves of high-quality thermal coal.

Shumba Coal - a private exploration company whose focus is the acquisition and development of highly prospective coal exploration licenses in Botswana – has a vision to become Botswana’s premier coal exploration, development and production company, without compromising on its dedication to the improvement of its country and its people; a vision that it is now tantalisingly close to realising.

Mashale Phumaphi, Managing Director of Shumba Coal, spoke to Endeavour Magazine about the story of the business and its plans for the future.

POWERING FORWARD

In reality though, Botswana’s

continuous double digit

economic growth faces a

major challenge as a result of

a chronic power supply deficit

which now affects the entire

Southern African region,

including local powerhouse

economies such as South Africa

and Zimbabwe. With Botswana’s

power supply-demand outlook

indicating that demand for

energy will exceed supply from

2016 onwards, it has become

a matter of great urgency for

Botswana to identify new,

alternative power sources.

Fortunately for Botswana,

the nation is home to an

estimated 200 billion tons of

coal and Shumba Coal has a

remit to play a leading role in the

development, production and supply of thermal coal in Botswana.

With it possessing a wide portfolio of coal exploration assets, local

knowledge and expertise Shumba Coal is very much at the forefront

of Botswana’s fledgling energy renaissance.

“We are the first private owned company within this field in

Botswana and we are strongly focused on the development of the

country’s coal exploration and mining industry for the benefit of the

country and its people. Shumba Coal is a citizen-owned company with

an extensive knowledge of local markets and culture which we believe

gives us a strong competitive advantage.

At present we have over $USD21.5 million in assets and

resources, and are listed on both the Botswana and Mauritius Stock

Exchange. Shumba Coal is in its infancy and we have just completed

feasibility studies of sites and staff training. Botswana has the largest

undeveloped coal reserves in Africa and the power supply crisis that

is affecting our local region is something we can help with. In global

terms we are benefiting from a move away from nuclear power

stations by the energy industry after the Fukushima disaster in Japan,

and improved technology which has made it possible to build clean

coal burning power stations which produce next to no emissions.

These emerging local and global markets mean there is real growth

potential for a Botswana energy export industry.”

SHUMBA COAL

The sub-Saharan nation of Botswana - which lies just north of neighbouring South Africa and south-west of Zimbabwe - has come a very long way since its birth in 1966, following independence from Great Britain. Having started life as one of the poorest nations in Africa with a GDP per capita of $70, Botswana has embarked on a journey of economic transformation which has seen it develop into the politically stable and thriving middle-income country that it is today. And with the economy currently one of the fastest growing in the world, and with its small population of two million people benefiting from the fourth-largest gross national income in Africa and a GDP per capita of $14,000, on the surface Botswana looks well placed to take off over the coming years.

Endeavour Magazine | 67

Mashale Phumaphi, Managing Director of Shumba Coal

shipping. Overcoming this issue is

something of a matter of urgency

for the company, and as a result

two consortiums have recently

tendered plans to construct

two separate railway lines -

The Trans-Kalahari route shall

terminate at ports in Namibia

and the Ponto Techobanine

rail route will terminate at the

Mozambique port. In addition

to this, a further line to the Port

of Durban is anticipated. At

present, significant engineering

and financial hurdles remain

but Shumba Coal will have the

capabilities to export thermal

coal to every corner of the globe

upon completion of construction

work.

Another crucial step in the

development of the business

over the coming years will

be the development of the

company’s future mining assets,

in particular Shumba’s Secheba

Thermal Project. The first stage

of this will see Shumba begin a

full Preliminary Feasibility Study

and full Environmental Impact

Assessment at the Secheba

Thermal Project, following the

recent completion of a Positive

Scoping Study. This site is the

company’s most advanced

project to date, and with the two

main coal seams holding reserves

of an estimated 1 billion tons of

JORC compliant high-quality

coal, it is considered imperative

by the business to develop the

area so that it is ready for mining

SHUMBA COAL

As Mashale suggested, Botswana’s large and considerable

reserves of coal will be much sought after, in light of recent studies

which indicate that global demand for high-quality thermal coal has

increased greatly. The dynamic economic growth of the Asian region,

especially China and India, means that there are very strong growth

markets to exploit within these energy-hungry economies and it is

this growing Asian market that Shumba Coal anticipates will drive

demand for coal over the coming decades. Closer to home, there

is also scope for Botswana to use its coal to generate power and

monetise its thermal coal resources in its own local area. As is the case

in Botswana, neighbouring countries like South Africa, Zimbabwe,

Namibia, Swaziland and Lesotho are all expected to reach the stage

where demand for energy outstrips supply over the coming years

and though these markets are restricted by their smaller economies

and will be less lucrative then the Asian markets, they are also more

accessible.

However before Shumba Coal and Botswana can begin to take

advantage of these market opportunities, there is still much work

to do to make the company fully operational. Firstly, the biggest

challenge that Botswana has in relation to exporting coal is the lack

of a suitable rail network to facilitate movement of coal to port for

by 2015/ 2016. Secheba Thermal Project’s close proximity to existing

infrastructure such as the Francistown highway and a main rail link

between Zimbabwe and South Africa will give Shumba access to these

markets, as well as other energy hungry local markets in Zambia,

Angola and Malawi; an important first step indeed for the business in

realising its ambitious future goals.

“As the world’s power requirements continue to grow then the

demand for thermal coal in the medium to long term shall continue to

increase as there is no immediate obvious substitution for coal based

power. In relation to the current weak global economic market we

strongly believe that in the medium to long term the global economy

shall recover and that the growing middle class in the developing

markets of the world shall continue to have a ferocious appetite for

power. As a result we believe that our 5 year prospects are very good,

particularly considering that there could be a significant expansion of

Botswana’s Coal industry.

I would like to say that Botswana has successfully retained its

image as a politically stable investment destination over the last few

decades and the time is very opportune for it to monetise its coal

resources given the regional power shortage and the increasing

global demand for thermal coal.”

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19 April 2013 02:42:27 PM

“In relation to the current weak global economic market we strongly believe that in the medium to long term the global economy shall recover and that the growing middle class in the developing markets of the world shall continue to have a ferocious appetite for power.”

SHUMBA COAL

00267 318 6072

WWW.SHUMBACOAL.COM

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