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Bloomberg News

Antony sguazzin

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July 11, 2021 • 22 minutes ago • 2 minute read • Join the conversation

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(Bloomberg) – At a time when funding for fossil fuel projects is running low, Botswana is rushing to develop six new coal mines and a rail link for exports, with the government poised to invest its own money in the projects. .

The southern African nation, the world’s second-largest producer of diamonds, has more than 200 billion tons of untapped coal reserves. To jump-start the industry, it has targeted investors from the world’s largest coal consumer, China.

“The country has good resources that are close to the surface,” Robson Mugomba, acting executive director of the Botswana government’s Minerals Development Company, said at a virtual meeting of Chinese investors last week. “With the resources we have, we could offer potential investors really attractive opportunities.”

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The call for the group led by the Guangdong Business Association of Africa comes as banks increasingly refuse to finance coal projects due to their impact on global warming. However, demand for the fuel, especially in Asia, remains high and prices have risen to a record due to tight supply.

Botswana wants to take advantage of what it sees as a period when coal will continue to be in demand before being replaced by other, cleaner forms of energy.

“We have that window,” said Charles Siwawa, executive director of the Botswana Chamber of Mines, in an interview. “We have a lot of coal and even if we make $ 10 billion between now and when they want us to stop, to us it means a lot to our economy.”

Rail link

The key to developing the projects is building a rail link to South Africa of up to 125 kilometers (78 miles) at a cost of $ 150 million to $ 250 million, according to a slide presented to Chinese investors. The line, capable of transporting up to 25 million tonnes a year, would funnel coal to the South African rail system that reaches its ports.

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While South Africa has had a significant coal export industry for decades, Botswana’s landlocked deposits have remained largely unexploited. The government owns the Morupule coal mine and has supported another operation, the Masama mine, owned by Minergy Ltd.

The state is now willing to invest its own money in projects to ensure they reach production, according to Mugomba.

“These opportunities are subject to a detailed evaluation that looks at possible returns,” he said. “We check our portfolio to see if there is a way to fund them.”

The government is determined to keep going even though it only has a 300-megawatt coal plant in its 20-year power plan.

It can be difficult to get funding from elsewhere. China’s largest lender, the Industrial & Commercial Bank of China Ltd., recently pulled out of a $ 3 billion coal-fired power plant in Zimbabwe after pressure from climate activists.

“Make no mistake, we are all subscribed to a cleaner world,” Lefoko Moagi, Botswana’s mineral minister, told a local newspaper last year. “But we think we just can’t leave an abundance of a God-given resource like that.”

© 2021 Bloomberg LP

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