• Botswana has more than 200 billion tonnes of undeveloped coal reserves and is developing six new coal mines.
• As banks move away from the industry, Botswana turned to investors from China, the world’s largest coal consumer.
• The key to developing the project is the construction of a railroad link to South Africa, which can reach 125 kilometers.

As funds for fossil fuel projects run out, Botswana is competing to develop six new coal mines and rail links for export, and the government is preparing to invest its own money in the project.

Southern Africa, the world’s second-largest diamond producer, has more than 200 billion tonnes of undeveloped coal reserves. To kickstart the industry, we turned to investors from China, the world’s largest coal consumer.

“The country has excellent resources close to the surface,” Robson Mugomba, chief executive officer of the government’s mineral development firm Botswana, told a virtual conference of Chinese investors last week. “With the resources we have, we can offer potential investors a truly engaging opportunity.”

The appeal to the group led by the African Cantonese Business Association comes from banks increasingly avoiding funding coal projects due to their impact on global warming. Still, fuel demand remains high, especially in Asia, and tight supply has boosted prices to record highs.

Botswana wants to take advantage of the fact that coal is still considered a period of demand before it is replaced by other cleaner energies.

“We have that window,” Charles Siwawa, CEO of the Botswana Mining Council, said in an interview. “We have a lot of coal, and even if we make $ 10 billion from now until they want to stop us, that makes a lot of sense to our economy.”

Rail link

According to a slide presented to Chinese investors, the key to developing the project is the construction of a 125-kilometer-long rail link to South Africa at a cost of $ 150- $ 250 million. With an annual transport capacity of 25 million tonnes, the line carries coal to South Africa’s rail system, which runs to the port.

South Africa has had a significant coal export industry for decades, but the landlocked Botswana deposit remains largely undeveloped. The government owns the Morupule Colliery and is supporting another operation, the Masama mine owned by Minergy.

The state is now ready to invest its own money in the project to ensure that it is produced, according to Mgomba.

“These opportunities are subject to a detailed assessment of potential benefits,” he said. “We check our portfolios to see if there is a way to fund them.”

The government is determined to move forward, despite having only one 300-megawatt coal-fired power plant in its 20-year energy program.

Financing from elsewhere can be difficult to obtain. Industrial and Commercial Bank of China, China’s largest lender, has recently withdrawn from Zimbabwe’s $ 3 billion coal-fired power plant under pressure from climate change activists.

“Undoubtedly, we are all part of a cleaner world,” Botswana’s mineral minister, Lefoco Moagi, told a local newspaper last year. “But we believe that we cannot leave behind such divinely-given resources.”

Source: News24