“The supply contract with a regional consumer shall see the company supply over 20,000 tonnes of washed coal and the medium-term coal supply contract is in line with the company’s strategy of having a high proportion of contracted customers in addition to spot market customers.”
Shumba Energy Ltd, a Botswana-based coal mining and energy development company, last week, told its shareholders that its coal trading division had entered into a 3-year contract to export coal.
The Botswana Stock Exchange (BSE) listed company indicated that having contracted customers in addition to spot markets could enable the company to generate predictable and sustainable revenues.
According to Shumba Energy, its management has established demand for its coal exports and trading division. Shumba Coal Trading is expected to manage trading of coal from projects owned by Shumba Energy and other Botswana coal producers in order to develop and grow the market for low-cost, high-quality coal from the country. “The supply contract with a regional consumer shall see the Company supply over 20,000 tonnes of washed coal and the medium-term coal supply contract is in line with the company’s strategy of having a high proportion of contracted customers in addition to spot market customers. This approach will enable the company to generate predictable and sustainable revenues,” said the company in the shareholders update released last week.
The company’s management has indicated that Shumba Energy intends to provide the Southern African region with low cost coal and energy. Updated data shows that demand for coal and power in the region remains high and is projected to increase over the years. According to the data the region is still faced with acute shortage of power and the figures show that local supply in majority of countries in the region is still low when compared to future demand. Botswana faces power deficit of 600 MW as a result of the projected increase in power consumption, Zimbabwe (950 MW), Namibia (600 MW) and Zambia (1500MW). It has been established that Zambia which is another potential market for Shumba coal exports, continues to experience widespread power shortages caused by an over reliance on hydro-electric power schemes that have been hampered by low rainfalls and excessive exploitation during the past few years. Observers have indicated that despite the commissioning of 300MW of new coal-fired generation and a new 120MW hydro-electric project, Zambia has still needed to import large amounts of electricity via a series of contracts to help meet local demand. According to the observers Zambia’s major mine and smelter expansions in the Copperbelt drives new demand for electricity.
The company’s management added that Shumba Energy is on the track to take advantage of the power deficit. “Shumba Energy was established in 2011 to provide the SADC region with low-cost coal and energy and the company is reaching its development objectives and now controls a significant portion of advanced energy projects in Botswana, includi ng over 4.5 billion tonnes of coal for thermal energy.”
“As a major industry player, Shumba Energy’s mission is to satisfy the growing energy demand in the SADC region as a result of chronic power shortages. For Shumba “Powering the Future” means addressing chronic power shortages head-on and supplying energy to affected southern African countries in a sustainable and cost-effective manner,” stated the company Managing Director Mashale Phumaphi.
Shumba Energy management has indicated that the company is uniquely positioned with its strategy to develop energy projects that are unaffected by the volatility of global commodity prices.