Shumba Energy strikes deal with ESKOM supplier

  • Shumba pockets P100 million
  • Lurco will help Shumba access export markets


An agreement has been reached for the establishment of a 50/50 joint venture partnership between the Botswana Stock Exchange-listed coal explorer, Shumba Energy Ltd and South African black-owned Lurco Group South Africa Pty Ltd (Lurco) at the Company’s Sechaba thermal coal project, the Shumba board announced this week.

Lurco has been trading for eight years and is an emerging South African mining resource business with a focus on exploration, beneficiation and trading.

Lurco is a supplier to Eskom in South Africa and currently exports thermal coal to a number of international clients out of various ports in Southern Africa. According to  Sanne Mauritius, Shumba Company Secretary, the deal will allow the partnership to supply coal into the region and for export. Through the deal, Sechaba and Lurco will hold an equal stake of 50 percent each in the company’s Sechaba coal mining project situated in the Morupule coalfield, in Botswana.

Under the commercial terms of the partnership, Shumba shall transfer Sechaba and related authorisations to a special purpose vehicle (SPV). Lurco shall immediately  conclude any feasibility work and begin the opencast construction, spending a minimum of US$ 10 million (approximately P100 million). Further, an amount of US$ 10 million shall be paid to Shumba in phases prior to Lurco earning its 50 percent. Lastly, development capital expended by both Shumba and Lurco prior to commercial production shall be recouped from the SPV in the form of shareholder loans.

The parties have agreed that coal produced at Sechaba from the open pit shall be toll processed through a wash plant owned by Shumba. The Managing Director of Shumba, Mashale Phumaphi commented, “As a Botswana based and owned company, we are pleased to have concluded a partnership with such a progressive black South African company as Lurco. The transaction will grant us access to markets that we haven’t had access to before. Together with Lurco we will work towards regional inclusivity and the partnership is a clear example of fulfilling Southern African Development Community (SADC)’s objectives of integration between Southern African countries in the energy industry.”

The Shumba MD said the partnership is in line with the company’s long-term strategy which is to address the chronic power shortage and satisfy the growing energy demand in the SADC region while monetising all of its existing assets. He said the terms they have received will ensure that they continue to accelerate the development of Sechaba while allowing Shumba to fast track other projects.