Botswana’s ambitions to develop its coal mining sector and reduce its dependency on diamonds will face an uphill battle in the face of subdued coal prices and the overshadowing value of the diamond sector, the Miningweekly reports.
The government-driven shift to coal production ramp-up in the next few years was expected to yield steady progress, supported by low operating costs, a solid project pipeline and rising regional and domestic demand, market analyst BMI Research said on Friday.
“We forecast the country’s coal output to increase from 2.3-million tonnes in 2017 to 3.8-million tonnes by 2021, with the sector’s share of total mining industry value growing from an estimated 2.6% in 2012 to 6.9% by 2021,” it said in the latest report forecasting the outlook for Botswana’s mining sector.
The firm suggested Botswana was well positioned to supply Southern Africa’s increasing coal demand, with coal-fired power generation to account for over 95% of Botswana’s power mix by 2025.
However, the poor outlook for coal prices poses a downside risk to the development of Botswana’s coal, with thermal coalprices set to average $65/t in 2017 and $63/t in 2018.
Further, the coal sector will continue to be overshadowed by the “sheer size” and value of the country’s successful diamond sector.
“While Botswana’s coal production growth rate will stand out in a global environment of subdued prices and carbon-conscious initiatives, the sector will only barely alleviate the country’s dependence on the diamond mining sector,” BMI explained.
The firm said Botswana’s diamond export value had nearly quadrupled year-on-year to $341-million in 2016, compared with the estimated $116-million value of the coal miningsector last year.(source: Miningweekly.com)