Botswana's Shumba Energy plans coal-to-liquids plant with Chinese firms

Wison Engineering Services

30/08/2019 09:17

GABORONE, Aug 30 (Reuters) - Botswana's Shumba Energy has
formed a joint venture with two Chinese companies to build a
coal-to-liquids plant at a cost of between $1.5 billion and $2
billion, Chief Executive Officer Mashale Phumaphi told Reuters.
    Botswana has abundant coal reserves of around 212 billion
tonnes but currently imports all its fuel needs of 1.2 billion
litres per annum.
    Shumba has over the last few years progressed from being an
exploration company to an energy development company. 
    It sits on over 4.5 billion tonnes of thermal coal reserves
in Botswana's eastern coal fields.
    Shumba will hold an 80% stake in the joint venture, CoPet,
with partners PowerChina International Group, part of
state-owned Chinese firm PowerChina, and Wison Group  2236.HK .
    The coal-to-liquids plant is expected to produce 20,000
barrels per day of diesel and 5,000 barrels of gasoline per day
when it is completed.
    "Our primary objective is import substitution, and to this
end we have already had fruitful discussions with the largest
fuel retailers in Botswana for off-take," Phumaphi said.
    Up to 75% of the capital expenditure for the plant could be
financed by debt, with Shumba hoping to use its relationship
with Power China International and the Wison Group to borrow
from Chinese lenders, he said.
    The coal-to-liquids plant would require 3.2 million tonnes
of coal per annum, which will be supplied by Shumba's Mabesekwa
coal mine, currently under development. 
    Shumba aims to reach financial close on the project in the
next two years, with construction taking a further four years.

            

 (Reporting by Brian Benza
Editing by Alexander Winning)
 ((alexander.winning@tr.com; +27 11 595 2801))