JOHANNESBURG (miningweekly.com) – Work is under way on the new Masama coal mine, which Botswana Stock Exchange-listed Minergy expects to commission in January, ahead of its primary listing on London’s Alternative Investment Market (Aim) in the first half of next year.

The 390-million-tonne Masama, located in the Mmamabula coalfield, 50 km north of the capital city Gabarone, has the potential to produce 2.4-million tonnes a year of thermal coal as Botswana’s only opencast low-strip mine.

The first saleable product is scheduled to be available from February 2019 for export to South Africa and mainly Asian markets. The Mmamabula coalfield is considered to be a western extension of the Waterberg coalfield in the Ellisras basin in South Africa.

“We’re are now able to break ground and invite contractors to start work immediately,” Minergy CEO Andre Bojé said in a release to Creamer Media’s Mining Weekly Online.

The 33% increase in the thermal coal price over the past 18 months has made the mineral one of the world’s five highest-performing commodities at a time when Botswana and Minergy have an opportunity to respond to Africa’s increasing demand for coal; the four-million tonnes exported from South Africa to the African continent in 2016 is forecast to grow to 38-million tonnes by 2030.

Masama is close to existing rail, road and water infrastructure, with distance advantages over competing suppliers to regional customers, and arising at a time when Transnet Freight Rail sees Botswana as a potential provider of additional rail traffic on its coal line.

“Investors looking to invest in coal have lots of opportunity now. The price of coal is rising, there is a deficit in supply and a strong demand, especially in the developing world, which is driving up the prices and keeping them high. In my experience, there’s never been a better time to invest in coal,” said Boje.

Minergy, which has raised an additional P26.9-million capital to meet its commitments, is engaging with local communities on job creation and upliftment programmes, including improving the school and the clinic at the Medie village, as well as bringing in electricity.

The mining contract has been awarded to Jarcon, a joint venture between South African company IPP and Botswana company Giant Plant, and the build-own-operate-transfer contract for the washing plant to Pentalin Processing. Contracts for the provision of site and bush clearing, civil works, power reticulation, water and waste management, road construction and weighbridges are in various stages of appointment.

Given the impending Aim listing, the granting of the mining licence to Minergy by the Botswana government further reduces the risk for any potential investors and underpins the investment case.

With the first phase of the development fully funded, the company could come to the market for its expansion.

Despite the global move away from using fossil fuels for energy in favour of cleaner sources, coal remains the world's second most used fuel after oil, with many developing countries locked into its use.

A number of traders have already reportedly engaged Minergy on offtake agreements. Trading-savvy Boje, the founder and former CEO of Wescoal, has many years of experience in coal trading under his belt.