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Africa: Botswana to Fast-Track $4 Billion Coal-to-Liquid Refinery



By Wendell Roelf

February 6, 2020 - Botswana, which has some of Africa’s largest coal reserves, wants to cut harmful carbon emissions but is committed to using its resources for a new coal-to-liquid (CTL) refinery set to come on stream by 2025, the mines minister said on Tuesday.

State-owned firm Botswana Oil issued a tender three years ago seeking investors to build the plant, estimated then to cost about $4bn, in a move to secure its energy supplies and diversify away from diamond mining.


Coal is loaded onto a truck

Photo: Siphiwe Sibeko, Reuters

“It (CTL plant) is still in its infancy stage, but we believe now it will be accelerated,” Lefoko Maxwell Moagi, minister of mineral resources, green technology & energy security, said on the sidelines of the Mining Indaba investment conference in Cape Town.

Moagi described Botswana’s 212-billion tonnes of coal reserves as “God’s gift” and said the CTL project, as well as a 100MW pilot coal bed methane project, were two projects Botswana would fast-track.

“We believe coal has also got a beneficial way of being exploited without adding to the carbon footprint. We can convert it in coal-to-liquids, we can convert it to gas, we can do a lot of things with coal and these are the things we will be exploiting fully,” Moagi said.

Asked about funding challenges for any future coal-related projects amid a global pushback from banks and investors, Moagi said some banks, which he did not name, as well as Chinese firms remained potential financiers.

Moagi said the government had held preliminary discussions with Sasol, a recognized leader in CTL technology and whose Secunda refinery supplies SA with millions of litres of synthetic fuel each year.

Sasol did not immediately respond for comment.

In 2019, Shumba Energy formed a joint venture with two Chinese companies to build a separate coal-to-liquids plant at a cost of between $1.5bn and $2bn. 

Moagi said the government also expected to finalise power purchase agreements in 2020 for a planned new 100MW pilot power plant using coal bed methane, gas trapped in underground coal seams.

Tlou Energy and Sekaname, a subsidiary of Kalahari Energy, have been shortlisted to develop the project.

“The project is at an advanced stage because what we needed to do is to make sure the power purchase agreements are finalised and we hope that this year it will be finalised,” Moagi said.

He said the government expected the coal bed methane project to come on stream by 2022.