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African Energy Resources' Botswana coal to benefit from heavy haul rail projects

African Energy Resources' Botswana coal to benefit from heavy haul rail projects

African Energy Resources' (ASX:AFR) coal project in Botswana stands to benefit by two major rail projects being developed, one that is aimed at transporting coal from Botswana into South Africa to be used by state‐electricity generator Eskom.

Yesterday, AFR also announced a capital raising of up to $4.5 million through a placement and a non-renounceable issue to advance its portfolio of coal and power projects in Botswana.

There is a massive 2.5 billion tonne coal resource base at Sese.  AFR also acquired the 2.4 billion tonne Mmamabula West Coal Project in south‐east Botswana which increases total in‐situ resources to 6.2 billion tonnes of thermal coal in Botswana.

Botswana‐South Africa Rail Link

Transnet Freight Rail recently announced that a 105km heavy‐haul coal rail link between Botswana and South Africa 
will commence construction next year as part of a R300 billion infrastructure investment programme initiated by TFR.

TFR has allocated approximately R40 billion for the construction of this line which will link into existing coal heavy‐haul railway lines and is aimed at transporting coal from Botswana into South Africa to be consumed by state‐electricity generator Eskom, or exported via the seaborne market.

Emphasising the timeline, TFR CEO Siyabonga Gama said that construction of the rail link would commence next year: “We are finalising feasibility studies [and we] will start constructing the rail link in 2015, immediately after the completion of feasibility studies”. 

The line will be designed to carry 40‐80 million tonnes per year. “We are planning to develop the Richards Bay Coal Terminal to support the expected [volumes] from Botswana and the Waterberg coalfield in South Africa”.

Trans‐Kalahari Railway


On 20th March, a Bilateral Agreement between the Governments of Namibia and Botswana for the construction of the 1,500km heavy‐haul Trans‐Kalahari Railway was signed at a ceremony in Walvis Bay.

The estimated capital cost of the project is approximately N$100 billion (US $10 billion) and construction work is expected to take five years. 

As part of this development, the Walvis Bay Commodity Terminal will be built with an annual capacity to handle 65 million tonnes of coal. The project is receiving the highest level of support from each government, including the Coal Development Unit in Botswana and the appointment of a Namibian ministerial committee to ensure the project is delivered.

Analysis

The emergence of these two heavy‐haul freight corridors will complement the two existing cape‐gauge corridors that are available for the export of coal from Botswana, opening up markets for future coal produced from AFR's Sese project.

The massive 2.5 billion tonne coal resource base at Sese, which owned by AFR which provides the resource base to benefit from the rail projects. 

Add in the acquisition by AFR of the 2.4 billion tonne Mmamabula West Coal Project in south‐east Botswana which increases total in‐situ resources to 6.2 billion tonnes of thermal coal in Botswana adds to the market potential of AFR's future coal produced with rail developments under way.

The rail projects will materially assist in the evolution of AFR's Sese project and we consider it to be value accretive to AFR.

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African Energy Resources Timeline

Newswire
November 01 2012

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