Europe Looks to Botswana to Meet Need for Coal

Earlier this week, Botswana president Mokgweetsi Masisi revealed that the country was overwhelmed with orders for coal supplies from Europe, estimating that the demand from countries in the West could surpass a million tons in a year. This comes as the war in Ukraine forces more countries in Europe to search for other ways to meet their demand for fuel.

Prior to Ukraine’s invasion by Russia in February, Europe relied on Russia to meet its fuel needs. The invasion has spurred investments into Africa and opened the floodgates for energy resources sourced from this continent.

In an interview at the Mining Indaba Conference, Masisi, who was a key speaker during the conference, stated that the country had gotten inquiries from Europe and was considering exporting its coal. Data from the International Energy Agency shows that the production of coal in Botswana has been limited, with the country mainly exporting its resources to neighboring countries. Given the demand, however, the country plans to increase production.

Masisi estimated that that demand from Europe could surpass 50,000 tons a month, noting that the country had seen demand from both private sector as well as governments in Europe and was focused on meeting these needs as soon as it could.

In that same interview, Lefoko Moagi, the country’s minister of green technology, mineral resources & energy security, stated that the country had the potential to meet this demand for coal from Europe.

The price of coal has seen a fourfold rise in price since the beginning of the year, with mining companies rushing to ramp up production in order to benefit from the unprecedented high prices. This is despite the increasing pressure on countries and companies to wean off the use of coal, which is a major pollutant to the environment.

Moagi revealed that other parties had also made inquiries regarding long-term supply contracts, estimating that in total, the country was looking at one million tons annually in demand from individual nations. Masisi also highlighted that all concerned parties remained committed to reducing carbon dioxide emissions, in line with the Paris Agreement on climate change. This agreement is an international treaty on climate change whose goal is to limit global warming to below 1.5o C.

He noted that responsibility arrangements on how the coal would be used to prevent pollution would be drawn up, adding that the coal would be used in a manner that was consistent with the window period allowed for investment. Furthermore, he continued, Botswana deserved a chance to develop and industrialize.

As Botswana mulls supplying coal to European countries, major sector players from the developed world, such as Warrior Met Coal Inc. (NYSE: HCC), may already be minting the benefits of coal’s resurgence during this time when the global energy supply has been disrupted by Russia’s invasion of Ukraine.

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