BOTSWANA'S MINERGY REPORTS BOOMING COAL REVENUES, BUT TOUGH TIMES LIE AHEAD

GABORONE - Botswana coal miner, Minergy Limited, reported a 146 percent surge in interim revenues due to strong coal sales. But tough times lie ahead as commodity prices fall while a heavy debt burden continues to weigh on the company.

As reported in its results for the six months ended in December 2022, Minergy produced an operating profit for the first time thanks to a "remarkable improvement in revenue" owed to high global demand and coal prices which supported product exports through Walvis Bay in neighbouring Namibia.

Notably, the inflows have seen Minergy reduce its net loss before taxation by 37 percent from 91 million pula (R123.9 million) for the comparative six-month period to 58 million pula (R79 million) for the interim period, thanks to increased revenue.

The exceptional demand for coal created by the war in Ukraine and the resultant impact on Minergy's performance started early in March 2022. The miner reported a 53 percent increase in volumes during the period under review, supported by some 147, 000 tonnes which were exported via Walvis Bay. Coal prices were about 66 percent higher than the comparative six-month period, Minergy noted. To sell the additional coal supported by buoyant export markets, mining at Masama was ramped up to full capacity. "This came with further investment into work in progress … and increases in contract mining and other services trade accounts," Minergy said.

The company said its planning assumed a market with extended increased demand and pricing lasting for at least 12 months. But an "abrupt and unexpected export price decrease" of around 33 percent has made it difficult for Minergy to generate seaborne sales volumes, which consequently impacted the basis for operating at full capacity. "This has led to high workin-progress levels resulting in sterilising inventories and its monetisation." In early March, mining at Minergy's Masama coal mine stopped when the contract miner there halted activities over non-payment of historical arrears.