S.African state miner dumps Botswana coal project

CAPE TOWN (Reuters) - South Africa’s state-owned mining firm African Exploration, Mining and Financing Corp. (AEMFC) has dropped a coal exploration project in Botswana because it was no longer viable, its CEO said on Wednesday.

A worker unloads coal at a storage site along a railway station in Hefei, Anhui province October 27, 2009. REUTERS/Jianan Yu

The Bosa Energy project in Botswana was meant to explore for coal, coal bed methane and uranium in the world’s top diamond producer. Coal resources within a proposed joint venture operation were estimated at 30 billion tonnes.

“(African Exploration) has opted to move out of the project after assessing the... market for the product,” chief executive Sizwe Madondo told Reuters in response to emailed questions.

He cited a number of factors for AEMFC’s withdrawal, including South African power utility Eskom “not committing to a power station in the area, logistics to other potential markets and funding requirements”.

AEMFC has been at the centre of a government push to broaden its own mining and exploration activities.

President Jacob Zuma’s office said in February the government had “resuscitated” the company, a wholly state-owned firm tasked to acquire and hold all exploration and mineral rights for the state, as well as engage in mining.

Madondo said a new joint venture company had been formed to expand AEMFC’s commodity base, although he did not provide details of the deal.

“A joint venture company has been formed and is currently at a start up phase to look at what commodities to focus on,” he said.

“This venture helps AE to diversify into other commodities like copper, manganese etcetera, which are currently not in its portfolio.”

He said South Africa’s Central Energy Fund, which held AEMFC as a subsidiary, could provide funding should a mining license be granted for its coal reserves at Vlakfontein, estimated at 56 million tonnes.

AEMFC was also recently granted prospecting rights for tin ore, zinc ore, lead ore, lithium ore, copper ore, manganese ore and silver ore in the Western Cape region.

South Africa, the world’s top platinum producer and No.3 gold producer, is transforming its mining sector to expand black ownership 16 years after the end of apartheid.

Since the end of apartheid in 1994, the government has passed laws which recognise mineral wealth as a national asset, but has stood firm against increasing rhetoric from within the ruling African National Congress to nationalise mines.

President Zuma has welcomed debate on mines nationalisation that spooked investors but said it was not government policy