Diversified energy and coal exploration outfit Maatla Energy has closed in a deal to acquire majority shareholding in Jindal BVI Ltd from Jindal Steel & Power Limited, a Mauritius conceived global energy conglomerate owned by Indian Billionaire Industrialist Naveen Jindal.
Maatla Energy is a multibillion pula mid-tier coal mining company in Botswana wholly owned by Maatla Resources Limited. The company is currently developing a coal export mine in Mmamabula Coal Fields, 145 kilometers north of Gaborone. The Mmamabula Coal Project contains over 90Mt of high-grade thermal coal. Maatla Energy is also currently conducting feasibility study to explore setting up Coal- Liquefaction Plant in around the operation.
On the other hand Jindal BVI is an investment company incorporated in accordance with the Laws of the British Virgin Islands. It is controlled by Jindal Steel & Power Limited; an investment company registered in Mauritius. Jindal BVI is involved in the mining and metallurgy industry with subsidiaries in Barbados, Bahamas, Mauritius and Botswana. In Botswana, Jindal BVI is present through Jindal Resources (Pty) Ltd a coal exploration and mining company, Trans Africa Rail (Pty) Ltd a railway construction company and Jindal Energy Botswana (Pty) Ltd a power and energy Management outfit.
Jindal BVI ‘s other subsidiaries in Botswana are Meepong Group of Companies encompassing Meepong Resources (Pty) Ltd a mining and management company, Meepong Energy (Pty) Ltd power station operation company in Mmamabula, as well as, Meepong Services (Pty) Ltd and Meepong Water (Pty) Ltd focusing on infrastructural and water abstraction respectively. All these subsidiaries under Jindal BVI were set up as operation companies for the Mmamabula Coal projects.
Reports from global media outfits indicate that Maatla Energy has put a price offer of $150 million for the acquisition of 97.44% of issued share capital in Jindal BVI a holding company housing all the above subsidiaries. In March this year Competition Authority Botswana as a regulatory requirement floated a merger notice in the market calling for expression of any opposition against the proposed acquisition.
Reports confirming Jindal Steel & Power Limited (JSPL) divestment from Jindal BVI suggests the transaction is predominately motivated by JSPL‘s quest to pare debt at group level. JSPL is reported to have a total outstanding debt of Rs 40,000 crore (over $5.6 billon) as on March 2019.
Company Executives have confirmed that JSPL has entered into a share purchase agreement to divest its stake in the Botswana project for a consideration of around $150 million as part of its international portfolio rationalization, an undertaking focusing at disposing some of JSPL mines and minerals assets across Australia, Asia and Africa.
“The assets are being rationalized and monetized keeping in view their long-term viability, the raw material security for JSPL and the profitability of each of these businesses. The Group has been combing each asset, with a view of either exiting it or building it, to add to the bottom-line,” disclosed JSPL on various market platforms.
Jindal Africa, a subsidiary of JSPL, bought the coal explorations which are also around Mmamabula from CIC Energy for $116 million in 2012, as part of its global expansion. The project plan also included setting up a 1,200-MW power plant in the area. The company has investment and business ventures in other Southern African markets such as Mozambique, Namibia, Zambia, Tanzania and Madagascar. However, with rising debt and global slowdown in the coal and steel market over the past few years, JSPL is selling off its international ventures to reduce its debt burden.
Maatla Energy exploration parameter, Mmamabula is one of the main coalfields in Botswana and contains more than 90 million tonnes of high grade thermal coal. Maatla’s Mmabula flagship mine has a life in excess of 25 years and is targeting initial production of 50 000 t/m, ramping up to 100 000 t/m within the first year of production. Currently site establishment and construction activities are underway with first coal sales expected in 2019.
There is an upward movement in the international coal price and an increasing demand for the high grade sized coal in the Southern Africa inland market. The Mmamabula coal mine will produce high grade coal for cement and lime producers, paper mills, chemical industries, brick works, breweries, sugar estates, hospitals and for general boiler applications in Southern Africa.
Maatla Resources says its mission is to develop the coalfields of Mmamabula to generate and supply coal which will power Botswana’s economy and assist in achieving energy security in the long term. With this acquisition Maatla Energy now stands to be a major player in the Mmamabula Coal exploration rush and Botswana’s coal industry as a whole.
Botswana’s Coal Industry
Botswana has over 200 billion tonnes of coal deposits underground, though the world is moving to green technology experts say the lucrative deposits cannot go unnoticed and be left untapped. Briton Billionaire Global Entrepreneur Sir Richard Branson also shared the same sentiments when headlining the 2017 Global Expo. He urged Botswana to explore coal deposits for industrialization, economic diversification and most importantly creation of much needed jobs as well as GDP growth in the interim while the country seeks environmental friendly energy generation alternatives.
Amongst international companies who are exploring the coal business and its value chain in Botswana are Tlou Energy, Shumba Energy, and Minergy all which are listed on Botswana Stock Exchange. Currently the only operating coal mine is Morupule Colliery founded by mining giant Debswana Diamond Company. Morupule is now wholly owned by government through Mineral Development Corporation (MDC).