Botswana-based Shumba Energy on Monday said it had signed a binding memorandum of understanding with HMS Bergbau Africa, a subsidiary of the Frankfurt-listed global trading house, in a step towards exploring the export market.
Shumba Energy, which was established in 2011 to provide the SADC region with coal and energy, owns a significant portion of advanced energy projects in Botswana, including more than 2 billion tonnes of coal for thermal energy.
Under the terms of the agreement, HMS will be responsible for marketing all export product as of 2019.
Shumba said in a statement that the collaboration would deliver advantages of scale and combined expertise.
“Shumba Energy’s know-how of development of coal mines in Botswana combined with HMS’s Bergbau’s marketing and logistics expertise in the global coal markets offers a solid base for further growth for both companies,” it said.
Mashale Phumaphi, Shumba Energy’s managing director, said the MoU was “a welcome step towards exploring the export market”.
“Despite political pressure to support non-fossils, we believe that the global long-term outlook for thermal coal demand is promising, driven by the industrialisation of emerging economies and the need to secure reliable and cost-effective baseload power supply,” Phumaphi added.
Heinz Schernikau, founder and chief executive of HMS Bergbau AG, said the deal would result in “a significant expansion of our operating activities in this region”.
“Besides expanding business volume in South Africa we also expect positive effects and improvements in terms of our position on the international coal market,” he added.
The statement added, however, that Shumba’s primary focus would continue to be developing power stations in Botswana to address the power challenges faced in southern Africa.