Landlocked Botswana has an estimated 212 billion tonnes of coal, but none has so far been commercially exported outside the continent due to the absence of cost effective export routes to ports. Presenting at the Botswana Resource Sector Conference recently, African Energy Resources Limited managing director Frazer Tabeart said if Botswana is to become a major exporter of coal, it needs significant investment to improve rail infrastructure.

"There is a lot of opportunity for Botswana but this is affected by the long distance from the market without infrastructure. The distance to port requires highly efficient infrastructure corridors," he said. Botswana is competing with Indonesia and South African coal exports, both of which may be restricted as strategic assets by their respective governments. However, Australia poses the greatest threat with the yet to be developed Galilee Basin in Australia, also a potential supplier to India," he said. The Botswana Stock Exchange (BSE) listed African Energy is developing the 2.5 billion Sese coal resources in eastern Botswana and also recently bought the 1.3 billion Mmamantswe project.

Tabeart explained that with the current fiscal climate, access to large amounts of development capital such as this is becoming harder as the major mining houses cut back on capital. "To attract major infrastructure funding, Botswana needs to consolidate its coal industry into fewer players with larger project portfolios (5-10 billion tonnes minimum) to attract multi-billion dollar infrastructure funding linked to equity participation in project development".Botswana government reports that it may seek tenders in late 2013 to build the $11billlion Trans Kalahari Railway, and a $4billion port at Walvis Bay. This will take seven to 10 years to become fully operational.

The existing rail links between Botswana and Maputo offer available capacity of 20 million tonnes per annum and the ability to incrementally expand to more than 100 million tonnes per annum. However, the proposed new routes to Walvis Bay and Ponto-Techobanine are yet to demonstrate commercial viability but offer potential long-term solutions for more than 100 million tonnes per annum.

Government is presently finalising studies on routes through Namibia to the west and Mozambique to the east, while South Africa has offered a limited route through Durban. A government thinktank recently estimated that the mushrooming coal exports industry could be worth P19 billion in the next 13 years, creating as much as P3.2 billion in revenue to government if appropriate infrastructure is urgently put in place.According to a coal export study carried out by the Botswana Institute for Development Policy Analysis (BIDPA), the coal export market can employ up to 6,000 people and provide about a quarter of the revenue currently generated from diamond sales by 2026. Diamonds revenues have averaged over P12 billion per annum, but in light of the expected decline in diamond production post 2027, BIDPA reckons that coal will come in as a key industry that has the capacity to partially absorb the impact.