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Home » News » Business » Coal prospects brighten as demand surges in China

Coal prospects brighten as demand surges in China

Publishing Date : 15 January, 2018

Author : REARABILWE RAMAPHANE

One of Botswana’s abundant resources, coal is increasingly demanded by the global market despite the world shift to green energy.


The  largest consumer of coal, China which is the world ‘s second  biggest economy after United States of America is anticipated to up their  coal demand this year. China also produces coal but is unable to meet its demand. China as the largest coal consumer, accounts for 49 percent of the world's total coal. The next largest consumer, the United States, consumes 11% of the world's total.


China's coal consumption increased by more than 2.3 billion tons over the past 10 years, accounting for 83 percent of the global increase in coal consumption .China’s micro-economy has been growing steadily in 2017, in a rising momentum, and coal consumptions in main industries like power, heating supply, steel & iron and chemicals (excluding building materials) have kept rising.


De-capacity in coal industry continued moving forward, outstripping the targeted tasks set in 2017 setting high prospects for increased demand on this year. Botswana is well positioned to benefit from the increasing demand of coal while it still lasts. Latest prospects revealed that Botswana sits on over 200 billion tonnes of coal that has not been explored. However this past year companies have been making progress in prospecting and exploring coal deposits for commercial and industrial use. Some subsequently listed on the Botswana Stock Exchange to raise capital an give Batswana a chance to own a stake in this multi billion pula industry with the recent one being Tlou Energy.


In its recent report released late last year, the World Bank Group forecasted a 4 percent increase in energy commodity prices including coal “Prices for energy commodities which include oil, natural gas, and coal -- are forecast to climb 4 percent in 2018 after a 28 percent leap in 2017” reads the World Bank  Commodity Markets Outlook.


The metals index is expected to stabilize this year, after a 22 percent jump last year (2017) as a correction in iron ore prices is offset by increased prices in other base metals. Prices for agricultural commodities, including food commodities and raw materials, are anticipated to recede modestly in 2017 and edge up next year.


“Energy prices are recovering in response to steady demand and falling stocks, but much depends on whether oil producers seek to extend production cuts,” said John Baffes, Senior Economist and lead author of the Commodity Markets Outlook. “Developments in China will play an important role in the price trajectory for metals,” he added


Apart from exporting coal to South African and overseas market Botswana companies explore coal to feed Independent Power Producers who are expected to take full swing this year as the country seeks to be power secure and even produce more for export into neighboring countries.


Another coal consumer prospected to take shape in 2018 is the multibillion pula Coal to liquid facility. Government through Botswana Oil Limited has already received 11 bidders who expressed interest for partnership in the project.   Companies exploring coal in Botswana are mainly Australian such as Minergy, Shumba and Africa Energy amongst others of which all are listed on the Botswana Stock Exchange. Most of the companies are at Environmental Impact assessments in the processes of acquiring mining licenses with production geared first quarter 2018 and thousands of jobs in the pipeline.

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