Analysts estimate that Botswana has roughly 200 billion tons of undeveloped coal that it must make viable as its diamond resources continue to decline. The bulk of the coal is located in eastern Botswana’s Kalahari Karoo Basin, an extension of South Africa’s Waterberg Coal Basin. At present, four private companies are engaged in the eastern Botswana coalfield, including CIC Energy/International Power Ltd, Kalahari Energy, Aviva/NEMI, and Saber Energy, part of the Tau Capital group that owns CIC Energy. Their projects include coal mining, coal to hydrocarbons, a coal-fired power station to Coal Bed Methane (CBM) production, and a CBM-fired power station and the various fuel industries spinning of from coal, its associated minerals and by-products of its extraction.

The potential economic byproduct and windfall that could be realized across the state from a coal boom is laid out nicely in Mmegi:

Most of the projects underway in the eastern Botswana coalfield are expected to enter commercial production after 2012. Analysts believe this places their developers in the enviable position of sidestepping the adverse effects of the prevailing global recession. For instance, it is expected that some project costs could decline for these developers because prices of steel and other materials have generally declined . . . Botswana’s new eastern economic belt is expected to transform rural villages like Mmashoro, Mmamabula itself and a whole lot of others into growth zones leading to a rise in land values and the establishment or upgrading of basic services such as schools, post offices, health care facilities and policing. It is expected that these villages, some of which will have to be electrified as a by-product of the heavy industry coming to their region, will also see the arrival of services such as banking, insurance and telecommunications.

However, some practical constraints may impede the timeframe. Botswana’s most recent budget saw it relax its fiscal belt and adopt deficit spending, but were its spending provisions adequate?

At present, one of the biggest challenges for the development of the economic belt is lack of infrastructure. Many of these developments are taking place away from major roads, railways and power lines, hiking costs for the many players involved. Kalahari Energy Chairman, Jim Best, has explained the challenge thus: “Part of the problem has been the infrastructure. There’s potential for exports from this area, but this cannot happen without infrastructure. We are lobbying government for infrastructure to make exports possible.”

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