Navigating Africa’s trade shifts

Coal has long been one of Botswana’s most ambitious undertakings, but turning that ambition into an export reality remains a logistical nightmare.Despite significant reserves, the country’s coal industry is stuck in neutral, limited by its geography and a serious lack of transport infrastructure. “It’s not that the coal isn’t there; it’s that they can’t get it out,” said Duncan Bonnett, a partner at Africa House. “The coal industry in the country is constrained by two major factors: firstly, it’s constrained by the fact that it is landlocked and has to rely on neighbouring countries for transit of cargo; and secondly, it’s constrained by the lack of transport infrastructure.”Regional competition for export routesEastwards is the most natural direction to take coal as the largest markets are in Asia. However, Botswana must compete with coal-rich neighbours like Zimbabwe, Mozambique and South Africa. “All those countries naturally give preference to moving their own minerals, so Botswana’s coal ends up at the back of the queue,” said Bonnet.Looking westwards, hopes have long rested on the idea of exporting through Namibia’s Walvis Bay. But this route has a catch – and it is a big one. “You can’t export the coal out of Walvis Bay until you build a railway.”While plans are back on the table for a railway line linking Botswana to the growing Port of Walvis Bay, the reality remains that neither Namibia nor Botswana have the funds at the moment to back such a venture.Funding constraints for infrastructure development“Financing has been the big issue for the development of Botswana’s coal fields for years,” said Bonnett. “How do you fund a coal rail line when few regional or international banks are willing to finance fossil fuel infrastructure anymore? That’s a major hurdle.”According to Bonnett, the challenge lies in the scale of development. “Interestingly, the country doesn’t face the same constraints when it comes to copper simply because the volumes are much smaller. It’s far easier to develop a logistics solution to move 100 000 tons of copper than to export 10 million tons of coal.”He said while Botswana may still be able to develop coal to a limited degree, building an industry at the scale that government envisions will be “very difficult” without solving the freight and infrastructure puzzle.“We are seeing some developments around rail, and like every other rail utility in the region, they’re exploring expansions and capacity upgrades. It’s not that there are no projects underway, but these aren’t large-scale rail developments of the kind that coal exports would ultimately require.”Botswana is also looking at ways to use its coal domestically. In March, the Energy Minister announced that the government was considering the development of a 615 MW coal-fired power station within the next two years. If the plan goes ahead, it is expected that the plant will be situated near the country’s main generation plant, the Morupule B power station. Built in 2012 with a capacity of 600 MW, Morupule B has faced ongoing pressure due to frequent breakdowns.Shift toward renewable energyAccording to Bonnett, the government is also increasingly turning to renewable energy. “There are a number of solar projects on the table at the moment, with some fairly substantial players involved. “Given Botswana’s abundant solar and wind resources, it makes sense for the country to invest in developing its renewable energy sector,” he said.In March, Norway’s renewable energy provider, Scatec, commissioned the first 60 MW of the 120 MW Mmadinare solar cluster in Botswana. The remaining 60 MW is currently under construction and is expected to be completed by early 2026.Looking ahead, the government is expected to issue requests for proposals for the construction of at least another 1.5 GW of solar power generation over the next few years. Botswana has set an ambitious target of sourcing 50% of its power needs from renewable energy by 2030. LV