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Project profile: Walkabout Resources

Published by
World Coal,

Walkabout Resources, Australia.

Botswana is a landlocked country beset with the tyranny of distance and infrastructure constraints. However, the country holds an endowment of close to 200 billion t of shallow, wide and consistent seams of thermal coal. Unlocking this coal from its calcite-blanketed bed under the expansive Botswana landscape and delivering it to regional power plants and international seaborne ports is the challenge facing the government and industry.

Botswana was ranked first in Africa and 25th in the world in the 2014 Fraser Institute Mining Policy Perception Index, which annually assesses the competitiveness of global mining jurisdictions. The government of Botswana, long a believer in facilitating a robust mining industry through the development of some of the world’s richest diamond mines, is an enthusiastic supporter of the emerging coal industry and is methodically managing the country’s three proposed coal railway development projects.

President Seretse Khama Ian Khama says diamonds alone cannot carry Botswana forward. Delivering his 2014 State of the Nation Address, Khama said, in order to achieve greater economic diversification, the country should continue promoting further beneficiation within the minerals sector.

“In the context of our ‘coal roadmap’, we are also finding opportunities through which our vast coal reserves can become an additional source of export revenues, while being further utilised to fuel local power plants,” the president said. “[This has], in turn, served as a catalyst for the Trans-Kalahari and Ponto Techobanine railway projects, as well as further expansion in the energy sector.”

Located south-central to the country is Takatokwane, where Walkabout Resources has a JORC inferred resource (2004 code) of some 6.9 billion t of shallow, flat-lying coal. The coal endowment area is vast, representing a district, 24 km east to west by 20 km north to south. While there are those that say such high coal tonnages defined in resource are unnecessary and will not be mined, it is important to note that size creates flexibility in planning and operations, provides for better economic options for extraction and establishes economic critical mass. Walkabout controls some 67% of the Takatokwane project through two joint ventures.

Within the inferred resource, Walkabout has published a JORC indicated resource of 748 million t inside a target mining area, an area selected for its coincident shallow coal, wide seams and lower sulfur content. Within this area, the company is planning to establish two 6 million tpy strip-mines delivering two products of thermal coal to the local and international markets. This production model, which will have a mine life in excess of 50 yr, will utilise only 15% of the mineable endowment at Takatokwane.

The coal at Takatokwane presents itself as five different seams of varying thickness and quality. Seam No.2, the upper seam, ranges between 8 m and 20 m thick in places. The coal is flat-lying, consistent and relatively geologically undisturbed. This makes high volume, opencast strip mining simple and cost effective. Four further seams of lesser thicknesses – but better coal quality – are located below the No.2 seam. These present an opportunity to produce premium export quality coal product and take advantage of cyclical market conditions.

Walkabout is engaged in a pre-feasibility study at the Takatokwane thermal coal project that is designed to deliver coal into the planned Trans-Kalahari railway between Palapye in Eastern Botswana and Walvis Bay in Namibia. This railway will have an export capacity in excess of 80 million tpy and will be operated under the build-own-operate (BOO) model. It is currently under a feasibility study managed by the Coal Development Unit of the government. Tenders for the financing and construction of the above ground, below ground and port infrastructure elements of the project are expected to be let late in 2015. If all elements meet their schedule, coal delivery is planned for around 2020. For Takatokwane, the real upside is that the railway is planned to pass right next to the target mining area and the project will be able to dispatch coal in both directions, west to Namibia and south to South Africa. Access to these dual markets is a key factor in reducing market and financial risk for the project.

In South Africa, Eskom and Transnet Freight Rail (TFR) are engaged in ensuring continuing electricity supply to an emerging sub-continent. In order to maintain the balance between low-cost power plant feed supply and higher value export product, TFR is extending the Richards Bay dedicated heavy-haul coal railway to access coal supplies in the northern Waterberg region of South Africa and also into Botswana. This strategic move is to ensure long-term power plant feed for Eskom’s power plants and secure uninterrupted and adequate electricity to drive the economies of southern Africa. South Africa remains a significant market driver for Botswana coal development.

Lower forecast international prices for coal and fossil energy supplies stand in stark contrast to the projected increasing physical demand models. Affordable energy is the catalyst to ongoing emergence of economies and the growth centres of the world will continue to rely on coal generated power to maintain and grow standards of living. As a result, price tension in the thermal coal domain is inevitable as is the growth of inter-continental trading of basic resources to balance high and low population density energy-intensities across the globe.

The Takatokwane project has significant technical, financial and market challenges ahead. One is the need to have a vision that foresees future supply shortfalls, which are being created by the market realities of today. Positioning the project so it is ready to develop into future market shortfalls is the immediate strategy for Walkabout. The Trans-Kalahari rail project is of critical national significance to the people of Botswana. For the government to push forward with it when the international energy markets are in disarray suggests tremendous vision and foresight.

Written by Walkabout Resources. Edited by .

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