Projected Significant Net Loss at Year-End for Masama Coal Mine Owner

Internal sources have reported that Minergy Limited, the proprietor of Masama Coal Mine, is expected to face a notable net loss before tax for the interim period ending in December 2022. The estimated loss is projected to fall between P25 million and P45 million.

A Higher Loss Compared to the Previous Year

This anticipated financial strain marks a substantial increase of 51% to 71% from the prior interim period. The escalation in the predicted loss is owing mostly to a temporary halt in coal production during the second quarter of the year, which caused Minergy to depend on existing coal reserves for sales.

Reasons for the Steep Loss

The unexpected interruption in the coal production was a result of operations being suspended by Jarcon Opencast Mining, Minergy’s former mining contractor. A stalemate over trade payable arrears in March 2023 led to this impasse. Although the suspension was imposed in the final quarter of the 2022/23 fiscal year, its impact persisted into the interim period, inducing a negative ripple effect on sales.

The difficult trading environment experienced by Minergy was further compounded by diminished coal prices and a rise in inland inventories. This increase was as a result of logistical problems in South Africa.

Efforts to Mitigate the Situation

Amid these circumstances, Minergy made an attempt to reverse its fortunes with the significant monetary aid from the Minerals Development Company Botswana (MDCB). An initial support of P90 million was received in August of the previous year, followed by an additional P299 million in December. This financial aid enabled Minergy to switch contractors, leading to Meropa Resources assuming operations and kickstarting mining activities in February.

Prospects for the Future

Confident of a positive change in the course of events, Minergy is hopeful about resuming full-scale production and sales by the conclusion of June 2024.