Coal cannot fully replace diamonds- Economist

Botswana sits on billions of tonnes of coal deposits but Professor John Mourmouris, a Greek transport economist, says that this commodity will never attain the same importance as diamonds in the national economy.

Speaking at last week’s Global Expo organised by Botswana International Trade Centre, Mourmouris said that coal offers “a narrow window of opportunity” defined by increased international efforts to reduce greenhouse gas emissions and renewable energy (solar and wind) getting cheaper. Additionally, coal is much less profitable than diamonds and its tax rates are lower compared to diamonds.

Mourmouris cautioned that the risk of investing in coal is high especially given that its future is uncertain. Past a point where the coal industry collapses, the infrastructure has no real alternative use. “Coal can’t fully replace diamonds as source of government revenues, but it can make a significant contribution – along with other activities – to economic diversification,” said Mourmouris who is a professor of Management and Transportation Economics at the Democritus University of Thrace in Greece.  

Botswana’s potential markets for its coal are India and China. In his state-of-the-nation address in Parliament a fortnight ago, President Ian Khama said that through its “Coal Roadmap”, the country is finding opportunities through which its vast coal reserves can become an additional source of export revenues, while being further utilised to fuel local power plants. “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. We have signed a bilateral agreement with Namibia on the Trans-Kalahari Railway Project, which paves the way for the construction of a heavy haul railway line stretching 1,500 kilometres from Mmamabula coal fields to Walvis Bay,” Khama said.

According to the International Energy Agency (IEA), Africa’s estimated 120 billion tonnes of coal resources are concentrated in the southern part of the continent. “They amount to less than 1 percent of world coal resources, but this relatively low figure reflects, in part, the lack of exploration in much of the continent. South Africa dominates Africa’s coal industry with over 90 percent of the 36 billion tonnes of proven reserves and virtually all of the continent’s production. However, other southern African nations, including Mozambique, Zimbabwe, Botswana, Tanzania, Zambia, Swaziland and Malawi are endowed with significant coal reserves,” IEA says in its 2014 report which focuses on Sub-Saharan’s energy outlook.