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Oakbay Investments
Coal & Uranium  
11 January 2017

German commodity trader signs coal agreement with Shumba Energy

HMS Bergbau AG has signed a memorandum of understanding with Shumba Energy, which will provide it with access to over 2 Bt of high-quality coal.

This implies that HMS Bergbau AG, one of Germany’s leading independent commodity trading and marketing companies, has significantly expanded its operating activities in South Africa through its wholly owned subsidiary HMS Bergbau Africa.

The signed agreement sets out the principles for exclusive marketing of the coal through the HMS Bergbau AG international partner network. Both companies expect the production to start in 2019.

Heinz Schernikau, founder and CEO of HMS Bergbau AG said: “We are delighted to wrap up another exclusive marketing agreement in South Africa, which will result in a significant expansion of our operating activities in this region.

“Once again our global marketing network and wealth of expertise in commodities logistics, as well as the group’s international standing as a reliable trading partner, proved its worth in the conclusion of this agreement.

“Besides expanding business volume in South Africa, we also expect positive effects and improvements in terms of our position on the international coal market.”

Mashale Phumaphi, MD of Shumba Energy, commented: "Despite political pressure to support non-fossils, we believe that the global long-term outlook for thermal coal demand is promising, driven by the industrialisation of emerging economies and the need to secure reliable and cost-effective base load power supply.

The signed MoU, which introduces a credible and experienced partner, is a welcome step towards exploring the export market. We look forward to developing a long lasting relationship with HMS Bergbau.” 


Shumba Energy is an energy development company based in Botswana and listed on the Botswana Stock Exchange (BSE:SHUMBA) and the Stock Exchange of Mauritius (SEM:SHCL). Shumba Energy has over the last couple years progressed from an exploration company to a development company and sits on over 2 billion tonnes of thermal coal.

The company recently told Miningreview that its strategy, in a market with only two other active energy developers, namely India’s Jindal Africa and ASX-listed African Energy Resources, is to unlock the value in Botswana’s high-grade thermal coal reserves as a means to generate cost-effective reliable energy for the region. “We will do this by developing integrated power projects which consist of coal mines with mine-mouth power stations,” said Phumaphi.

“Being one of only a few projects ready to take advantage of the current coal market dynamics, Shumba Energy is in the fortunate position of having continued the development of its assets despite the tough market conditions and competition from larger international companies, to now be in a position to take advantage of the reinvigorated coal price,” he said.

 

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