MCM new corporate strategy sets ambitious production and revenue targets
Morupule Coal Mine (MCM) is on course to be a P3 billion revenue generating company, with the newly launched 2022-2027 corporate strategy positioning the company to be a multi-product, globally competitive, low-cost operation of high-quality coal products with the agility to service diverse markets and customers.
Buoyed by the rising regional and international coal supply shortage, due to limited investments in new coal mines and continued demand for energy by Asian markets, particularly India and China, MCM has responded swiftly to the new developments by charting a path that will see the company increasing its production significantly, and capitalizing on the demand.
2022-2027 CORPORATE STRATEGY
On the 28th of October 2022, MCM launched its 2022-2027 corporate strategy, a five-year approach responding to new opportunities in the coal market. The new corporate strategy, signaled a new path that the Palaype-based coal miner is pursuing. Under the new strategy, MCM will increase its production to 7.6 billion tonnes, and generate P3 billion in revenue.
“When Morupule Coal Mine was established back in 1973, then called Morupule Colliery, its primary mandate was to service BCL power plant and the Botswana Power Corporation (BPC). As it is, our core business was power generation, and it took us a while before we could entertain other market segments,” said Dr Bonny Matshediso, MCM Board Chairman at the launch of the strategy.
He said the mine then started to service external coal markets, especially in the Southern African states like South Africa, Namibia and Zimbabwe.
“We have since observed a steady increase in demand for our product in the Asian market and lately in Europe. All these changes have necessitated that the company must change tact and refocus so that it can get maximum value of its productivity, hence the birth of the new strategy.”
The watershed moment for MCM was a retreat exercise at Manong Lodge in 2021, where the company leadership converged with a view to review the current state of the mine’s business as opposed to its new opportunities and challenges. The intention was to determine the potential of the mine and how to grow its value, and the decision to develop and adopt a new strategy was reached at the meeting.
“Our new direction is such that we must aim to win with one goal of being a multi-product, globally competitive, low-cost producer of high-quality coal products with the agility to service diverse markets and customers,” said Dr Matshediso.
“Like dreamers everywhere in the world, we are deliberately ambitious, and we have set ourselves some targets which we are confident that we will meet, of course with the help and support of our stakeholders.”
For MCM to win successfully on the new ambition, Dr Matshediso said, it must first establish itself as a global partner of choice in the coal mining transition by recalibrating and making the necessary adjustment to consolidate the lustre of its appeal.
“We are targeting the global markets as a whole, over and above our current markets in Botswana, South Africa, Namibia and Zimbabwe. With our partners like Botswana Oil and Botswana International University of Science and Technology (BIUST), we will intensify our research development to come up with environmentally friendly and value additive innovations to make extensive use of our billions of tons in coal reserves which our country is endowed with,” said the MCM board chairman.
The new strategy carries in it an expansive desire to target business success through dedicated human capital development initiatives that can enhance the company operational efficiency and prop up productivity. The company is looking at putting together a comprehensive and cohesive organisational culture that prides itself in collective success and fights together when chips are down. MCM will ensure that its marketing and sales team gels well with the mineral resource management team to jointly undertake market intelligence exercises that can yield into proper response to market demands.
CITIZEN ECONOMIC EMPOWERMENT
MCM has responded to calls by government to come up with initiatives that empower citizens to take part in the economic activities in line with MCM business output. Ahead of strategy launch, MCM took a decision to establish a fully-fledged office for citizen economic empowerment.
“We strongly believe that empowering Batswana to own businesses can help reduce our national import bill. We have a plan to achieve 50 percent citizen spend supporting 3000 jobs by 2027,” said Dr Matshediso.
“We have a duty as a responsible company to make sure that Batswana are prioritized in access to the economic opportunities that may result from our operations, and we have full commitment in doing just that.”
Morupule Coal Mine commits to leveraging its purchasing power and influence to achieve socio-economic development objectives through its Citizen Economic Empowerment Programme. Through the CEEP, MCM partners with other corporate organizations and the Government of Botswana to drive socio-economic transformation and growth. Core to the MCM CEEP is delivering on increasing the participation of Botswana citizen-owned Small, Micro to Medium Enterprises (SMMEs) in the MCM supply chain, which in the long-term, will de-risk and enhance the capacity and sustainability of the local supply base.
Understanding that socio-economic development problems are complex, the MCM CEEP looks to cultivating an ecosystem through engagement and collaboration with key stakeholders; ensuring that doing business for a citizen-owned business is made seamlessly easier within the local market.
With the goal of creating a shared citizen spend value of 50 percent and support 3 000 jobs by the year 2027, the MCM Citizen Economic Empowerment Programme since May 2022 has set out to collaborate across the socio-economic development value-chain locally and regionally.
MCM also has a partnership with Botswana Chamber of Mines to drive import substitution through promotion of local manufacturing, as well as a partnership with United Nations Development Programme (UNDP) on supplier development and capacity building.
The company has also joined hands with the financial services sector, to unlock access to finance and capital for Morupule citizen suppliers, with a P3.05 billion pledge by commercial banks and financing institutions. Access Bank has pledged P1.2 billion, while Stanbic Bank, FNB and ABSA have each set aside P500 million, with TICANO coming in at P250 million. Bank Gaborone has come forth with P100 million.
EXPORT MARKET BOTTLENECKS
One of the bottlenecks that MCM has experienced in the export market is the fact that Botswana is a fully-landlocked country, which has hindered MCM’s fluent play in the international markets. The logistics of getting MCM coal to the international markets have always been compromised, making it an expensive undertaking, much to the detriment of the company business efficiency. The new strategy allows MCM to identify and develop partnerships and alliances that can help MCM to build distribution and integrated channels for logistics and market access. This year MCM opened a new rail export route through Zimbabwe to Maputo port, transporting of over 40 wagons of coal every month since April.
In its new strategy, operational efficiency is another factor MCM has considered as a matter of priority as they look into their capacity to deliver on their business expectations. The strategy, to ensure operational excellence, prioritizes adoption of digitalization and integration that would allow MCM to leverage on technology and enable quick decision making.
LEADING THE TRANSFORMATION
In August 2021, MCM announced the appointment of Mr. Edwin Elias as the General Manager, joining the coal miner from Debswana. Elias has since become the Chief Executive Officer of the company, following the adoption of a new organisational structure.
Farmed and nurtured at Debswana, Elias brings to MCM a wealth of experience spanning over 20 years in the diamond mining industry of which he has served 13 years in the Executive Management of Debswana Diamond Company and the DeBeers Group.
The time he joined MCM, he was the Group Head of Ore Processing/Metallurgy at Debswana Diamond Company. He previously held various executive roles as Senior Manager– Ore Processing (Jwaneng Mine); Head of Maintenance and Process (De Beers Canada – Victor Mine); Senior Manager – Ore Processing (Orapa, Letlhakane and Damtshaa Mines).
Elias has served in several consultative forums within Debswana and the De Beers Group including as Chairman of the Debswana Job Evaluation Committee (Union/Management Forum). He is also a distinguished member of the Canadian Institute of Mining, Metallurgy and Petroleum (CIM), and the Institute of Directors in Southern Africa (IoDSA).
Throughout his career, he has acquired competency skills in different critical areas including Technical and Strategic Insights; Business Excellence; Safety Excellence; Business Planning and Assurance; Leading People and Change; People Development and Stakeholder Management.
He holds an Executive Master’s Degree in Business Administration (EMBA) from the University of Toronto – Rotman School of Management, Canada; a Bachelor of Science(Bsc.)– Metallurgical Engineering from Missouri University of Science and Technology, USA and Emerging Leaders Program (ELP) Certification from the London Business School, UK.
Elias has been tasked with the responsibility of leading MCM in its bid to increase production and revenue. He has already delivered Motheo Project, a mine expansion project mainstay in increment of MCM coal production output.
“There has been great build-up towards the launch of this strategy which makes me feel confident that once we roll it out, a lot of motion would have taken traction to make it easy for us to sail through this new and uncharted path,” said Elias at the launch of 2022-2027 corporate strategy.
“We have already started the delivery of over 60 000 tons out of 170 000 tons of coal destined for the seaborne market through Maputo as we March to meet our 2022/2027 coal tonnage output.”
Elias said MCM will marshal all its resources to ensure that this new strategy is fully resourced so that the company can meet its set targets and drive the business profile of the mine to much greater heights.
“We know that we have set bold and ambitious targets for ourselves, but our aim is to win, and win. I can assure you that our road to 2027 has started and no roadblock or pothole will be allowed to slow down our journey. We are focused; we are resolute, and we are committed to delivering on our promise,” said Elias.
The MCM CEO said at the centre of the corporate strategy is the intent to make their people the primary drivers of their operational excellence, indicating that they have a plan in place whereby they want to capacitate their people in various aspects of the new ways of doing business.
“Our people are at the centre of our business, and we can only achieve on what we want if their efforts are recognized and facilitated to flourish. Our new strategy was developed under the theme “togetherness”, and it is simply a rallying call to our staff and stakeholders that we must be in this thing together from the beginning to the end,” he said.
MOTHEO PROJECT IMPACT
On the 28th of September, President Mokgweetsi Masisi commissioned the Motheo Project, setting in motion the company’s plan to capitalize on coal supply shortage and to take advantage of premium prices caused by the shortage in the regional and seaborne markets particularly Asia.
Motheo Project’s business case was founded on the backdrop of the rising regional and international coal supply shortage. The shortage is caused by the limited investments in new coal mines and continued demand for energy by the Asian markets, particularly India and China.
Motheo Project will increase the current Morupule Coal Mine production capacity from 2.8 million to 4.2 million tonnes of coal per annum. The project will increase MCM market share regionally, and allow MCM to enter new markets; Asia and Europe, and will also improve resource utilisation and realise potential asset value, and also reduce the risk of coal supply from a single underground coal mine.
Morupule Coal Mine, through its newly developed corporate strategy, targets to supply various markets with a cumulative total of 7.6 million tonnes of coal per annum by the year 2027. This will grow the mine’s annual revenue to P3 billion from P1 billion which is expected soon in 2023.
“I am confident that if these ambitious targets can be delivered as expected, we surely are on the right path to unlock our coal potential; to meet our local energy needs and still supply global markets to fuel our economic growth,” said President Masisi during commissioning.
Motheo Project created 3500 jobs during the construction of the basic or core infrastructure for the Opencast mining operations and the installation of equipment for the Coal Processing Plant. Of those jobs created during the peak of construction, 490 employees are still on the ground. As the project transitions into full operation, it is expected that it will create over 350 new and permanent jobs.