Once heavily reliant on diamonds and minerals, Botswana is looking to diversify its economy and coal companies have started to realise the country’s potential as a major investment spot.

Hodges Resources managing director Mark Major told International Longwall News Botswana could be a leading player in coal exports in the future.

“Botswana has a big future,” Major said.

“It’s been relying on diamonds for a long time and they’re understanding now how important coal is.”

Hodges has two major coal developments in progress, which have the potential to contain up to 2.6 billion tonnes of coal.

While still in the drilling stages both Morupule South and Moiyabana hold the key to Hodges’ success in Africa.

Its flagship project, Moiyabana, located in central east Botswana has an exploration target of around 800 million tonnes.

“It’s got the capacity to be something on the lines of Vale or Rio’s mines,” Major said.

“I don’t think any other companies on the same scale as us have the tonnage we are looking at … it’s a rarity to have such a big tonnage.”

Moiyabana is set to begin production in 2015.

No stranger to African coal, Australia-based coal group Cokal is seeing Africa’s coal potential after it accelerated drilling at its Bumi Barito project in Mozambique.

Cokal has a three year minimum arrangement to explore in Mozambique, which it says could be the largest coal basin in the world.

Lynch told ILN its Bumi Barito project could rival the Bowen Basin.

Other companies banking on Africa’s coal potential include Bermuda-based coal explorer Ikwezi Mining.

The company, which formed in May this year, is endeavouring to take its 209 million tonne Newcastle thermal coal project in South Africa into production next year.

Meanwhile, South Africa-focused Continental Coal has just submitted a technical and financial tender to the Kenyan Ministry of Energy seeking rights to one of four coal concession blocks within Nairobi’s Mui Coal Basin.

Continental Coal said Kenya and the Mui Basin held highly important coal development and exploration opportunities for its shareholders.

“We believe that Continental has all the necessary credentials and experience to successfully advance the concessions into profitable and major coal mining operations for the government of Kenya,” Continental executive director Jason Brewer said.

Continental also has two key projects in Botswana, with its Serowe project located just 10km north of Botswana’s only operating coal mine, Morupule Mine.

With the approaching carbon tax driving coal companies away from Australian coal exploration and development, Africa’s low production costs and minimal regulatory red tape make the country an attractive place to develop.

Major said before acquiring the projects in Botswana Hodges was looking at projects in Australia, but the carbon tax was too much of a deterrent.

The move to explore coal overseas could mean greater opportunities for Hodges.

“We’ve only explored about a quarter or a third of the area, so there’s definitely a lot more blue sky out there,” Major said.

While the future looks bright for Hodges, Major can’t say the same for the Australian coal industry.

“Rather than a tax, look at royalties. [Taxing is] short-term thinking,” Major said.

“You need something that’s going to work in the good times and the bad and I don’t think it will.”