How Kibo plans to become a regional energy player
The mining exploration firm has transformed itself into an energy player, with power projects in the pipeline in Tanzania, Botswana and Mozambique
Minerals exploration and development company Kibo Mining has embarked on an extreme makeover, and in 2018 emerged as Kibo Energy, with three African power projects now in its stable as well as a UK energy firm.
It’s been a defining year for the company, which was founded in 2008 and is based in Ireland with a primary listing on the London Stock Exchange’s Alternative Investment Market. Kibo also has a secondary listing on the JSE’s Alt-X.
CEO Louis Coetzee took up the post as head of Kibo Mining in 2012. “At that time, the only asset the company had was a huge portfolio of exploration licences, all in Tanzania,” he said. Kibo began to package its assets into gold, nickel, coal and uranium, and in that that process sold off some licences. But it was the opportunities for energy in Africa which became increasingly clear, Coetzee says. “Access to energy was a challenge even we had in developing our own projects. We saw a tremendous opportunity to get into the energy sector.”
The company already had one energy asset, the Mbeya coal-to-power project in Tanzania, in its portfolio. In late 2017, Kibo moved ahead to transform into an energy company by acquiring a majority interest in the Mabesekwa Coal independent power project (IPP) in Botswana. The resources projects were moved out of the company through a reverse takeover of Opera Investments, renamed Katoro Gold.
In June, Kibo announced a joint venture agreement for the potential development of the Benga IPP, a planned coal-fired power station in Mozambique. In August the company announced it had been renamed Kibo Energy.
Coetzee says a strong portfolio is key to develop Kibo as a regional energy player. The three African projects have been carefully selected for their potential to tap into regional demand. For example, the distribution network is such that the Botswana project could theoretically supply to SA if required, he says.
Outside of Africa, Kibo also signed a memorandum of understanding to acquire a 60% stake in Mast Energy Development. Coetzee says the firm has a number of shovel-ready projects for small-scale, gas-fired, power generation in the UK. This offers a potential source of potentially early revenue generation for Kibo and would also bring knowledge and expertise.
For now, Kibo continues to pursue the all-important a power purchase agreement for Mbeya, although progress here has been frustrated by significant changes in Tanzanian government policy, and personnel. The project would be not just the first utility-scale IPP in Tanzania, but the first baseload facility in country entirely. Kibo plans to develop up to 1000MW in capacity, depending on the outcomes of a tender process, Coetzee says.
The investment case for Tanzania has, however, weakened under President John Magufuli, who has taken government policy in an economic nationalist direction.
According to Jared Jeffery, a political analyst at NKC African Economics, this move has been evident in a “number of areas, from regional trade agreements to the government’s dealings with international mining companies and others”.
“As long as Magufuli is at the helm, and the chances are good that that will be for at least another term from 2020, we can expect this attitude towards foreign investors and economic policy in general to persist,” he says.
Coetzee, however, says delays in securing the power purchase agreement did not arise from any opposition to the project. “It’s just growing pains — not even growing pains — it’s birth pains.”
Next, Kibo aims to introduce renewable energy and gas into its portfolio, but it is still “scanning the environment” for suitable projects.