Investment opportunities are created by solving people's problems. And a major energy development this week could solve one of the biggest issues going in the commodities sector.
That's happening in Botswana, where developers unveiled one of the largest projects ever seen in an obscure but growing segment of the energy industry.
Coal-to-liquids. Related: Policy, Coincidence Or Conspiracy: What’s Really Holding Oil Prices Down?
Project backers in Botswana said they will go ahead with a massive investment in coal-to-liquids operations, projecting a total budget of $4.2 billion for a coal-to-liquids plant capable of producing 20,000 barrels of petroleum fuel per day -- along with a subsidiary facility to produce by-product fertilizer.
And things now appear to moving fast with the project with developers Coal Petroleum (a private Botswana company) and South Africa investment firm Kumvest saying that construction will begin during 2016. Related: SPR To Be Used To Raise Cash For US Gov
At the proposed scale of the project, this will be one of the largest coal-to-liquids projects being advanced outside of China (a nation that's undergoing a major push for such technology). And if it is successful, it will have some notable impacts.
First, it will be a huge boost for Botswana's energy sector which right now relies 100 percent on imports of liquid fuels to meet the country's demand of 7.5 million barrels per year.
It also provides a way to monetize Botswana's massive -- but stranded -- coal reserves which have gone largely undeveloped because of the lack of transport infrastructure to major regional sales points in southern Africa. Related: These Private Equity Giants Are Selling Their Shale... To China
And if all of that is successful, it could offer a solution to problems the entire coal industry is facing right now.
That's because coal use is falling in key markets like Europe with power generators switching en masse to sources like renewables and liquefied natural gas leaving a lot of coal deposits stranded due to economic rather than geographic reasons.
If coal-to-liquids technology can gain momentum and profile through megaprojects like the one in Botswana, it could become an option for re-developing the flagging coal sector globally. Watch to see how this critical benchmark project proceeds.
Here's to solving with solvents,
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Dave Forest
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The key to coal's future is climate change. If coal combustion is a serious threat to mankind, there is no answer. The advanced societies will regress to the standard of the most primitive societies with all the social unrest this will create. There is no economical alternative to carbon combustion (with a limited exception of uranium fission.).