Coal to Hydrocarbons Project

With projected fuel shortfalls in Botswana, CIC Energy’s planned Coal-to-Hydrocarbons (CTH) Project intends to convert coal to low sulphur diesel fuel and associated products.  Above ground coal gasification technology would be used to gasify the coal cleanly, and then Fischer-Tropsch technology is planned to be used to produce diesel fuel and other products.

The Central and Eastern Blocks at the Mmamabula Coal Field are being considered for the CTH Project. Drilling results have indicated that the coal qualities of both blocks are suitable for gasification.

CIC Energy received responses to a request for proposals from a group of international companies regarding the production of low sulphur diesel fuel. CIC Energy does not anticipate significant further expenditure on the CTH Project until such evaluations have been completed.

History

CIC Energy’s initial focus when the CTH Project was initiated in 2007 was to convert coal to a variety of downstream products including fuels and petrochemicals, by first gasifying the coal. To this end a number of studies were completed.

Wood Mackenzie completed an initial market study for the CTH Project in early 2008.  The study assessed the potential demand for the different downstream products that can be produced from syngas and indicated several downstream product opportunities for the Southern African Development Community (SADC) and international markets.

A second phase detailed value-chain study, which included a more comprehensive market study, was conducted by Shell Global Solutions International in late 2008.

A major technical feasibility study for the CTH Project was completed by Jacobs Engineering in mid 2008 and announced in the Company’s news release of August 5, 2008. The purpose of this study was to develop and evaluate viable CTH Project alternatives as well as to provide technical and cost estimates. The results of this study were positive and it concluded that the coal from the Mmamabula Coal Field was entirely suitable for the production of syngas using either the Shell or the Siemens gasification technologies that were evaluated.

The results from two additional technical studies were incorporated into the Jacobs feasibility study. These included a technical study by Toyo Engineering of Japan related to the manufacturing of a specific fuel end-product (dimethyl ether) from the syngas. The third technical study was a pre-feasibility study conducted by a partnership between Lategan & Bouer and VGI Consulting Inc. (both from South Africa) to evaluate a multi-product pipeline from the Mmamabula Energy Complex site to the Gauteng area in South Africa. The outcomes of both of these studies were positive.