Keywords: long run marginal cost function, econometric models, programming models, international steam coal trade model, Botswana, energy policy, coal exports, rail transportation costs, marginal supply costs, capital costs, mine development, coal mines
Planning the future of Botswana's coal
Botswana has vast proven deposits of steam coal, which, for a long time, the government has wanted to develop but without much success. The main objectives of this study are: to forecast possible coal exports from Botswana and the land routes for these exports; to determine the competitiveness of Botswana's coal in world steam coal trade; to make recommendations on the appropriate policy for the exploitation of this coal. To accomplish these objectives, we construct a model of the global steam coal trade and apply this model to forecast the likely optimal size of mine, timing of capacity, and choice of export port for the years 2005 and 2010 from a 2000 base forecast year. The results of our regional analysis suggest that Botswana's coal exports are competitive in Asia and Western Europe. These results are shown to be least sensitive to changes in rail transportation costs and marginal supply costs but more sensitive to changes in capital costs for mine development.