India's Jindal Steel and Power announced recently that it would invest up to 5.5 billion pula (about $750 million) to develop Mmamabula coal fields in southeastern Botswana for both coal exports and power generation.

According to local daily Mmegi published on Friday, the company is tying up an 855 million pula deal to purchase Canadian firm, CIC Energy, which holds rights to the 2.4 billion tonnes coalfield.

Jindal director, Sushil Maroo has revealed that the company, which operates the largest coal-based sponge iron plant in the world and has an installed capacity of three million tonnes per annum of steel, aims to invest up to 5.5 billion pula in two to three years to develop a coal mine and build a power plant at Mmamabula.

"In Botswana, Jindal Steel aims to produce about 2.5 million metric tons of coal from the mines to run the proposed 300 megawatt power plant. The company also plans to look at exporting coal from Botswana and work on 'evacuation' facilities in the next five years," said Maroo.

Jindal secured last month approval from CIC Energy shareholders and Botswana authorities for the acquisition.

Maroo was also quoted as saying the company is looking at opportunities to buy iron-ore and coking-coal mines overseas and would also look at setting up a project in Botswana to convert coal into liquid fuels.

Last week, CIC announced that the deal is expected to close within the next two weeks and, in any event, no later than October 9, 2012, subject to the satisfaction of certain conditions, including approval by the Minister of Minerals, Energy and Water Resources.

Under CIC, the Mmamabula Energy Project was focused on building a 1,200 MW power plant with South Africa's Eskom expected to be the primary power off-taker. The deal is also expected to spur government into fast tracking the development of a new railroad to enable coal to reach ports in Mozambique en route to India.

Botswana can export as much as 1.7 million tonnes per annum to international markets using existing railways through Mozambique. Botswana plans to fully exploit its 212 billion tonnes of resources to become a top coal exporter in the next six years with the construction of a new railway line and a new port in either Namibia and Mozambique.