Coal industry needs US$1bn

coal_1875940b1.jpg

ZIMBABWE’s coal industry needs US$1 billion in the long-term to fully recapitalise, Chamber of Mines CEO John Chikombero said.

Report by Gamma Mudarikiri

Chikombero told businessdigest in an interview this week coal production was this year expected to drop to 1,96 million tonnes compared to 2,56 million tonnes in 2011, owing to a myriad of challenges, chief among which were erratic power supplies, working capital limitations and archaic and out-dated machinery.

He said the biggest challenge facing the coal industry is limited working capital, hence the US$1 billion it needs over the next five years.

In the nine months to September 30 2012, coal production amounted to 1,246 million tonnes. Production of 2,56 million tonnes was recorded in the full year in 2011. At its peak in the mid-1990s, Zimbabwe’s coal sector produced more than five-million tonnes a year.

Chikombero however, said the 20 special grants recently issued by the Ministry of Mines and Mining Development, would significantly improve coal production although this was dependent on the success of capital-raising efforts by government.

Zimbabwe’s leading coal producer Hwange Colliery Company Limited (HCCL) this year suffered a 22% drop in overall production while deliveries plunged by more than 50% owing to increased competition from new coal miners in a market where demand has stagnated.

Competition is expected in the future to be stiffer with the licensing of additional 20 mining companies to explore the possibility of extracting coal in the nearby Hwange, Gwayi and Binga mining districts. This is also expected to improve production volumes.

HCC last month commissioned equipment worth US$6,3 million procured under a pre-purchase financing arrangement while awarding of tenders for the supply of mining equipment worth US$40 million is also in progress and expected to be finalised in this last quarter
In another bid to increase production, a new subsidiary, Hwange Coal Gasification Company, plans to raise coke production by 40% to an estimated 200 000 tonnes per year.

Top