COAL miner Makomo Resources says its output could increase significantly if the government allows the company to retain 100% of the revenue generated from exports.
By Nkululeko Sibanda
Director Raymond Mutokonyi told businessdigest the coal miner would be able to use the revenue from exports to import various consumables seen as key in its operations.
At the moment, Makomo Resources, Mutokonyi said, was being allowed to retain 50% of its export earnings—a situation he said was inhibiting its plans for growth and efforts to boost production.
“We have written to the parent ministry (Mines and Mining Development) to seek authority to retain the revenue we earn from exports. Our request has been that our retention base be increased from 50% to 100% because we believe that this will enable us to use the money to acquire essentials in the production value chain which in the end will result in an increase in our output,” explained Mutokonyi.
Key among Makomo’s requirements is the importation of mining equipment, motor vehicle consumables and spare parts, as well as other important components.
“Our major challenge when it comes to some of these spare parts is that we can’t find them locally. We will have to import them from elsewhere, including from the original manufacturers of the equipment that we use in our operations.
“We cannot do that (importation of spare parts) using our local currency. We will need to have a sound foreign currency base to do that and when you juxtapose what we get at the moment and what we desire, you can see that there is a huge gap, hence our request to increase the retention levels,” Mutokonyi said.
The coal miner has also pleaded with the parent ministry to allow it to retain part of the revenue for coal it sells on the local market in foreign currency. This, however, it is understood, is a mammoth challenge the government would not easily give into, given the biting foreign currency challenges facing the country.
Monetary authorities argue that the country has a priority list for the allocation of foreign currency which makes it impossible for other sectors outside that list to get much-needed allocations. “The company has continued to price its products using the local RTGS
dollar. This is against a situation where some prices of basic commodities and consumables that we need are either priced highly or priced in US dollars.
“We have raised this issue as well with the parent ministry to say please allow us to retain some of our revenue from the local customers in foreign currency. That request has several challenges to it. But we are of the view that at the end of the day we need to remain in business and failure to keep up with the trends in as far as review of prices for coal is concerned and the green light on foreign currency allocation, we might be faced with operational challenges going forward,” Mutokonyi said.
Makomo currently supplies coal to the Zimbabwe Power Company (ZPC) for electricity generation at Hwange Thermal Power Station as well as other clients in and outside the country.