Senior Business Reporter
CONSTRUCTION of a US$10 million 300MW power plant by Zimbabwe ZhongXin Electric Energy (ZZEE) in Hwange, Matabeleland North Province is underway with the first phase of the project expected to produce 50MW by October this year.
ZZEE is a subsidiary of the Zimbabwe ZhongXin Coking Company (ZZCC), a joint venture project between Qualisave Mineral Resources of Zimbabwe and Yuxia ZhongXin Coking Company of China.
Briefing Mines and Mining Development Minister Winston Chitando and his Finance and Economic Development counterpart Professor Mthuli Ncube during a tour of coal and coking coal companies in Hwange on Friday, ZZEE assistant plant manager, Andreas Hlabangana, said despite investing in coking coal production, they were also building a 300MW power plant whose construction began last year.
“ZZCC has embarked on building a coal-driven power station on the outskirts of Hwange along the Hwange Victoria Falls road, which when completed will contribute 300MW into the national grid,” he said.
Later an an interview with Business Chronicle, Hlabangana said: “Construction of Zimbabwe ZhongXin Electric Energy (ZZEE) began in February 2019 with capital injection of US$9,99 million and the whole construction should take three years but we are striving to complete in two and half years”.
The project is being done in phases of 50MW with the first phase to be completed in October 2020, he added.
In terms of construction work progress, he said boilers for the thermal power plant have been built and are 60 percent complete while turbines are 10 percent complete.
“Due to the Covid-19 pandemic, activity on the thermal power project has been affected by the Covid-19 pandemic. While the electrical connection boxes that are supposed to be installed at the power plant are already in the country, the engineers who are supposed to do the installation works are still locked down in China because of the Covid-19 pandemic,” said Hlabangana.
He said on completion the power plant will consume 300 000 tonnes of coal annually and ZZCC has applied to Government for a Coal Special Grant Grant (CSG) in order to enjoy economies of scale once the firm starts producing coal to support its operations.
During his briefing to Ministers Chitando and Prof Ncube at ZZCC before a tour of the power plant, Hlabangana said they were presently receiving inadequate coal supplies from Makomo Resources and Hwange Colliery Company Limited and hence ZZCC has applied for a CSG from the Ministry of Mines and Mining Development.
“The company has two plants requiring 15 000 tonnes of coking coal per month sourced from Makomo Resources and Hwange Colliery Company Limited, but due to their challenges they have both failed to meet the demand.
“The supply of raw materials is our major challenge hence a CSG claim application, which is still with the Ministry of Mines and Mining Development. Once approved this challenge will be a thing of the past,” said Hlabangana.
It is hoped that once granted the CSG, ZZCC will cut dependency from other players for coal supplies for its coking coal and thermal power station projects.
Hlabangana appealed to Government to increase the retention on export proceeds for coking coal, which was presently pegged at 50 percent in US dollar and 50 percent in local currency.
“The suppliers of all raw material and consumables are now requesting that we pay in US dollar so that that they are able to import machinery, equipment and spares for their mines to keep running.
“Considering the exchange rate of the RTGS offered by the Reserve Bank of Zimbabwe versus raw material and consumables that we buy locally, our profit margins are shrinking.
“We propose that our export US dollar retention be reviewed to 80 percent and 20 percent RTGS,” he said.
The tour of the coal and coking coal producing firms in Hwange was a fact finding mission on the challenges bedevilling players in the sector.
The visit is also a precursor to President Mnangagwa’s tour tentatively planned within the next four weeks.
Responding to the issues raised by the business, Minister Chitando said Government will in the next four months through the “Use-it or lose-it” policy repossess underutilised mining titles, which would be reallocated to prospective investors.
In an interview with journalists after the tour, Prof Ncube said he was impressed by the coal and coking mining activities being undertaken in Hwange.
He said the tour was also an eye-opener as Government through his ministry will fine-tune the policy framework to foster productivity by players in the coal sector and the mining industry at large.
“At least l have understood what their issues are and l also appreciate the investments that are taking place in this area.
“For instance, the investors in the production of coke are big employers and their activities will go a long way in contributing to the US$12 billion mining economy by 2023.
“So, my office being in charge of the taxes as you can imagine, l am always trying to see where we can fine tune the tax incentives for investment,” he said.