Hwange's 25-year coal supply deals stall

Published: 14 March 2018

HWANGE Colliery Company Limited (HCCL) is yet to reach financial closure on two 25-year coal supply agreements it signed last year with the Zimbabwe Power Company and the Pan-African Energy Resources.

Pan-African Energy Resources is an independent power producer that was issued with a licence in 2010 by the Zimbabwe Energy Regulatory Authority to develop a 2 000 megawatts coal-fired power plant in Lusulu, Binga.

HCCL managing director, Engineer Thomas Makore, said:

"The projects are yet to take off. We are waiting for ZPC to finalise on financial closure. Once that happens, it will pave way for work to begin, starting with exploration and mine development".

HCCL, once Zimbabwe's largest coal producer, was in 2015 granted three new concessions in Western Area, Lubimbi East and West following concerns that the colliery's existing concessions would run out within five years. The new concessions that have an estimated resource of about 750 million tonnes of mainly coking coal and thermal coal will prolong the lifespan of Hwange by 50-70 years.

"Lusulu Power is also in the process of finalising some agreements with its business partner before the development of the power station. Once the project to establish the power station is completed, we will supply them with coal," said Eng Makore.

The two coal-supply agreements would enable HCCL to increase its output through the supply of 200 000 tonnes of coal per month to each of the two thermal power plants. The two deals were part of initiatives to support and sustain HCCL's turnaround strategy. Between 2015 and 2016, the colliery faced a number of litigations from its creditors including workers who are demanding a lumpsum pay out of $5 000 after going for five years without a consistent full salary.

HCCL workers' spouses have engaged in a demonstration and camped at the firm's premises demanding that the colliery pays its employees.

The coal miner will start paying its workers full salaries this month while Government negotiates a bailout to meet the lumpsum payment demanded by the colliery workers.

The company owes its creditors $352 million with $74 million being owed to workers.
- zimpapers

Tags: Hwange,