Financial Gazette (Harare)
Chris Muronzi
20 May 2005
Harare — RIO Tinto Zimbabwe (RioZim) hopes to succeed in wooing investors to the US$1.8 billion Sengwa coal project, which has been stalled by investors' apprehension due to the country's increasing risk profile, chairman Eric Kahari has said.
Kahari told The Financial Gazette that RioZim would continue with its bid to court investors to inject funds into the project, saying Zimbabwe's perception abroad had worked against Rio Zimbabwe's favour.
When complete, the project - expected to open up an estimated 2.2 billion tonnes of coal reserves - would boost Zimbabwe's tenuous power generation capacity ahead of the expiry of Zimbabwe's existing power import agreements in 2007.
"Country risk has largely affected our attempts to bring in new investors, but we are still looking for investment. We have our ears to the ground. In light of the 2007 situation, the country needs Sengwa. We (RioZim) also need hard currency before the project goes on," said Kahari.
RioZim, which has maintained a strong presence in the mining sector over the years, has been courting international investors to inject close to US$2 billion to revive the power project.
The Zimbabwean economy, haunted by frequent power cuts, is facing an acute shortage of foreign currency, which has extended five years of economic decline.
RioZim has previously indicated that mining operations would begin as soon as an independent investor comes aboard. So far, only Chinese investors have shown interest in Zimbabwe's power sector. Low Foreign Direct Investment (FDI) has worsened the economic situation in the country.
Sengwa's coal reserves reputably cover 4 735 hectares. RioZim has a coal mining tribute arrangement with Beta Company, which runs until the end of this year.
The Sengwa project, which became known as Gokwe North Power Project after government indicated its plans for the Sengwa coal fields, was initiated in 1990 with work on a single coal field that closed three years later.
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