The Herald (Harare)

20 August 2014

Zimbabwe: ZIMCHEM Operations Under Threat

ZIMCHEM Refineries could completely shut down its plant due to raw material shortages after Hwange Colliery switched off its coke oven battery as a result of breakdowns. Hwange Colliery, a significant shareholder in ZimChem, supplies coke oven by-products that are processed to produce solvents and coal tar products to the Kwekwe based firm.

Hwange managing director Mr Thomas Makore recently told this paper that the company resolved to shut down its coke oven processing plant due to high running costs.

Mr Makore said the company was looking at options to rebuild the plant.In an interview last week, ZimChem managing director Mr Ben Mashangu confirmed that operations of the company were under threat due to raw material shortages.

ZimChem was operating at about 20 percent capacity of its core business after 80 percent of its potential capacity had been wiped out following the closure of Zisco. Zisco, also a significant shareholder in the company used to supply ZimChem with coal tar which is used to manufacture chemicals like benzene and creosote before it closed in 2008.

"There is not much activity at the plant since the closure of Ziscosteel and this has been worsened by shortage of coke-by products from Hwange Colliery," said Mr Mashangu.

"We have since diversified into producing other products to generate a bit of cash but in very small quantities.

"Some of the products that ZimChem is producing include auto engine cleaners, degreaser and stone pre-coat oil."

Mr Mashangu, however, said despite raw material shortage, the plant was still a "very neat condition."

Other products that can be produced by ZimChem include dip chemicals and ammonium. Work towards restating Zisco, now NewZim Steel is ongoing, although nothing is happening on the ground.

Industry and Commerce Minister Mike Bimha said the restart of Zisco is so far restricted to Government and Essar Africa, as the shareholders. In 2010, Essar agreed to buy 54 percent of Ziscosteel, now NewZim Steel, in a deal in excess of $750 million.

The revival of Zisco would significantly impact on the viability of ZimChem, as the bulk of the latter's raw materials come from mothballed steelmaker.

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