20 April 2017

Zimbabwe: Hwange Signs 25-Year Coal Supply Deals

Photo: The Herald
Hwange Colliery mine (file photo).

HWANGE Colliery Company Ltd has signed off-take agreements with two thermal power stations, which will see it supplying the firms with 400 000 tonnes of coal per month. The 25-year coal supply deals will see Hwange supplying more than 200 000 tonnes of coal per month each to the Zimbabwe Power Company and Lisulu Power, an independent power producer in the Matabeleland North Province, MD Mr Thomas Makore said.

He gave no further details on the off-take agreements but indicated the deals would underpin Hwange's turnaround programme, which the company has just embarked on.

"We have already entered into a 25-year coal supply agreement with the two companies and we are in the process of finalising the contracts," said Mr Makore. Zesa Holdings, the parent company of ZPC is working on expanding Hwange Thermal power plant, which will add 600 megawatts of electricity onto the national grid.

Most of the conditions for the release of the $1,2 billion loan for the project from a Chinese bank have been met and the process is now being handled by the Ministry of Finance for the finalisation of the Implementation Agreement, Zesa said recently.

In 2015, Government granted Hwange three new concessions in western area, Lubimbi east and west following concerns that HCCL's present concessions were running out.

The new concessions, with an estimated underground resource of about one billion tonnes, according to an independent competence report done by SRK Consulting, is expected to increase the life span of the coal mining company by more than 50 years.

The company is in the process of engaging a contractor to do exploration, Mr Makore said recently.

Next week, Hwange will be seeking to enter into structured payment plans with its creditors in a bid to stop litigations against the company and allow it to reconstruct.

The ZSE-listed company owes various creditors in excess of $180 million. A positive outcome of the meeting will enable the company to raise funds for working capital requirements.

The company is looking at ramping up production at its open cast operations to 100 000 tonnes per month and re-open the underground mine by Q3, with production target of 50 000 tonnes.

Hwange is also steadily increasing output after Mota-Engil resumed operations last month.

Mota-Engil signed a five-year contract worth $260 million with Hwange in 2014 and was producing 200 000 tonnes of coal per month before it stopped in June last year over non-payment.

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