Staff Reporter
ZIMBABWE Stock Exchange-listed RioZim Limited says it has made significant progress towards setting up a multi-billion dollar power plant which had earlier been hamstrung by government’s reluctance to break state-owned ZESA Holdings’ monopoly.
In an announcement to shareholders accompanying results for the half-year to June 30, 2010, RioZim said significant progress had been made towards establishment of an independent power project at Sengwa Colliery.
“This vast resource of over 1,3 million tonnes of low sulphur coal remains earmarked as a fuel feed to a thermal power station. Work on the Sengwa Power Station and the coal mine is progressing at a pleasing pace,” said RioZim.
During a parliamentary hearing this year, RioZim managing director, Josphat Sachikonye, said the company had identified investors willing to partner his firm in the construction of the power plant.
“A consortium of South African companies is keen to partner us to operationalise the project,” Sachikonye said, noting that the project had been lying idle because had government argued that there was no space for private sector power generation in the country.
It would appear government, desperate to ease a crippling power shortage in the country, has shifted position and is desperate to foreign investors into the capital-rich power generation sector.
Sachikonye told parliament in May that the Gokwe North Power Project, which it intends to build with foreign investors, would cost a staggering US$3 billion. This figure is up from a cost of US$1,68 billion when the project was conceived over a decade ago.
In a recent investors’ update, RioZim indicated that the project had being actively reviewed after lengthy delays, with the intention now of placing a larger power station with an output of 2000 MW on the resource than the original concept of 1400MW.
“This will be a massive project and will involve partnerships with ZESA, government and other technical and financial partners,” RioZim said.
The Sengwa Colliery has a coal resource of about 1 383 million tonnes of which 538 million tonnes are proven reserves.
The resource is a low rank coal with an average calorific value of 16,7MJ/kg and 29 percent ash content.
This is a non-coking coal and not suited for general commercial use. It is the ideal feed for an on-site thermal power station, particularly as it has relatively low sulphur content.
The resource was extensively drilled in 1993 and 1994 and the Gokwe North Power Station project was developed to feasibility study stage in 1997.
From 1995, there was a small mining operation in place at Sengwa to supply a portion of the coal to the local market due to Hwange’s inability to satisfy the market.
RioZim later deduced this to be wasteful of the power station resource and the operation was terminated in 2008.
RioZim is on the market this month to raise US$40 million in what is easily the single largest cash call by a listed company on the domestic bourse.
RioZim has also had limited exploration work on a number of its exclusive prospecting orders and has a lot of work requiring significant cash support, according to a report by directors.
The group also intends to undertake new exploration projects. These, together with the plant refurbishment, would exert pressure on the group’s cash flows.
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