‘RioZim’s US$3bn coal project won’t derail’

05 Jun, 2020 - 00:06 0 Views
‘RioZim’s US$3bn coal project won’t derail’

eBusiness Weekly

Golden Sibanda
Multi-commodity miner, RioZim, is confident it will secure funding for its multi-billion dollar coal fired power plant in Gokwe by year-end, despite the spirited campaign by environmentalists to derail financing for the project.

The Zimbabwe Stock Exchange (ZSE) listed miner, which extracts diamond and gold, has already awarded Chinese firm, Power China, a contract to construct the coal fired plant in Sengwa, Gokwe North, for an estimated cost of US$3 billion.

China Hydro will develop the project jointly with fellow Chinese entity China Gezhouba Group Corp, which is also assisting with fundraising for the power project.

RioZim has given little updates this year about progress on the 2 800 megawatts power project in the Midlands due to fears the project might be thrown off rails by environmentalists pushing to block its funding.

Among the environmentalists’ concerns is the fact that coal mining operations and thermal power production are associated with acid mine drainage, land scarification, air pollution from dust as well as from the thermal power stations.

This comes after the Zimbabwe Environment Lawyers Association wrote to the Zimbabwe Energy Regulatory Authority (ZERA) seeking updates on the status of the project and whether licence had been granted.

ZELA also wanted to know if an Environmental Impact Assessment (EIA) had been conducted and whether climate change considerations had been taken into account.

The lawyers claimed that their demands were based on principle of justice for the environment, which they say is enshrined in the laws of Zimbabwe.

With the project having secured funding commitment from Chinese financiers, it has come under intense scrutiny and a de-campaigning onslaught from western environmentalists amid growing geo-political tension between the US and China.

Despite the vile efforts of those opposing the development of new coal fired plants, which they argue discharge environmentally damaging emissions, the power project remains firmly on course.

As such, Caleb Dengu, RioZim board member in charge of energy projects gave away very little this week regarding progress on the project over concerns around spirited efforts by environmentalists to block financial support for the project.

“We have been quiet because each time we have commented, environmentalists have gone to the people who want to finance the project discouraging them against financing the coal fired power project.

“As such, we have agreed with banks that we are not going to say much on the project, but quietly work on the project until we get the funding and construction begins, if we comment too much the project dies,” he said.

Notably though, observers say the actions of those opposed to coal plants in Zimbabwe and other parts of the less industrialised world expose the hypocrisy of the West, which industrialised using thermal energy systems, but is leading the crusade against coal.

Ironically too, coal is the dominant energy mineral for Zimbabwe whose second largest plant is coal fired. The country boasts of vast reserves of coal particularly in the north-west and southern parts of the country.

To that end, Chinese companies in recent years have undertaken multiple projects to help Zimbabwe address severe power shortages.

London listed exploration and development company Sable Mining and China’s CITIC Construction signed an agreement, which entails looking at developing a 600 MW plant at Sable’s 19 236 hectare Lubu coal project in Hwange.

Makomo Resources had obtained license for a 2 x 330MW coal project “two weeks ago” and that the company was now looking at “activating our financiers.”

Zimbabwe has also licensed a joint venture between Zimbabwean and Chinese investors to establish a 50 megawatts coal-fired power plant in Hwange.

Indications are, however, that the project has remained largely on course and may in fact reach financial closure before the end of this year.

The Industrial and Commercial Bank of China has given a formal expression of interest in the project and is negotiating with Sinosure, also known as the China Export and Credit Insurance Corp, to cover country risk insurance costs.

RioZim’s Sengwa coal project has been on the cards since the early 1990s but has on several occasions, despite lots of investor interest, failed to get off the ground due to lack of funding needed for the project.

Things are looking up now, with engineers from Power China, the sister company of Sino Hydro, which completed the 300MW capacity extension of Kariba South, reportedly already working on technical designs for the plant.

Sino Hydro, which already has a good record in Zimbabwe after it successfully completed the Kariba South project, also landed the contract for the ongoing 600MW Hwange thermal power plant extension.

Completion of RioZim’s Sengwa project will go a long way in resolving Zimbabwe chronic power shortage given demand of 1800MW at peak periods, outstrips internal supply of 1500MW when all power plants operate at reliable production capacity.

A two-year drought blighted the country’s Kariba thermal power plant by draining the reservoir, while aging equipment at its main Hwange thermal plant causes incessant breakdowns and outages that see many consumers receiving only eight hours of power a day.

The ZSE listed firm is also involved in gold production at Renco in Masvingo, Cam and Motor in Kadoma, Dalny Mine in Chegutu, diamond extraction in Murowa and operates a nickel refinery in Empress.

According to the United Nations Framework Convention on Climate Change’s Paris Agreement, members are duty-bound to reduce reliance on coal for electricity generation.

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