State-owned power utility ZESA Holdings is re-looking to venture into mining as it seeks to raise funding to expand electricity generation capacity, officials have said.
ZESA is targeting some idle mining assets owned by Government with intention of bringing on board investors to develop them. Zesa — struggling to meet demand due to subdued production at its plants, require huge capital to expand capacity.
Zimbabwe generates about 65 percent of foreign currency from mineral receipts and Zesa views the sector as strategic to raise foreign currency for future capital projects.
Zesa, which jointly owned coal concessions in Sinamatela in Hwange District with a local firm before the ownership structure changed initially wanted to venture into mining in 2010 as it sought to argument coal supplies from HCCL, then coal sole supplier.
This was aimed at reducing load shedding, which then largely resulte d from coal shortages.
“We are investigating which minerals we can go for; but obviously we are targeting assets owned by Government that we can develop in partnership with investors.
“This is a medium to long term plan that we believe could be a viable avenue of raising funding using domestic mining assets to expand production,” said one official.
Dr Sydney Gata, Zesa executive chairman confirmed yesterday in an interview, saying the plan was recently approved by the management.
“It was approved last week by the management but we still need to do more investigations,” said Gata.
The plan is similar to a tobacco contract scheme that Zesa embarked on around 2005 which was meant to raise foreign currency for power imports and for expansion.
“It is the same model but this time Zesa is targeting mining; minerals which have the potential of generating foreign currency,” said one source who requested not to be named.
Last year, Zimbabwe Power Company—a subsidiary of Zesa — said it was
weighing an option of investing heavily into coal mining as it seeks to produce own fuel for its thermal plants. ZPC claimed inadequate supplies of coal and an unsustainable pricing structure by the miners are threatening the country’s power generation and wants to produce its own fossil fuel to guarantee power supplies.
ZPC operates Hwange Thermal Power Station, the country’s second largest electricity plant in terms of capacity and small thermal plants — Harare, Munyati and Bulawayo.
ZPC is expanding Hwange under a US$1,5 billion deal with Sino-Hydro to boost electricity production by additional 600MW.
The plant has since outlived its lifespan. It is expected Zimbabwe coal output will increase largely on the back of expansion of Hwange station also referred to as Zesa Stage 3. As such, future investment plans by the miners are largely informed by anticipation of increased demand by ZPC.