Blackout for prospective coal producers

27 Jul, 2014 - 05:07 0 Views
Blackout for prospective coal producers Deputy Minister Moyo

The Sunday News

Deputy Minister Moyo

Deputy Minister Moyo

GOVERNMENT is unlikely to issue prospective coal companies with new mining leases to extract the resource as it believes the existing coal mining houses can satisfy the market.
Mines and Mining Development Deputy Minister, Cde Fred Moyo, told Sunday Business in an interview during the Mine Entra Exhibition in Bulawayo last week that Government believed increasing the number of players was likely to compromise the quality of the product.

In 2010 Government awarded Special Grants to 20 companies to explore and extract coal and coal bed methane gas in the Hwange-Gwayi area.

However, to date only four mines are operational namely Makomo Resources, Zambezi Gas, Chilota and Coal Brick while China Africa Sunlight Energy and Liberation Mining are at an advanced stage of starting mining activities.

“We want to open mines to fulfil a market gap or desire. At the moment there is already a situation of over production in the country and that could destroy the coal sector, that’s the threat that is there now.

“It will destroy the coal sector in that prices could drop to levels that are not sustainable and when the levels of coal prices become unsustainable then the mines will have to make ends meet somehow and naturally they will have to make ends meet by dropping standards,” Cde Moyo said.

He said the flooding of the country’s coal on the market would result in the drop of technical, social and maintenance standards as well as posing serious socio-political consequences that might arise in existing companies being forced to retrench some new ones might struggle to remit loans used in starting up their businesses.

“You get some of them failing to do basic hygiene issues that are required to be performed by every employer. They will not send their people for mandatory medical checks.

“They will not run clinics and will even fail to pay fees for employees’ children and all these consequences could emanate from a sector that has become unstable,” Cde Moyo said.

On average the country’s coal sector produces half a million tonnes a month with Makomo Resources having projected to increase its production to 300 000 tonnes while HCCL has also targeted to extract a minimum of 300 000 tonnes, Zambezi Gas is looking at an output of 100 000 tonnes while the other companies are set to contribute 50 000 tonnes.

“We are towards the 700 000 tonnes mark. Our railway system can only move 50 000 tonnes a month into South Africa. So what happens to the other 150 000 or 200 000 tonnes that the companies will have produced?

“I don’t think there is really a need to chase further concessions being transformed from exploration into production. I think let new concessions come in with new markets and the new concession must be opened up on the back of new markets. The markets are already over supplied.”

With the country’s coal largely sitting in two forms with 50 percent of the seam being power station coal and the other 50 percent being either steam or coking coal Cde Moyo said there was likely to be a situation whereby new companies would tend to exploit the one that would be in demand leaving the other part of the resource to waste.

“If new players come in and they have power station coal and then it happens that there is no thermal power station that has come up where does that coal go to or somebody sees an opportunity to supply steam coal and they don’t have power coal in support what happens to the other coal? So we actually run a risk where the other coal resources are treated as waste in order to only sell the portion that has got a market share,” he said.

Liberation Mining site manager, Mr Patrick Utete, said the company was waiting for its Mining Lease from the Mining Affairs Board to start mining after having completed its exploration two years ago.

The company applied for a Mining Lease in December 2012 with the hope of beginning its coal extraction activities at its 16 545 hectares Gwayi-Lupane concession the following year (2013) but to date it is still to receive the document.

“We are still waiting for a Mining Lease from the Mining Affairs Board, which in all fairness we believe it is now long overdue. There is a need for us to start mining so as to benefit locals as enshrined in the Zimbabwe Agenda for Sustainable Socio-Economic Transformation.
“Remember there are a number of power stations that are set to be constructed including the expansion of the Hwange Power Station. This will give rise to an increase in the demand for coal and we are also looking forward to exporting,” Mr Utete said.

Deputy Minister Moyo said the ministry was working towards regularising the coal sector so as to ensure that all companies adhere to internationally recognised technical skills, quality and safety standards.

Over the years, the only miner, HCCL was and is still self-regulated with Government having less influence.
“These companies must realise that coal as a commodity is rarely sold by a company, coal as a commodity is sold as a national brand. We cannot sell Makomo or Hwange coal to other countries because if one makes a mistake the others will die because it’s one brand. So we then need to regulate the standard of coal that will leave the country to go into the external markets,” he said.

“The companies can send it independently but it must be exactly be the same product so that the companies don’t expose themselves but of course ministry’s desire would have been let’s consolidate the coal parcel.”

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