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Johannesburg
May 21, 2022
Sub-Sahara Mining & Industrial Journal
Mining News

Power shortages cripple miners

THE country’s largest ferrochrome producer, Zimasco is battling increased power outages which have seen the firm resorting to expensive sources of power.

Zimbabwe has long been stuck in a biting power crisis that has forced the power utility, Zesa, to import power from Mozambique.

Many businesses including miners have resorted to alternative power sources, such as generators, which are expensive to operate given the increase in global oil prices.

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“While our smelter in Kwekwe has not been significantly affected by the ongoing power cuts, our mining operations continue to be negatively impacted by the frequent outages and, where feasible, the use of significantly more expensive power from generators has had to be employed,” Zimasco spokesperson Clara Sadomba said.

She noted that the company had so far managed to increase its operational capacity this year from the two furnaces that were running last year (50% of operational capacity) to three furnaces (75% of operational capacity).

Zimasco, a unit of China’s Sino Steel Corporation, was placed under provisional judicial management in 2016 after its indebtedness to banks and creditors increased to about US$65 million in 2015 from US$38 million in 2009.

Resultantly, the miner stopped operations in 2015 leading to the switching off of its furnaces at the Kwekwe refinery.

Three of its furnaces were then leased to Portnex in a US$12 million lease agreement.

However, Zimasco has since reclaimed its western plant operations following the expiry of Portnex International’s lease agreement.

The South African firm’s five year lease agreement expired at the end of 2020.

Portnex’s stint at Zimasco suffered challenges which saw operations being shut down at one time due to failure to settle electricity power obligations.

There have also been disputes over the entity’s alleged failure to pay rentals to Zimasco.

After the expiry of the lease agreement, Zimasco took over its western plant operations.

Zimasco exited judicial management in 2018 after posting US$160 million in turnover and a profit of US$45 million.

The mining and smelting firm has plans to set up a multi-million dollar smelting complex in Mberengwa as the company advances its chrome value addition thrust, according to Finance and Economic Development minister Mthuli Ncube.

There are indications that Zimasco will invest close to US$80 million in a new smelting facility in the medium-term.

When operating at full capacity, the ferrochrome producer has an average annual turnover of about US$200 million.

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