FERROCHROME producers are lobbying government to reduce energy tariffs for bills paid in foreign exchange as the sector suffers from price fluctuations on the international market. Zimbabwe has one of the biggest chrome reserves in the region and is pinning its hopes on the mining sector to spur economic growth.
The ferrochrome producers also proposed the setting up of an Inter-Ministerial Committee to address the matter that is now threatening the viability of the industry.
In a letter addressed to Energy and Power Development Minister Fortune Chasi by Portnex International managing director Frikkie Laubscher citing concerns of the industry, ferrochrome producers are in urgent need for a review of the power tariff structure.
“Indeed, the entire ferrochrome industry is on the verge of total collapse and one simply needs to have regard to the significant outstanding foreign currency remittance (CD1 acquittals) position from the sector alone and every producer is in arrears,” said Laubscher. He said depressed prices for ferrochrome and the current tariff regime would reduce output of the sector.
Laubscher implored Chasi to set up an inter-Ministerial Committee to review a proposal submitted to the Ministry of Energy, ZETDC and also discussed briefly with Vice President Kembo Mohadi on November19, 2019.
“We are confident, a review of the tariff (or introduction of set-off incentives) is for the sustainable viability of all ferrochrome producers,” he said.
Chasi could not be reached for comment as his phone went unanswered and he did not respond to text messages sent to him. The cost of power in the country has drastically affected some mining operations that require uninterrupted and cheap power supplies. It has been established that power is critical to economic development and that there is a positive correlation between cheap power supply and growth in gross domestic product.
Therefore, cost of power has remained a nightmare for most mining companies especially for those with high power consumption operations. Despite calls to review downwards the cost of power, cost of electricity has been on the rise amid public outcry. Such a scenario, according to the miners has proven to be unsustainable for mining companies who are already suffering from low commodity prices.
Zimbabwe is facing rolling power outages following a sharp decline in generating power capacity at the country’s hydro-powered station. Water levels at Kariba Dam this year plunged following one of the worst droughts in living memory.
A steep electricity tariff increase and removal of subsidies has to date failed the country to raise enough foreign currency to cover for power imports or to fix its power plants which are in constant need for repairs due to old age. This has forced government to turn to mining companies especially those that export to pay for their electricity in foreign currency.