Mines and Mining Development minister Winston Chitando yesterday inked a historic US$500 million deal with UAE-based boutique consulting firm Victoria Consulting that is expected to unlock value in Zimbabwe’s coal mining sector and push revenue earnings from the fossil fuel to US$1 billion by 2023.
In terms of the deal, Victoria Consulting will assist Zimbabwe penetrate the Indian and Japanese markets while at the same time funding key infrastructure projects in respect of roads and rail to transport coal to the foreign markets.
The Dubai firm will also help capitalise 10 running coal mining projects in Zimbabwe and provide working capital for the same.
There is also scope to fund new projects.
“We want to see an off take of 5 million tonnes in the next couple of months, the projects will be able to more than double what we have been producing,” Chitando said in his address at the signing ceremony, which was graced by President Mnangagwa at his Munhumutapa offices yesterday.
He said Zimbabwe extracts between 2 to 3 million of tonnes annually from its estimated 12 billion tonne coal reserve which means the country requires thousands of years to finish the resource, hence the need for export and partnerships.
“India is the largest importer of coal, last year it imported about 52 million t (and) the imports are growing, in April India imported 15 million tonnes of coal,” Chitando said.
Currently, Zimbabwe has limited coal exports into the region and China.
Coal production has also been hampered by power shortages which hit industry forcing companies to shut down for hours. Recently, coal miners said they were left with two weeks’ supply of coal to thermal power stations.
According to official figures from the Ministry of Mines, Zimbabwe produced 995 000t of coal worth US$23,4 million in the first half of 2019.
Chitando said the coal industry suffers from capital constraints of how to export coal and how to increase production.
“We have over 10 projects in Zimbabwe at various stages to meet volumes capital is required. Secondly we are full aware there’s need to invest in logistics; we are targeting production in Hwange,” he said.
Victoria Consulting will also work with the Ministry of Mines and the Minerals Marketing Corporation of Zimbabwe to find or locate necessary projects which qualify for capital and then deliver.
One of the company’s officials will be based in Zimbabwe through early implementation of the project.
Victoria Consulting CEO Vitor Sousa said his company is with Zimbabwe all the way.
We affirm our true commitment to assist, advise and work together with the Ministry of Mines to make sure these goals will be achieved and even surpassed,” Sousa said.
President Mnangagwa said Zimbabwe should take advantage of the good relations it has with India and exploit the full potential of the deal, with targets to least export 10million tonnes of coal to India in the short to medium term.
“Every week there is a consumption of a million tons of coal and we produce 2 million tons per annum, you can see the huge potential where we are only at 2 million per 52 weeks which can be consumed in two weeks in India,” he said.
“By 2023 the entire mining industry will be at US$12bn revenue. You can see an opportunity of it actually growing beyond and the market is there.”
Mines Deputy Minister Polite Kambamura said global coal trade is currently at about 1,5bn tonnes per annum and Zimbabwe should get a slice of the cake.
Kambamura said there is need for an approach to hastily extract coal by 2050 given a strong push to ban fossil fuel by 2030 in developed nations and by 2050 in developing economies.
“We hope within the next 60 days we must have negotiated through main agreement and having signed it,” he said.