Zimchem lays off workers
VINCENT MHENE
Zimchem Refiners, a tar and chemicals manufacturer based in Redcliff, had to lay off employees this year due to a decline in capacity utilization brought on by the nation’s economic challenges.
As capacity utilisation dropped from 15% to 10%, the company’s employment levels fell by 8%, from 108 in the first quarter to 99 in October , according to a performance report given during Midlands Provincial Affairs and Devolution Minister Owen Ncube’s visit to the plant on Monday.
According to the report, there were 108 employees in Q1, 106 in Q2, 102 in Q3, and 98 employees in October 2023, when employment levels finally declined. Its capacity utilisation averaged 12%, having been at 15% in Q1 and Q2, falling to 8% in Q3 after rising marginally to 10% by the end of the month.
The Managing Director of the company, Tendai Shoko, stated that the manufacturer of chemicals and tar was confronted with various challenges, including cash flow limitations and working capital funding constraints.
“We are facing challenges such as working capital constraints resulting in failure to procure raw materials in bulk, cash flow constraints, low-capacity utilisation, operating without a tax clearance, lack of funding for plant refurbishment, and sanctions on ZISCO Steel affecting operations as we cannot trade internationally.”
He added: “Due to the sanctions, Zimchem cannot make foreign payments or receive funds from outside Zimbabwe, neither can we export or import, such that we are currently exporting through a third party. Consequently, Zimchem has been black-flagged for exports by RBZ (Reserve Bank of Zimbabwe) as the company fails to clear its CD1s because it cannot receive export receipts.”
Currently, Zimchem Refiners exports furnace fuels and creosote to Zambia in addition to pitch to South Africa. There are currently 2,000t on its order book.
“In terms of exports, we sold 2 356t of creosote and furnace fuels to Zambia, giving us US$1 256 605.60 revenue. We also exported 997t of pitch to South Africa, earning us US$577 800.00 in revenue,” Shoko said.
He revealed that Zimchem was exploring DR Congo, Tanzania, and Mozambique as potential markets.
The company also plans to acquire its own coke batteries as the ZISCO ones were not operational, use Chrysotile for modification of road tar by refurbishing the modified tar plant, commission a Bitumen Emulsion Production Plant, and set up a 500Mt electrode paste briquette manufacturing plant, the report showed.
“Zimchem Refiners imported a Bitumen Emulsion Production Plant and it is yet to be commissioned. The plant has a production capacity of 6 tonnes per hour. Bitumen emulsion raw materials will be imported from South Africa. The plant requires some funding to complete installation and sourcing of raw materials for commencement of production,” read the company`s performance report.
Midlands Provincial Affairs Minister Owen Ncube said Zimchem Refineries was vital to the country`s road rehabilitation programme through its tar products.
“Furthermore, the company manufactures tar for domestic use on our roads and exports the same to neighboring countries. The Second Republic, in line with the import substitution strategy, took a bold decision to empower local entities to strengthen the use of local resources to address local challenges,” Ncube said.
The company this year completed refurbishing its tar manufacturing plant, which has the capacity to produce 30t of road tar per day. This is against the government`s daily requirement of 10t.
