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Fairness Moyana in Hwange
TALKS are underway towards reviewing the coal pricing model to make it more sustainable following an outcry from coal producers, a senior official has said.
The coal producers have recently complained that the product price was too low and did not reflect with the cost of production, which remained high. A tonne of coal is being sold for US$30 while on the regional market it is fetching between US$38 and US$47.
Speaking in an interview here recently Mines and Mining Development minister, Winston Chitando, said efforts to ensure sustainable pricing for coal was underway with an announcement on the review due this month.
“Government is committed to ensuring that there is a sustainable pricing model, discussions are underway between the coal producers and the relevant Government departments,” he said.
“I would like to assure coal producers that very soon pronouncements will be made by the relevant authorities on a long term pricing mechanism to ensure that there is sustainable delivery of coal not only to power stations but also other various users like coking plants and industry.
“So, I’m very confident that by the end of October that will be sealed, so that we have a long term sustainable pricing for coal,” said Chitando.
He said the coal mining industry played an important role in the economy and was focused towards the US$12 billion mining industry by 2023.
“As you are aware of the role that coal producers play in supporting Government efforts to attain a middle-income economy by 2030, as envisaged by President Mnangagwa. We will continue to support these players especially with the various Government and private sector projects currently underway such as construction of power stations and coking plants. The demand for coal will be high. So we need our producers to be well capacitated to meet and satisfy that demand,” said the minister.
“I have no doubt that we will achieve a US$12 billion mining sector by 2023. We are at about US$2 billion but in three years from now we should be at US$12 billion, just one sector. This should have been done a long time back but we were not focusing on the resources at our disposal.”
President Mnangagwa has also stressed the need to utilise available resources such as the land and minerals to drive economic growth.
“Let me assure you support from my administration is 100 percent as long as I see that you are patriotic and committed to developing our country,” said President Mnangagwa during his recent visit to Hwange where he met coal producers and assessed different energy projects.
According to the chairperson of Coal Producers Association, Mr Raymond Mutokonyi, the producers want a cost reflective price model.
“The price was last reviewed in May 2020 from US$26.50 to US$30.00 having been at that level since July 2011. All inflation from 2011 to date have been borne by the producers,” he said.
“For example, diesel cost was US$0.90 but has increased to over US$1.35, the same for other inputs. The unavailability of forex for key inputs such as explosives, spare parts and continuous machinery replacement has been severely compromised,” he said.
Mr Mutokonyi who is an executive director for Makomo Resources bemoaned failure by Zimbabwe Power Company to pay for deliveries arguing that the debt had ballooned to $900 million and was crippling production.
“Failure by ZPC to pay for delivered coal has also compounded the viability challenges of the sector leading to subdued productivity. As at 25 September we are owed a total of $900 million, almost a billion at the prevailing bank rate,” he said.
“Regional comparisons put the price of similar coal at between $38 and $47. We understand efforts are underway to have this reviewed and hope the exercise will be concluded soon.”
The Coal Producers Association brings together coal producers in Hwange namely Hwange Colliery Company, Makomo Resources, Zambezi Gas and Galpex also known as Coalbrick Mine.
Online Reporter