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Michael Magoronga
MIDLANDS – Redcliff-based chemicals producer ZimChem Refineries is facing serious operational challenges after its raw material supplier suspended supplies owing to a $1,1million debt.
Chinese owned Hwange Gasification Coal Company (HGCC) stopped supplies of crude tar to Zimchem demanding that the company settles the debt first.
HGCC is reportedly supplying the crude tar to regional market where they get forex and are now demanding payment upfront for the supplies of the raw material to the company.
Zimchem acting chief executive officer George Chigora confirmed the company had since seized operations due to the lack of raw materials.
“We are facing challenges since the time the company stopped supplies of our main raw material. There is no production that can be done without the crude tar,” said Mr Chigora.
The company is now seeking government intervention to break the impasse.
“What is happening is that HGCC is now exporting crude tar since they get foreign currency from countries like South Africa and Zambia. They have opened a regional market and dumped us in the process. We therefore request government to intervene because even if we want to, there is no way we can settle the debt without production,” he said.
Mr Chigora said the debt ballooned to irretrievable levels during the introduction of the multi-currency system in 2013.
“The debt rose when the dollarization was introduced and ever since then we failed to settle the bill since it continued to escalate against company challenges,” added Mr Chigora.
He said the Chinese Company made it difficult for the company as at times they would increase prices of the raw material in retrospect.
“Challenges arose when the company started demanding payment upfront. They also at times would increase the price in retrospect. This made it difficult for us. I suspect they were looking for reasons to stop supplies and concentrate on supplying their regional market,” he said.
Online Reporter