Martin Kadzere Business Reporter
INDIAN state-owned Bharat Heavy Electricals Limited and Shandong of China are among companies that have expressed interest in partnering RioZim Limited in setting up 250 megawatt plants at its vast coal fields of Gokwe in the Midlands province.The short-term strategy envisages the construction of a number of smaller power plants over the next 10 years, RioZim said in a statement last week. It said its energy division Rio Energy, was in the process of bringing in technical and financial partners.
“ . . . three best-in-class developers have registered their intent to develop at least one 250MW plant over the next four years. These include EPC Contractors, Shandong, GEDI and BHEL, who are submitting quotes on the construction of a 250MW plant. These firms have excellent track records in power development, having developed between them in excess of 10 gigawatts of capacity around the globe,” RioZim said.
RioZim has engaged an Indian consulting firm WAPCOS to update the bankable feasibility study to ensure potential investors are provided with reliable data on the resource.
RioZim added it has so far spent US$10 million in exploratory work since 1989 when the Government ceded a coal grant to Sengwa Colliery, a company owned by RioZim and Rio Tinto plc.
“There have been major milestones since then. During these years the owners have spent over US$10 million exploring the resource to ensure that the full value is identified. As a result, significant progress was made in order to determine the resource size and extent of power generating opportunities. This has included a bankable feasibility study done with national power of the UK,” said RioZim.
However, the ultimate success of the project had been constrained by lack of customers ready and able to pay for power supply at reasonable cost. Secondly, there had been a dearth of sponsor companies and utilities able to partner the project.
In addition, access to project finance is limited under current market conditions, which require an investment of US$400 million even for a relatively small 250MW power plant.
Another challenge relates to sourcing the debt portion of the full capital investment on favourable terms. Under the current market conditions debt finance is expensive and unavailable.
Meanwhile RioZim said it is helping Sable Chemicals on pre-feasibility study to set up a coal gasification plant with the aim of supplying coal to the proposed Sable’s coal gasification plant.
“A Memorandum of Understanding was signed in February 2012 between Sable Chemical Industries Limited and RioZim on the establishment of a joint venture. Sable will focus on the coal gasification based ammonia or urea plant and downstream capacity enhancement projects, while RioZim will focus on becoming the supplier of coal to the project,” RioZim said.
Sable Chemicals chief executive Mr Jack Murehwa recently told our sister paper, Sunday News the projects would cost US$600 million. About three million tonnes of coal would be required annually to run the coal gasification plant. Sable is the sole manufacturer of ammonium used in the production of AN fertiliser. It is planning to decommission the electrolysis plant it is operating and start importing ammonia on an interim basis to allow the commissioning of the coal gasification plant.