SABLE Chemicals has failed to secure investors to provide about $700 million required for replacement of its high-cost electrolysis technology plant used for production of hydrogen.
Zimbabwe’s sole manufacturer has not been able to immediately replace electrolysis with a low- cost alternative and will for now maintain the use of the highly expensive electrolysis system.
The company was exploring the possibility of coal gasification to get hydrogen required for production of ammonia; a major input in the manufacture of ammonium nitrate fertiliser.
Mr Mike Ndudzo, chief executive of Industrial Development Corporation – parent company of Sable Chemicals – said last week that investors were worried about the market, power and imports.
“The investors have brought up their own questions, ‘like if we are to bring our investment , are we going to be guaranteed of a ban on imports, (good) pricing of electricity and the price of the commodity in order recoup their investment’?” said Mr Ndudzo.
Mr Ndudzo made the remarks last week during a tour to IDC’s Dorowa Mine in Buhera, which produces the NPK used in manufacturing of compound fertilisers in the country.
Sable faces serious challenges relating to the cost of running the electrolysis plant, for production of the hydrogen used to manufacture some of its ammonia, as it requires lots of power.
The situation has significantly affected the Kwekwe-based fertiliser manufacturer’s capacity to produce ammonium nitrate fertiliser to meet requirements for the whole country.
Mr Misheck Kachere, chief executive of Chemplex, a subsidiary of IDC, under which Sable falls, said challenges with the electrolysis plant militated against efforts to increase production.
Sable, which is operating at an average 40 percent of capacity due to funding and plant constraints, imports about 30 percent of the ammonia it requires to produce AN fertiliser.
This raises concerns of consistency to supplies, which may be disrupted by logistical issues or events in other countries, posing food security risks for agro-based Zimbabwe.
“For ammonium nitrate we admit that we have a problem, we have challenges at Sable. For example, last year there were about 175 000 tonnes of AN used in the country, but Sable only produced 75 000 tonnes, so it is a challenge because of the technology.
“Some electrolyte units of the electrolysis plant are beyond repair. If you want to repair them you will need $4 million for each unit. So these need rehabilitation and we have 10 units. With the power that we are getting from ZESA, that’s sufficient,” he said.
Mr Kachere said that they were, however, still hopeful that they will be able to secure investors to provide the finding to replace the high power consuming electrolysis plant by 2018.