Covid-19 delays Zimasco expansion
ZIMASCO, a unit of Chinese-owned Sinosteel, has hinted construction of new ferrochrome furnaces in Mberengwa in the Midlands Province could be delayed due to Covid-19 induced challenges.
Zimasco and Afrochine Smelting, the country’s major ferrochrome producers, entered into a joint venture to build four smelters with capacity to produce 140 000 tonnes per annum.
The construction was expected to begin during the first half of this year, but is likely to be delayed due to disruptions caused by the pandemic that has so far killed 286 000 people all over the world and infected about 4,18 million.
Zimbabwe has so far recorded four deaths, 37 confirmed infections and 12 recoveries.
“We are stuck with this Covid-19 and this is certainly going to delay the project,” a Zimasco official said in a statement last week.
Declared a pandemic by the World Health Organisation on March 11, the highly contagious disease has become a global emergency, given its devastating effect on the entire global population and the economy.
It is feared that the crisis caused by the pandemic could plunge the world economy to depths unknown since the Second World War, adding to the woes of an economy that was already struggling to recover from the pre 2008 crisis.
Beyond its impact on human health (materialised by morbidity and mortality), coronavirus, is disrupting an interconnected world economy through global value chains, which account for nearly half of global trade.
The pandemic has also resulted in abrupt falls in commodity prices, fiscal revenues, foreign exchange receipts, foreign financial flows, travel restrictions, declining of tourism and hotels, frozen labour market among others.
Some analysts said the funding of new capital projects would be negatively affected due to the disruptions being caused by Covid-19 and warned the “suspension and delays are inevitable.”
“We are likely to see many projects being reviewed especially those that had not taken off,” said an analyst with a local research company.
“We have seen this happening in other parts of the world where some proposed projects are being delayed.”
The first furnace was expected to be commissioned next year, followed by the commissioning of the second plant in 2022 and finally, the third and fourth in 2023.
Apart from the new complex, Zimasco intends to build a sixth smelter at its Kwekwe complex.
Zimasco said equipment to build a sixth furnace at the Kwekwe smelter is already on site. This will be a 30 MVA furnace with a capacity to produce 55 000 tonnes per annum.
However, Zimasco had indicated priority would be given to commissioning the Mberengwa furnaces ahead of the Kwekwe since it is situated at the ore source, making it more cost effective to operate. The Kwekwe furnace was expected to come on line in 2024.
The Zimasco Kwekwe smelter has an operational capacity of 180 000 tonnes of ferrochrome per year.
Zimbabwe has 15 ferrochrome operations concentrated mainly in the Midlands Province.
Being host to an estimated 12 percent of the global chromite resources and production currently contributing less than 3 percent to global output, the Zimbabwean chrome ore industry has significant potential for growth going forward.
Zimbabwe holds the world’s second largest known chrome ore deposits, after South Africa.
Global chrome ore resources are estimated in excess of 12 billion tonnes, according to Roskill Chromium Global Industry Outlook 2018.
Chrome and ferrochrome remains among to commodities that contributes the bulk of Zimbabwe’s export earnings alongside platinum and gold, diamonds, nickel and coal.