Golden Sibanda Senior Business Reporter
RIOZIM says its US$1,5 billion investment into building a 2 800 megawatts thermal power station in Sengwa, Gokwe North, remains firmly on course with the company now moving to the next phase of preliminary works, which entail, chiefly, signing a power purchase agreement.
Notably, RioZim said the Sengwa project was part of two power initiatives, including a 178 megawatts solar power project, the company is pursuing to cushion itself from the effects of crippling power shortages buffeting the entire country, which it said posed significant risk to operations.
RioZim’s operations chiefly cuts across gold and diamond mining and processing at Renco (Masvingo), Cam and Motor (Kadoma) and Dalny (Chegutu) mines as well as base metal processing at Empress Nickel Refinery.
“The solar power project and the Sengwa Thermal Power Project in order to generate its own electricity and ensure uninterrupted power supply for national consumption,” RioZim said. A framework agreement for the US$200 million solar plant has already been signed with a technical partner.
As part of milestones targeted under the next phase of the Zimbabwe Stock Exchange (ZSE) listed diversified miner’s plans, RioZim intends to sign a power purchase agreement (PPA) with State owned Zimbabwe Electricity Distribution and Transmission Company (ZETDC).
The PPA is critical element in reaching financial close for project funding as it guarantees a future market for the power to be generated from the project, hence its bankability with regards to ability to pay back loans.
Other targeted key milestones entail developing a residential town at Sengwa, water abstraction permits from
Zinwa and Zimbabwe River Authority (ZRA), updating and completing environmental impact assessments, engineering, procurement and construction (EPC) contract and financial close.
Zinwa (Zimbabwe National Water Authority) has rights over use of all water bodies in the country while ZRA administers the affairs of Zambezi River, from where the bulk of the water to be used at Sengwa Power Station will be drawn.
Earlier, the company had posted a number of key milestones on Sengwa. RioZim signed framework and exclusivity agreements with Power China in November 2018, completed a full design and feasibility of the Power station, route and design of the water supply pipeline from the Zambezi River, design of 420kV power evacuation lines from Sengwa to Selous and coal mining plan and fuel coal delivery to station.
“The Sengwa Power Station will be constructed in phases of 700 megawatts each up to 2 800 megawatts. It is envisaged that the power station will include complimentary projects such as the development of a town and industrial park where export generating companies can set up operations so as to create an economic hub in the district,” RioZim Limited said in an recent update on operations.
The Sengwa thermal power station Project has been in the pipeline for some time since the early 1990s. The ZSE-listed mining group last year secured an investor, Power China International Group Limited.
Power China International already has Zimbabwean experience having carried out similar work, Kariba hydro power project, in the country and is currently still engaged with similar thermal construction.
Financially, RioZim said that revenue went down 15 percent in 2018 compared to 2017 on weaker production due to Lower sales volume of 1,8 tonnes against 2 tons sold in the prior year comparative.
Operating profit also went down in 2018 by 128 percent to US$2,2 million due to fixed exchange rate, which was at 1 to 1 until February, lost production in the fourth quarter and costs during shutdown.
The company invested said it had US$12 million capital into operations in 2018, which ranks among major achievements by the company despite the myriad of headwinds encountered during the period.
In 2018, RioZim acquired 30 pieces of mobile equipment and successfully transitioned to owner mining at Cam and Motor Mines, which cut costs. It also signed binding agreements with two investors for power projects and completed construction of a US$6 million flotation plant.