via Sable seeks fertiliser funding – DailyNews Live by Kudzai Chawafambira 13 SEPTEMBER 2013
Sable Chemicals Industries Limited (Sable) says it is seeking finance to import ammonia in order to boost local fertiliser production and supply.
The agro-based company — Zimbabwe’s sole ammonium nitrate fertiliser producer — is currently experiencing working capital constraints due to the country’s acute liquidity crisis.
Jack Murehwa, the Sable chief executive, told businessdaily that his company is also suffering from unsustainable electricity bills emanating from its archaic electrolysis production system.
“For most of this year because of working capital constraints, ammonium nitrate manufacture has been based largely on locally manufactured ammonia with very limited ammonia imports. To increase ammonia imports, we are seeking financing from banks and negotiations are at advanced stages,” he said.
Murehwa said the electricity tariff applicable to Sable will continue to be a subject for discussion with authorities taking into consideration the strategic nature of ammonium nitrate in Zimbabwe’s agriculture sector.
“There is need to consider the real cost of power to the nation used in the manufacture of the AN, relative to the benefits of local manufacture of such a strategic commodity,” he said.
The electrolysis system has over the years heavily weighed down Sable’s bottom line prompting the firm to plan decommission the plant — used to separate water oxygen for the hydrogen it requires in the production of ammonia in the near future.
Meanwhile TA Holdings (TA) — parent company to Sable — recorded a $2,2 million loss in the half year to June 30.
TA, however, forecasts Sable to increase production in nitrogen fertilisers and ensure greater economies of scale.
Zimbabwe Fertiliser Company, another TA subsidiary, is expected to return to profitability by the end of the financial year despite continued streamlining of operations to adapt to the prevailing economic environment.
The group achieved a profit before tax of $3,6 million compared to $1,4 million in the same period last year while total group revenue surged to $38,9 million from $34,6 million in prior comparable period.