Makomo Resources, Zimbabwe’s largest coal producer by output, plans to spend $1.5-billion on a 600 MW power plant and will also start exporting the fuel to steelmakers in Southern Africa.

Construction of the plant will start in 2018, says FD Tendai Mungoni. Makomo will finance the plant together with Chinese investors it does not wish to identify.

Companies including Sinosteel’s Zimasco plan to build power plants in the country, which does not generate enough for its needs. Zimbabwe, with the biggest known reserves of platinum after neighbouring South Africa, has coal resources of as much as 15-billion tons, government estimates show.

“We expect to spend about $1.5-billion on that power plant,” says Mungoni. “We have lined up very keen investors, some from the region, some offshore – the Chinese.”

Makomo is 60%-owned by a group of Zimbabweans, while British and South African investors hold the rest, Mungoni says, declining to provide more information. The country mined 4.9-million tons of coal last year, with Makomo’s output comprising 75% of that amount, overtaking Hwange Colliery Company as the largest producer of the fuel, according to the country’s Chamber of Mines. The nation’s royalty on coal production is 1%.

Makomo has a contract to supply 60 000 t of coal monthly to the State-owned Hwange power plant, the nation’s biggest such facility, with 920 MW installed capacity. Zimbabwe Power Company, which operates the station, asked Makomo to double supply for June and August, Mungoni says. It also supplies 10 000 t monthly to the country’s three smaller thermal plants.

Zimbabwe is expanding power generation capacity to curb blackouts that have paralysed mines and industry. It produces an average of 1 300 MW, compared with peak demand of 2 200 MW, resulting in daily rationing and electricity cuts.

Makomo plans to raise monthly capacity to as much as 350 000 t monthly by the end of the year from about 250 000 t now.

The company is in discussion

with the National Railways of Zimbabwe to finalise the transportation of the coal, Mungoni says.

Makomo plans to start exports of coking coal, used in steelmaking, moving 20 000 t this month and increasing this to 80 000 t from next month.

“Currently, it’s going to be regional – South Africa, Zambia, thereabouts,” Mungoni says. “With time, we intend to see how that launch goes; we intend to go further afield.” He declines to disclose the names of the clients the company has reached agreements with.

The price of coal leaving the South African port of Richards Bay, which has the world’s biggest terminal for the fuel, has declined since 2011 and has dropped 11% this year to about $74/t.

Makomo started operating the mine, which has a 25-year lifespan, in October 2010. While Zimbabwe granted the company a permit to operate on a 7 000 ha site, it is using 500 ha now, employing about 600 workers, up from ten when it started. The company has used $200-million since starting operation and has no plans to start trading its shares on an exchange.

“It hasn’t been easy, but it also hasn’t been hopeless,” he says. “We have had to come together with our anchor customer to navigate these times together, while taking cognisance of the need for electricity gener-ation. By and large, the conditions have been chal-lenging and have tested us as Zimbabweans.”