Makomo coal production under threat
MATABELELAND North-based Makomo Resources’ efforts to improve or maintain coal output at current levels are under threat as the company’s fuel suppliers are demanding cash upfront on all transactions.
Makomo Resources general manager Mr Samson Mabvira said the demands being made by the fuel suppliers were likely to dampen production targets at the mine as they rely on fuels such as diesel and lubricants to power and operate mining equipment.
“There is a new challenge that might affect our operations if it’s not addressed quickly. We’ve learnt that some fuel suppliers are now demanding cash upfront or hard cash for deliveries of the precious product in the mining of coal.
“Most of our transactions with clients don’t involve hard cash so the cash payment demands from our fuel suppliers may adversely affect our efforts to increase volume output,” said Mr Mabvira in an interview on the sidelines of the celebrations held at the colliery recently to mark the company’s 6th year anniversary.
Makomo is producing 63 000 tonnes of coal per month against a monthly projection of 200 000 tonnes.
The mine produces thermal coal mainly for the country’s thermal plants while a small portion goes to industry and regional markets particularly Zambia.
Makomo is targeting to increase output to 300 000 tonnes per month by year end as it explores other regional markets.
The company which uses contract mining is the largest coal producer in the country, having taken over the position from troubled Hwange Colliery Company Limited.
Mr Mabvira said slow revenue inflows caused by the challenging economic climate were adversely affecting their efforts to increase output as they were owed by their major coal consumers, the Zimbabwe Power Company over $25 million.
“Since we are owed a lot of money by one of the major consumer of our coal products, we are unable to finance sections of production such as purchases of consumables which may be diesel, oil and lubricants for the mining machinery.
“At Makomo we say the sky is the limit as we can produce according to market demand. However, if we are going to meet some of our targets, we need to make sure that we have access to fuel and the markets to sell our products.”
Makomo requires 25 000 litres of diesel daily which translates to 600 000 litres per month.
He said as part of measures to keep operations on track, the mine was engaging some of its suppliers to pay off their debts through fuel.
“The current economic climate is not favourable to all of us but we need to continue mining coal. This is a challenge to us and as part of being on alert, we are in talks with some of our clients to pay their debts in the form of fuel”.
Makomo was recently awarded a power generation licence to develop a 660 megawatt power station close to the mine at a cost of $3 billion.