Makomo Resources productivity skids in first quarter

MAKOMO Resources’ production capacity experienced a slide in the first quarter of the year due to a cumulative $23 million which the company is owed by the Zimbabwe Power Company for coal deliveries at its thermal power stations.

Makomo Resources’ managing director Mr Raymond Mutokonyi said the failure by Zesa Holding’s subsidiary ZPC to make prompt payments for coal deliveries at its thermal power stations was weighing down operations at the country’s largest coal miner by output. ZPC is the company’s biggest customer.

He said production at the mine dropped to 40 percent in the first quarter of this year as the company struggled to purchase strategic equipment due to lack of adequate working capital and flooding of its mining pits due to incessant rains late last year and beginning of this year.

“ZPC owes us about $23 million. As a result it makes it difficult for us to procure the requisite inputs which are mainly equipment and spares which take a lot of time to ship due to foreign currency shortage. They are slow payers so you realise that by the time they pay the lead time of getting spares from China, America or wherever we will have ordered takes time for them to arrive.

“The Reserve Bank of Zimbabwe allocates you foreign currency based on what you have in your account. If you have less you will be forced to use that and it affects your working capital.

That has been the case for years and combined with the flooding of the mine, which happened last year it meant we had to use more resources which we didn’t have to pump out water. As a result of that our production fell 60 percent compared to the previous year,” said Mr Mutokonyi.

He said failure by ZPC to make prompt payments had resulted in the company ceasing operations at its small power station due to non-availability of coal.

“The small power stations of Harare, Munyati and Bulawayo have not been running for the past three or so months and it means we have to import more power when we can actually produce enough coal,” said Mr Mutokonyi.

Zimbabwe has installed power capacity of 2 100 megawatts (MW), but is currently generating an average of 1 300MW and meeting the difference through imports from the region.

“At the moment we have reached the 200 000 tonne mark. We had slumped drastically both on the coking coal and thermal coal side with the thermal coal which makes up the largest chunk of our production being at 120 000 to 150 000 tonnes,” said Mr Mutokonyi.

He said the company would soon explore new export markets, currently it is exporting to Zambian Breweries and merchants in the Democratic Republic of Congo.

“All along we were going to the northern market, Zambia, Democratic Republic of Congo and Malawi but we have had inquiries from the southern market which is South Africa. We haven’t explored the southern market for the past five years but inquiries are coming in now,” said Mutokonyi.

Makomo Resources is mining in Entuba coalfields and the mine has been in operation for the past seven years. The size of the concession is 7 000 hectares. The mine has a lifespan of 25 years.