$5,2bn deal takes off

WORK on the $5,2 billion coal-to-fuels project, born out of the tie-up between Government and a Canadian investor, is expected to begin immediately after the ground-breaking ceremony on June 1, and is expected to create more than 20 000 jobs in both downstream and upstream industries over the next three years.

Geologists are set to be deployed on site this week, while mining equipment is currently being mobilised from South Africa.

Verify Engineering Private Limited an agent of the Ministry of Higher and Tertiary Education, Science and Technology Development - entered into joint venture and shareholders’ agreements with Nkosikhona Holdings, an investment vehicle of Magcor Consortium Group of Companies of Canada.

The two entities will operate under a joint venture company, Vectol Zimbabwe.

Verify Engineering chief executive officer, Engineer Pedzisai Tapfumaneyi told The Sunday Mail yesterday that work on the project will commence immediately after the ground-breaking ceremony.

He said equipment is presently being mobilised from South Africa.

“The project will enable Zimbabwe to have energy security and revive its economy. The project is fully endorsed by the Government as it is key to national economic development and self-sufficiency in terms of all liquid fuels, fertilisers and a whole range of other chemicals.

“Accordingly, it was granted national project status. In pursuit of this objective, Verify Engineering produced a bankable feasibility study in December 2017 for the development of coal-to-liquid fuels and chemicals project.

“This became the basis upon which Nkosikhona Holdings was engaged,” said Eng Tapfumaneyi.

“A Memorandum of Understanding (MoU) was then signed between Verify Engineering and Nkosikhona Holdings on the 5th of February 2018.

“Nkosikhona Holdings subsequently expressed their commitment and readiness to invest US$5,25 billion in the project as FDI during the Investor’s Conference organised by the Ministry of Higher and Tertiary Education, Science and Technology Development, which was held on the 9th of March 2018 and officially opened by His Excellency, The President.

“The Joint Venture and Shareholder Agreements have gone through the requisite stages and approvals and were signed on the 17th of May, 2018 by the contracting parties - Verify Engineering (Pvt) Ltd and Nkosikona Holdings.”

The project is primarily a coal beneficiation project for the production of liquid fuels, liquefied petroleum gas, oxygen, waxes, compounds for agriculture such as fertilisers, tar and solvents like plastic manufacturing.

At full throttle, the beneficiation plant will produce eight million litres of liquid fuels daily against the national consumption of five million litres.

The project has since been awarded national project status, which allows companies to import duty-free capital equipment.

It is believed that the venture mirrors similar projects by South Africa’s energy company, Sasol, which is globally reputed for converting natural gas and coal to liquid fuels.

Magcor Consortium of Canada will bankroll the project.

According to Eng Tapfumaneyi, while the coal mining venture is expected to begin next month, construction of the beneficiation plant in Lusulu will take between three to four years.

Vectol will in September invite companies to bid for the construction of the plant through an open tendering process.

An estimated 50 000 metric tonnes of coal reserves mined by Verify Engineering at its Mkwasine mine over the last 14 years have since been transferred to Vectol as part of the deal.

“We are looking at between 15 000 to 20 000 direct and indirect jobs. As an example, Sasol produces 25 million litres a day and it employs 35 000 people.

“It pays more than $2 billion a year in taxes and dividends to the South Africa government.

“With this project, we are literally going to close our borders in terms of importing some chemicals, plastics and some pharmaceuticals.

“But it is the plastics and agro-chemicals industries that will stand to benefit the most from this. We are not going to import.

“The plant will produce eight million litres of fuel and the country requires around four million litres a day. We will have enough to satisfy local demand.

“But as the economy grows, obviously the eight million we are producing will not be enough to satisfy local demand.”