Power deal for Us$1,5bn steel plant

ZIMBABWEAN authorities have reached out to Mozambican power producer, Gabinete de Implementação do Projecto Hidroeléctrico de Mphanda Nkuwa to secure exclusive power imports for a US$1,5 billion steel and ferrochrome facility that is shaping up near Mvuma, according to officials at the Fortune 500 listed Chinese giant, Tsingshang. e company is carrying out its Zimbabwean operation through a special unit called Dinson Iron and Steel Company (Disco), and last month, the plant was 60% complete.

In an interview with the Zimbabwe Independent last month, a Disco official said if the power import deals, which are being spearheaded by national power utility, Zesa Holdings, are successful, dedicated power would be routed from Tete exclusively for the project.

Zimbabwe claims that the Mvuma plant would be Africa’s biggest steel operation, and authorities have been working around the clock to address all hurdles.

“Zesa promised us that they will provide enough electricity,” Wilfred Motsi, project manager at Disco, said when asked how the project would be power, giving the power crisis confronting Zimbabwe.

“ey are also meeting Mozambique’s Mphanda Nkuwa for the supply of power. is means as promised, we will get enough electricity to power the plant. In the first phase the plant will require 100MW and at full throttle we will require a total of 800MW.”

Gabinete is developing the Mphanda Nkuwa power facility on the Zambezi River, about 60 kilometres downstream of the existing Cahora Bassa Dam near Tete, which also occasionally exports power to Zimbabwe.

e firm will shell out about US$4,5 billion to complete the facility, which is expected to reach financial close by at the end of next year, before commissioning 2031, according to the African Development Bank, which became advisor last May.

With most of southern African economies battling to generate their own power, Mozambique appears to be positioning itself to bridge the gaps by building facilities reaching out to most affected countries, including Zimbabwe.

Authorities in that country have already said power from the facility would also be exported to South Africa, which has been confronted by rolling blackouts that are threatening to ground Africa’s most industrialised economy.

For forex-starved Zimbabwe, the Mphanda Nkuwa project would come in handy as projections so far indicate that it will have one of the lowest generation costs in the region.

But the facility has already courted controversy, as it will force the relocation of 1 400 families and affect the livelihoods of a further 200 000.

Disco already has a power deal with Zesa, where a dedicated power line would be constructed for the facility.

e plan will require 100MW during the first phase.

Under the deal, the Chinese firm will extend US$55 million in loans to Zesa, which will be used to construct the powerline linking Disco to the national grid.

On completion, power demand would rise to 800MW, Motsi told the Independent.

Currently, Zimbabwe is suffering a prolonged power shortage, which may mean expanded demand from Disco will starve other producers.

On Tuesday, the country was producing about 1 094 MW, against a daily demand of about 2 000MW.

Despite prolonged rolling blackouts, Zimbabwean authorities have promised Disco that they are confident domestic generation will be available for its steel operation.

“Zesa said it is banking on the Hwange 7 and 8, they are in negotiations with Zambia for the Batoka project,” Motsi said.

“So far, we have invested about US$750 million into the plant, including capital equipment.”

He said Disco had invested US$50 million, which was injected into the construction of dams within the vicinity of the operation.

At the completion of the first phase, the plant will produce 1 200 million tonnes of carbon steel.

Zimbabwe has sunk about US$2 billion into power generation in the last decade.

But the country still struggles with outages.

Experts say the country’s coal-powered thermal plants are supposed to supply the baseload power, but the aged generators frequently break down.

According to a report from the Industry and Commerce ministry, Zimbabwe was targeting to build a US$6 billion steel industry by revenue in the next three years.

“e robust implementation of the engineering, iron and steel sector strategy (20222026) is addressing the import substitution of iron and steel products,” Nzenza said.

“e sector aims to generate US$6 billion in revenues and employ about 50 000 people by the year 2026. ere have been remarkable developments in the sector. Key to note is Cabinet’s approval of Kuvimba Mining House as a potential investor for Ziscosteel.”

e report also said a revolving facility, established by the Industrial Development Corporation of Zimbabwe three years ago, had saved 7 000 jobs and created 2 000 more. — Staff Writer.