South Mining is considering the development of a 300MW power plant at its Hwange operations as the company grapples with a major mismatch between coal production and market demand, with the bulk of its output consisting of thermal coal that is difficult to sell, Mining Zimbabwe can report.
By Rudairo Mapuranga
South Mining General Manager Victor Farai Rakabopa told Parliament’s Portfolio Committee on Mines and Mining Development that the company is producing almost twice as much coal as it can currently sell, with limited orders from the domestic power sector adding to the challenge.
“We are producing almost double the amount of coal that we can sell,” Rakabopa said. “The power station here, ZPC, only gives us an order of about 70,000 tonnes. We are struggling to sell coal.”
The proposed power plant would provide an alternative market for the thermal coal that South Mining is currently unable to sell, allowing the company to convert a stranded coal resource into electricity.
Rakabopa said the challenge is largely linked to the geological structure of the company’s coal resource.
The seam contains about 11 metres of coal, but only around three metres is suitable as coking coal, which commands stronger demand. The remaining eight metres consists largely of thermal coal, for which South Mining faces a more constrained domestic market.
The result is that producing the higher-value coking coal also generates significant volumes of thermal coal that the company struggles to place in the market.
Rakabopa said the company therefore sees power generation as a potential way of creating value from the surplus material.
“Some of the coal that we are wasting, we can actually try and utilise that to invest into power plants,” he said. “When we export, we’re now exporting electricity. It’s a massive beneficiary for us as a country.”
The proposed 300MW plant would effectively shift part of South Mining’s business model from simply selling coal to converting the commodity into electricity, potentially creating an additional revenue stream while reducing pressure from unsold thermal coal.
The proposal comes as Hwange remains Zimbabwe’s major thermal power hub. The existing Hwange Thermal Power Station has an installed capacity of 1,520MW following the addition of Units 7 and 8, although actual generation varies with operating conditions.
South Mining’s proposal would be a separate generation project focused on utilising its own coal resources.
The commercial viability of the project would depend on issues including financing, regulatory approvals, coal supply, transmission infrastructure and the market or off-taker for the electricity generated.
Rakabopa’s comments suggest the company sees electricity as a potentially more marketable product than surplus thermal coal, particularly if the plant can ultimately support power exports or supply additional domestic demand.
South Mining’s strategy is also built around the production and beneficiation of coking coal.
The company receives approximately 50,000 tonnes of coking coal per month from Makoma Resources for processing at its beneficiation operation. It has also invested more than US$800,000 in a coal washing plant designed to remove impurities and improve the quality of its coking coal.
The company is also looking at ways of extending the productive life of its mining operations.
Rakabopa said shale material currently being discarded could potentially be processed in future as technology and market conditions change.
“We are throwing shale into dumps at the moment. In future years, when there is more pressure, we can also utilise that shale. It can also extend the life of mine,” he said.
He estimated the current self-mining operation has a life of about 15 to 20 years, with the potential to extend this through the recovery of currently discarded material.
The proposed power project reflects a broader push within Zimbabwe’s mining sector to extract greater value from mineral resources before they leave the country.
For South Mining, the immediate challenge is that the company’s geology produces more thermal coal than its existing customers can absorb.
Rather than treating that material solely as a difficult-to-market by-product, the proposed 300MW plant could provide a pathway to convert it into electricity.
However, the project remains a proposal, and further details on financing, construction timelines, technology, regulatory approvals and the intended electricity off-taker will be critical in determining whether the plan progresses to implementation.
If developed, the project could give South Mining an alternative outlet for surplus thermal coal while adding electricity-generation capacity to Hwange and potentially creating a new value chain around the company’s coal resources.
