Diversified mining group RioZim Limited has lost its mining special grant for the Sengwa coalfields after the Government cancelled the licence under its “use-it-or-lose-it” policy, marking the latest setback for the struggling miner, Mining Zimbabwe can report.
By Ryan Chigoche
The development comes as the company continues to grapple with financial pressures and legal challenges that have weighed on its operations in recent months, effectively stripping it of control over one of Zimbabwe’s largest undeveloped coal resources.
The decision follows an unsuccessful appeal by the Zimbabwe Stock Exchange-listed company against the revocation of its coal mining rights for the Sengwa Colliery, a project that has remained undeveloped for decades.
In a letter addressed to RioZim director Wilson Gwatiringa, the Permanent Secretary in the Ministry of Mines and Mining Development, Pfungwa Kunaka, confirmed that the appeal against the cancellation had been dismissed.
“Following the cancellation of your coal mining Special Grant Number 849 (Sengwa Colliery) and your subsequent appeal against the proposed cancellation, please be advised that the appeal was unsuccessful,” Kunaka wrote.
“By notice of this letter, Special Grant Number 849 is hereby cancelled with immediate effect in terms of the provisions of the Mines and Minerals Act [Chapter 21:05].”
The Sengwa coalfields, located in Midlands Province, Zimbabwe, are estimated to hold around 1.3 billion tonnes of coal, making them one of the country’s largest undeveloped coal resources.
RioZim had planned to develop the deposit alongside a large-scale 2,800-megawatt coal-fired thermal power station, a project valued at about US$3 billion and intended to help address the country’s electricity shortages.
However, the project failed to reach financial closure despite several attempts over the years to attract investment.
The Sengwa concession was historically held under a joint venture between RioZim Limited and global mining group Rio Tinto, with both companies sharing the asset equally. Since the early 1990s, RioZim has been searching for investors to finance the power project, but without success.
In an effort to revive the development, the company later proposed restructuring the project into four phases of 700 megawatts each, a model aimed at reducing upfront capital requirements. However, limited funding and the absence of a bankable power purchase agreement prevented the project from progressing.
The Government’s decision to cancel the licence suggests the authorities may now seek to allocate the Sengwa coal resource to new investors capable of developing the asset.
The move is consistent with Zimbabwe’s “use-it-or-lose-it” policy, which allows the State to reclaim mining concessions that remain undeveloped for extended periods.
Meanwhile, concerns have emerged regarding disclosure obligations, as RioZim is yet to issue a cautionary statement to investors regarding the loss of the Sengwa concession.
Under the listing rules of the Zimbabwe Stock Exchange, listed companies are required to notify the market of any material developments that could affect their asset base or share price.
The development comes at a time when RioZim is already facing mounting operational and financial pressures.
In recent months, the company has been dealing with a corporate rescue push initiated by mine workers. The legal challenge has added further uncertainty around the future of the group’s assets and restructuring plans.
The dispute recently forced the miner to halt a planned US$21 million sale of some of its mining operations after a court setback linked to the ongoing corporate rescue proceedings.
With the loss of the Sengwa coal concession and the ongoing legal battles, RioZim’s path to recovery is likely to remain closely watched by investors and the mining sector.
