Makomo struggles to recover $15 million ZPC debt, to widen revenue streams

HWANGE — Coal miner Makomo Resources is owed over $15 million by its biggest customer, State-owned power producer Zimbabwe Power Company (ZPC), which has hit its cashflows, officials say.

Makomo, which last year registered a milestone after overtaking Hwange Colliery Company Limited to become the country’s biggest thermal coal producer, is owned on a 60/40 basis by a group of local and foreign investors.

The Hwange-based miner, whose production has been limited by demand can produce up to 300 000 tonnes a month, with ZPC taking up to 98% of total tonnage.

But the power producer’s inability to pay for thermal coal has hit the operations of the miner, which began operations in 2010.

While officials at the mine were reluctant to give figures, sources said the debt was over $15 million.

Makomo Resources director Raymond Mutokonyi could only say that failure to pay for deliveries was affecting the firm’s bottom line.

“This (non-payment) has led to inefficiencies in the operations, which increase the cost of sales and reduces overall profitability,” Mutokonyi said.

ZPC officials did not respond to queries on measures being taken to address the debt. The power generation company is a subsidiary of power utility Zesa Holdings, which says its operations have also been hamstrung by non-payment by consumers.

The utility says it is owed over $800 million in unpaid bills.

The debt issue has, however, not totally strained relations between the two companies as Makomo is in the process of constructing a private road which directly links the mine and ZPC’s Hwange thermal power station.

Officials at Makomo say the miner was looking to the future through construction of the road, which not only reduces the trip to and from the power plant by over 15km, but also cuts to zero the risk of accidents between coal delivery trucks and private vehicles.

Makomo has, in the meantime, scaled down production as officials said they had mined adequate stocks to cover the next two to three months, with part of mining machinery temporarily diverted to construction of the road. To widen its revenue streams, Makomo acquired a soon to be commissioned $14 million coal washing plant, which will allow it to produce premium coal products for the local and export markets in the southern African region.

– The Source.

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