Capital constraints coupled with COVID-19 impact, derail RioZim’s projects

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The Company is in discussions with a potential financier for a targeted highly structured financing arrangement for Sengwa Phase 1

Harare – Lack of funding and the effects of the COVID-19 pandemic have derailed the progression of RioZim’s projects which are aimed at improving production in the half year ended 30 June 2020.

In a statement accompanying the Company’s results for the period, RioZim Chairperson, Saleem Beebeejaun said the Biological Oxidation Plant (BIOX) project at the Company’s Cam and Motor Mine was negatively affected by the lockdowns in South Africa and locally, delaying the manufacture of key components as factories were closed.

Civil works were halted for all of the second quarter due to lockdown but work has commenced again in the second half of the year.

Funding of the project which is expected to increase production by at least 50% also remains a major stumbling block to project progression and commissioning within the targeted timelines.

The project was expected to be commissioned in the fourth quarter of 2020.

Commenting on progress at the Sengwa Power Station project, Beebeejaun said a framework agreement for Phase 2 of the project, which entails expanding capacity from 700MW to 2 800MW was signed with the Investment Partner.

He stated that in conjunction with the Investment Partner, the Company is in discussions with a potential financier for a targeted highly structured financing arrangement for Sengwa Phase 1 but while the discussions have been promising, the impact of COVID-19 has delayed the conclusion of the engagement.

In April this year, it was reported that RioZim will build the Sengwa power station with China Gengzhouba Group Corp (CGGC) at an estimated cost of $3 billion with CGGC having the mandate to develop the project and assisting with fund raising.

The coal reserves in Sengwa, located in Gokwe North can support a 10 000MW plant.

RioZim is also embarking on solar production projects at its mines.

In the period under review, the Company received four Independent Power Producer (IPP) licenses for the establishment of solar farms at Cam and Motor Mine, Renco Mine, Dalny Mine and Murowa Diamonds Mine.

“The Company proceeded to apply for a Power Purchase Agreement (PPA) with ZETDC”, Beebeejaun said.

He added that the Company is currently in the process of selecting an Engineering Procurement and Construction (EPC) firm whilst discussions for funding are in progress.

However, financing is expected to be the primary challenge.

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