By William Milasi
The deal between coking making firm ZimCoke and government which was recently sealed is going to give a new lease of life to chemical producing firm Zimchem.
Zimchem has been battling persistent raw material shortages which saw the firm mooting the idea of having potential clients to bring their own raw materials.
ZimCoke Director Michael Moore said the deal is going to go a long way in assisting Zimchem.
In an interview Wednesday Moore said production is expected to commence towards year end.
“We are going to refurbish battery number three and move on to number two. We need to completely refurbish the byproduct plant which will then feed into the byproducts into Zimchem Refineries,” said Moore
Cabinet on Tuesday approved a $350 million investment deal in which ZimCoke (Pvt) Ltd will revitalize the coke plant within Ziscosteel.
Of the $350 million, $133 million will be capital injection, while $225 million will cover the debt owed by Ziscosteel to German Bank KFW.
“The agreement entails the revival and running of the coke oven batteries, which have not been operating since 2008. At full production, ZimCoke will manufacture half a million tonnes of coke in a year. The project also involves rehabilitation of Redcliff Water Supply infrastructure, production of tar and pitch for road making as well as the refurbishment of locomotives and wagons,” government said.
Meanwhile, Zimchem has been battling serious operational challenges after its raw material suppliers are demanding that the Redcliff based company service its $1, 1 million debt.
Zimchem’s key supplier Hwange Gasification Coal Company (HGCC) is being accused of prioritizing the regional market where they are generating liquidity.
HGCC is supposed to be supplying Zimchem with crude tar.
Acting General Manager Tendai Shoko has said any move to breathe life to Zimchem is a welcoming development.
“Any move by the government to breathe life into Zimchem whether direct or indirect is welcome.
“We anxiously wait for the tar and benzole to start flowing from the coke oven batteries,” said Shoko.
He further highlighted that the revival of the company will go a step further in the firm getting back its customers.
“We are also looking forward to getting back our customers in the road construction industry and timber treatment industry who have been spending the much needed foreign currency importing chemicals from South Africa,” he said.
Last year the company’s board chairperson who is also acting CEO George Chigora confirmed that the company was not getting consistent raw material supplies.
“It’s true that we are not getting consistent supply of crude tar due to the fact that the company owes suppliers. Another reason is that our raw material suppliers prefer to export tar to South Africa before benefaction,” he said then.
Sources said the Chinese suppliers were prioritizing the regional markets at the expense of the local ones. They are exporting crude tar to South Africa whilst they are starving local companies of the raw materials.
This has consequently affected production as it is currently down at the plant.
Zimchem was commissioned by government in 1994 and processes crude benzol and tar into a range of chemical products.
Zimchem woes began in 2008 following the closure of Ziscosteel, which use to supply the firm with coal tar.