A struggle to raise exploration funds

26 Jun, 2016 - 00:06 0 Views
A struggle to raise exploration funds

The Sunday Mail

Harmony Agere

Only one out of three companies awarded mining concessions to explore coal-bed methane gas in the Lupane-Lubimbi area has reached commercialisation stage with the others still struggling to raise funds for exploration, a Government official has said.

Mines and Mining Development deputy minister Fred Moyo said this as he was responding to a question from Chegutu West legislator Cde Dexter Nduna in Parliament on Tuesday.

Honourable Nduna had asked the deputy minister to update the house on the developments at the gas fields.

Hon Moyo’s response indicated that there is still a long way to go before any gas productions can begin in Lupane.

He said only Discovery Resources had made strides to commercialise while two other concession holders — Zimbabwe Mining Development Corporation (ZMDC) and Hwange Colliery have remained idle.

However, even though Discovery had reached a commercial stage, negotiations to come up with an investment structure to help the company reach the gas development stage are yet to yield results.

The deputy minister added that both ZMDC and Hwange Colliery are still very far from reaching the production stage as they are yet to reach the exploration stage.

He said the two have got no capacity to start exploration and are looking for partners to help with funding.

Hwange Colliery is going through turbulent times and was recently awarded Government protection by the High Court after several creditors sought to attach its properties.

ZMDC, on the other hand, is engaged in several other projects which experts say gives it little space to invest in new ones.

“Zimbabwe has got the largest coal gas resources in the region,” Hon Moyo said in response to Hon Nduna’s question.

“A number of companies have been given concessions within the Lupane-Lubimbi area to explore for this gas. A company called Discovery is one of those companies that has done substantial work and have established mineable resource of this gas. Other companies have concessions in the area, namely ZMDC and Hwange Colliery. These companies are looking for partners to help them develop this gas potential.”

Deputy minister Moyo invited interested companies that wish to enter into the sector to approach the ministry.

On a supplementary question, Hon Nduna sought to know when exactly production was expected to begin in Lupane.

“When do we expect to have some movement after you have allocated and allotted some of those concessions to those companies that you allude to?” he asked.

In his reply, Hon Moyo seemed to imply that there is still a lot of time before production can begin in the area.

“We only have one company which I have mentioned, Discovery Resources, that has done work to the extent of reaching commercial stage,” he said.

“We are negotiating with that company to see what structure of investment can be put in place so that they can move to the stage of gas development. The other companies that I mentioned are very far from reaching production stage as they still have to do exploration work.

“So, I would say for those companies that are still to do exploration work, it is probably an issue of raising funding, finding partners who will be able to take them into this first stage of exploring for the gas. So, we can only look for this one company that has done enough work to reach commercial stage.”

Researchers say Zimbabwe has some of the largest coal gas reserves in the region and an earlier exploration by hydro-carbons giant Mobil Oil in the 1990s concluded there was nearly “100 percent potential of gas” and a high possibility of oil occurrence in the region.

If gas reserves are utilised and oil reserves are confirmed, experts say the country’s economy can be turned around rapidly. It has also been said that 300MW of electricity will be added to the national grid once production of gas begins after investors indicated plans to invest in a power plant in Gwayi.

According to explorations undertaken by the Industrial Development Corporation (IDC), extensive deposits of coal-bed methane gas in the Hwange-Lupane basin are estimated to be over 23 billion cubic feet per square mile.

Meanwhile, deputy minister Moyo also revealed that Kamativi Tin Mine’s resuscitation could begin by the end of July after Government managed to secure an investor.

“Government has entered into a joint venture with a Chinese investor, Beijing Pinchang. The investor is expected to inject $100 million into the project,” he said.

“Government entered into this agreement through ZMDC and the parties have started working on financial closure. We hope that these last discussions will be concluded soon. There are conditions or precedence, that the targeted investor must satisfy and I would like to say that an announcement will be made by the ministry once these discussions are finalised.”

Pressed on the approximate date the deputy minister said, “I think this is the closest that we have come to signing and finalising an agreement. The conditions must be satisfied, if my recollection is correct, during this month of July. If we do not conclude by then, then the parties (would) have failed to agree. If the parties agree, a permanent position will be concluded in July and the project should take-off.”

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