The Sunday Mail
Martin Kadzere
COAL miners will engage the Government over failure by ZESA Holdings to pay 50 percent of coal supplies in foreign currency, The Sunday Mail Business has learnt.
In 2019, ZESA entered into an agreement with coal producers to pay half of the supplies in foreign currency to enable them to import critical consumables and spares.
But the deal is yet to be implemented due to cash constraints choking the power utility.
ZESA is being paid in foreign currency by some exporters, including mining companies.
“We are hoping to have the minister’s (Energy and Power Development) audience so that the matter can be resolved,” Coal Producers Association chairperson Mr Linos Masimura said.
About 90 percent of coal produced by local miners is consumed by power stations.
However, due to recurrent breakdowns, particularly at Hwange Power Station, the Government gave mining companies a three-month window to export.
Coal producers want the window extended until domestic demand picks up.
Energy and Power Development Minister Zhemu Soda said the agreement was made when coal mining companies were having challenges with currency conversions before the launch of the foreign currency auction system on June 23 last year.
“This time there are no coal miners who are complaining about their payments because they are being afforded the opportunity to convert their currency at the RBZ auction system,” said Minister Soda.
“We are aware that there are some critical spares that they want to import from outside the country, and the Reserve Bank of Zimbabwe is ready to assist them in that regard.”
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But Mr Masimura insists coal producers are having challenges accessing foreign currency from the auction system.
“We are having serious challenges in accessing foreign currency from the auction system,” he said.
“Firstly, we are not getting the money we want. Secondly, the little that would have been allocated is taking five to six weeks to come.
“It is a double blow in the sense that our local dollars are taken away; my cash flow is affected and disbursement is delayed.”
In the latest mining survey published recently, miners said access to forex was expected to continue to be challenging in light of the reduced foreign currency retention levels from exports, loss of value through the 40 percent RBZ exports surrendered portion, disqualification of mines from the auction market and delays in disbursements.
The price of coal is pegged at US$30 per tonne and is paid at the official exchange rate.
Apart from delayed payments, coal miners are incurring huge exchange losses due to the huge disparity between the official exchange rate at $98,9: US$1 and the black market rate at around $180.
“Coal producer respondents indicate that they are facing payments delay for coal delivered to ZESA, highlighting that the delays are resulting in working capital constraints,” said executives in the coal mining industry who participated in the survey.
No comment could be obtained from ZESA.
