Govt to revoke idle EPOs

26 May, 2024 - 00:05 0 Views
Govt to revoke idle EPOs

The Sunday Mail

Oliver Kazunga

The Government says it is reviewing all exclusive prospecting orders (EPOs) issued to investors across the country, including those for coalbed methane (CBM) and coal, which are critical in boosting power generation, amid revelations prospecting rights will be revoked for projects where there is no or little progress.

EPOs give exclusive rights for investors to prospect for specified minerals in an identified location in Zimbabwe for the discovery of fresh deposits leading to opening of new mines and expansion of existing operations.

Ordinarily, an EPO is given for three years, with an option for renewal for another three years, but in most cases, reviews noted little progress on the ground, prompting the Government to get tough with the EPO holders.

In 2021, the Government issued a total of 25 EPOs, including those for CBM and coal, to potential investors to prospect for reserves over three years, with the aim of subsequently establishing viable investments.

After noting limited progress by some of the EPO holders on their plans, in March this year, the Government ordered all provincial mining directors to stop granting new or extending all EPO tenures until further notice.

The directive applies to all EPOs issued in 2021 and expired this year, as well as any others presently valid and about to expire.

The special grants in 2021 included those issued to five CBM potential investors — Alabara Resources; Zambezi Gas; Sakunda Energy (all local companies); Tumagole of South Africa; and Shangani Energy Exploration (SEE), which is owned by Chinese steel giant Sinosteel, to explore and tap into the energy sector in Matabeleland North province.

Zimbabwe is believed to host huge deposits of untapped CBM, especially in Matabeleland North.

Hwange and Lupane are understood to have over 800 million cubic metres per square kilometre, while further studies indicate that Zimbabwe has more than 40 trillion cubic feet of potentially recoverable gas in Lupane, Lubimbi area, enough to generate millions of dollars in potential revenue and create thousands of jobs directly and indirectly.

In an interview last week, Ministry of Mines and Mining Development Permanent Secretary Mr Pfungwa Kunaka said at a time the country has a huge energy gap, it is imperative for EPO holders in the CBM and coal sectors to move with speed to show progress towards setting up plants.

“Taking into account the EPOs that we have awarded in various sectors, including those for CBM and coal, we have to review all the applications which are on the table so that we take a position whether to formalise or dismiss them. Those that we have evaluated and identified as lacking capacity to develop or utilise the titles, we are dismissing them.

“There has been a large number of idle EPOs on exploration and yet, as a country, we are very short on energy and we think we should be exploiting that (CBM and coal) resources,” he said.

Zimbabwe, whose peak demand is 2 200 megawatts (MW), is presently generating an average of 1 200MW.

To drive the country towards the envisaged upper-middle-income society by 2030, Zimbabwe requires 11 000MW.

The Government has adopted the “use it or lose it” policy to ensure Zimbabwe derives significant benefits out of its mineral resources, repossessing all underutilised mining titles held for speculative tendencies.

“So, we have to review all the applications which are on the table . . . they have to put a roadmap of where they want to go, achieve and when. An EPO, ordinarily, should be three years but with an option to renew it for a further three years.

“Our worry is when we monitor them every year, we want to see progress. In fact, every six months, they should be reporting progress. Companies should live to the plans which they would have put forward and that’s why we want to be cautious.

“We do not want to be dealing with companies which waste time. We want to move with speed,” he said.

Last year, Alabara was reported to have completed phase 1 of the project, which entailed confirmatory drilling, and was in phase 2 of the project, which is about mine development.

In 2021, Australian firm Jacqueline Resources was also awarded a special grant to explore and develop CBM fields in Matabeleland North.

Zambezi Gas is reported to have drilled three wells, with one of them considered highly promising.

In the case of Tumagole, the South African company has carried out an aero-magnetic survey and identified drilling positions for exploration.

The firm has committed to invest as much as R55 billion into the extraction of methane gas in Zimbabwe, while SEE has earmarked US$780 million to build a 600MW power station and petrochemical-related industries.

SEE has carried out electro-drilling, with three holes having been completed by last year.

“We are not quite happy because happiness comes out of tangible progress in terms of where we want to go.

“A lot of them would tell you we have done this hole . . . it’s not enough. We want them to get to a point where they confirm viability in terms of exploiting the coalbed methane. They also need to be giving value in terms of explaining the quantities of gas that we potentially have.

“So, these projects in terms of progress, I think there is a lot which is still missing. That’s why I am saying we need to critically look at all of them to understand where they have problems,” said Mr Kunaka.

“If they are to go to the drawing board, so be it.

“But you do not go to the drawing board with our blessing if your performance has not been good.

“You have to be convincing in terms of what you have done so far because all these EPO holders are required to have some plans upfront and live to the plans.”

Despite promoting power generation, Mr Kunaka said, the Government was also looking at value chains such as fertiliser production, which are derived from coal and CBM sectors.

The Second Republic has identified mining as one of the key sectors to propel Zimbabwe towards an upper middle-income society by 2030. In this context, the country’s attainment of macro-economic growth targets, among others, would be achieved by ensuring efficient power supply from energy projects such as CMB investments in Matabeleland North.

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