, pub-3787448768440954, DIRECT, f08c47fec0942fa0 [google-translator]

Zimasco shuts down furnaces as it fights with ZESA over tariffs

Ferrochrome producer Zimasco shut down its smelter after the authorities cut power because of a dispute over tariffs.

The company, a unit of Sinosteel, is in talks with the Zimbabwe Electricity Transmission Distribution Company to end the standoff, says spokesperson Clara Sadomba.

“We are confident the situation will be resolved soon and power will be restored to the smelter,” she told Bloomberg. “In the meantime, we have taken the opportunity to carry out essential maintenance work on our furnaces.”

The ZETDC last month received regulatory approval to raise tariffs for exporters by 24% and compel foreign-currency earners to pay their electricity bills in US dollars.

In September, Zimasco temporarily shut down one of its Kwekwe plants, due to a sharp drop in prices for the metal, the Russia-Ukraine war, plus an economic slowdown in key market China. Zimasco has the capacity to produce about 180,000 tons of ferrochrome a year, and plans to more than double that amount by 2024, the company said in September last year.

Ferrochrome producers are among the heaviest power consumers in Zimbabwe.

Mines expect a 42% increase in the proportion of electricity costs to total cost of production in 2023, according to a Chamber of Mines survey of mine executives. The increase in electricity cost will consume an average of 20% of mining companies’ stay-in-business capital budget, the survey says.

ZETDC has rejected pleas by mines to reverse the tariff hike, saying the utility had taken losses for two decades by charging below cost. This had left ZESA with an infrastructure gap of US$2 billion, and also unable to pay for imports.

“What we are saying is let’s pay the tariff, let’s pay our bills,” acting ZESA managing director Howard Choga told a meeting of miners recently.

Electricity demand is rising as mines expand and new projects kick off. According to Choga, ZESA has applications of 2350MW in new connections, 80% of which are from mining. But the utility is unable to meet demand, which the Chamber projects will rise 20% in 2023. – (Bloomberg)

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