Govt to wean ferrochrome producers from Zesa grid

Oliver Kazunga

Senior Business Reporter

Government has given ferrochrome producers until December 2025 to establish their own power plants, a development expected to relieve pressure on the national grid.

Zimbabwe presently generates about 1 094 megawatts (MW) against a peak demand of 2 200MW.

The country’s power challenges have been exacerbated by the extremely low water level at Kariba Dam following the drought that hit the southern African region in the 2023/2024 rainy season.

This has forced the country to rely largely on Hwange Thermal Power Station, a 920MW rated plant producing well below capacity due to aged equipment, and imports.

The Government last year extended the plant’s production capacity by 600MW, but with curtailed output at Kariba, a 1050MW plant, ouput from Hwange is inadequate to meet national demand.

Kariba Dam was designed to operate at between levels of 475,50 metres and 488,50m for hydropower generation for Zimbabwe and Zambia.

The Zambezi River Authority, responsible for water management in the Kariba Dam, recently indicated that usable (live) water needed for power generation, as of November 11, 2024, was at 476,03m compared to 477,88m during the same period last year.

The mining industry is one of the key sectors in Zimbabwe and consumes about 25 percent of the energy produced in the country.

According to the Chamber of Mines of Zimbabwe (CoMZ), ferrochrome and nickel sub-sectors are highly-energy intensive as their mining and refining processes require substantial power.

Energy and Power Development Minister Edgar Moyo told The Herald Finance and Business on Monday this week that presently the ferrochrome producers were on energy subsidy, but because this arrangement was not sustainable, ferrochrome smelters would be required to establish their own solar power plants.

“An agreement was made between the companies (ferrochrome) producers and Zesa to the effect that by December 2025, the ferrochrome smelters will be on self-supply.

“They are currently on a subsidy and that is unsustainable hence the decision. Those who will fail will revert to the ordinary tariff applicable to all.

“I don’t think anyone will fail because most of their projects are at advanced stages of development,” he said.

Zimbabwean ferrochrome producers require about 300MW to support their operations, a huge strain on a grid struggling to support domestic demand.

The alloy producer has said it was repositioning itself as a leading alloy producer in Zimbabwe after its smelting plant was switched on in August this year having been dormant since 2013. ZimAlloys, which had been under corporate rescue for about eight years, was restarting its smelting operations after Kuvimba Mining House took over the company in 2019 and set aside US$45 million for various capital expenditure programmes at the ferrochrome producer.

CoMZ president Mr Thomas Gono had not responded to written questions by the time of going to print yesterday.

Economist Ms Mercy Shumba said the planned move by the Government was a step in the right direction towards easing the strain on the national grid as mining firms will have increased energy independence.

“Ferrochrome producers would have a reliable, onsite energy source and thus reduce pressure on the national grid while also excess power generated from the Independent Power Producers’ solar projects can be fed into the national grid to support other power consuming activities across the economy.

“Solar plant construction and maintenance would create employment opportunities as well as fostering environmental benefits such as reducing carbon emissions and thus aligning with Zimbabwe’s commitment to the Paris Agreement,” she said.

The Paris Agreement is a global pact reached in December 2015 at the United Nations Climate Change Conference (COP21) as world leaders sought to tackle climate change and its negative impacts. The agreement is an international accord aimed at mitigating climate change by limiting global warming to well below 2 degrees Celsius (3,6 degrees Fahrenheit) above pre-industrial levels.

Ms Shumba said solar energy reduces mining firms’ energy costs and Zimbabwe’s power import bill, estimated at around US$250 million annually while improving profitability of the concerned companies.

“While solar plants reduce the risk of power outages, the technology provides a reliable energy source as well as cutting down energy costs and thus improving profitability of the implementing companies,” she said.

Meanwhile, speaking to the media in Abu Dhabi at the International Petroleum Exhibition and Conference last week, Minister Moyo said the Government’s thrust was now on mitigating climate change by reducing carbon emissions, which cause the depletion of the Ozone layer.

“Coal is our dominant engine for the supply of power, however with the current thrust towards reducing carbon and to mitigate climate change, we are now moving towards renewables. And one of the key renewables we are looking at is solar and we have developed Government Implementation Guarantees to the private sector for Independent Power Producers to come into the sector and ensure the contribution of solar to our energy mix is enhanced,” he was quoted as saying.