Contango Holdings set to supply coal to global company
CONTANGO Holdings, which owns the Lubu Coal Project in Binga district is optimistic of entering into a long-term offtake agreement with a multi-national company (MNC) which has facilities in South Africa and has expressed a need for a minimum of approximately 7 000 tonnes per month.
The envisaged agreement hinges on successful completion of tests in January 2024.
The Muchesu deposit contains significant quantities of coking and thermal coal and has a huge resource base totalling over one billion tonnes.
In an update, the firm said it has received approximately US$116 000 from a large multi-national company (MNC) as payment for the previously reported circa 1 000 tonne bulk sample of washed coking coal.
“Over half of the bulk sample has been mined, screened, washed and is ready for collection, with the balance due later this month,” it said.
It noted that MNC recently commenced collection of coal from mine gate ahead of delivery to its facilities in South Africa for final tests in their own coke batteries.
“Given historic test work undertaken by the MNC, as well as Contango’s ongoing verification of the coal quality and characteristics of the bulk sample, the Company believes there is a high probability of entering into a long-term offtake with this MNC following the successful completion of their tests in January 2024.
“As previously reported, the MNC has expressed a need for a minimum of approximately 7 000 tonnes per month.”
Contango further noted that it anticipates a long-term contract with MNC.
“However, current discussions are with respect to a larger long-term contract, which the board is inclined to progress with given the complications around the current offtake partner, TransOre, which has not yet provided further orders or payment for washed coking coal as envisaged under the July 2023 offtake agreement.”
TransOre is a United Arab Emirates (UAE) registered entity managing a portfolio of global commodity supply chains and has pledged to play a central role in the Binga coal project for the benefit of Zimbabwe.
The TransOre contract was expected to replace the non-exclusive contract with AtoZ Investments (Pty) Ltd and is intended to complement the expected offtake arrangements being finalised with the global multi-national company which is expected to complete its due diligence shortly.
The first offtake signed with AtoZ Investments (Pty) Ltd was to purchase 10 000 tonnes per month of washed coking coal.
Meanwhile, Contango said it remains in discussions with other potential offtake partners of both coking and industrial coal which would be envisaged as complementary to any contract with the MNC.
Muchesu Coal Mine is one of the signature investment projects under the Second Republic, which is expected to yield high-value benefits for locals and the economy at large.
Matabeleland North has vast mining activities that have been critical to the growth of the province and the country’s development.
The province is the hub of coal-to-energy value chain investments, which will unlock up to US$1 billion under the coal and hydro-carbon sector.-chronicle
