Makomo in talks with potential investors
Makomo Resources is negotiating with potential investors seeking to acquire a significant stake in the coal mining firm, people familiar with the development said yesterday.
Makomo, once the country’s largest coal mine went under corporate rescue-a local form of bankruptcy protection after running into financial and operational challenges.
“We are at a very delicate stage with serious contenders are we are hoping the negotiation will be concluded soon,” said one who declined to be named citing protocol issues.
Calls seeking comment from corporate rescue practitioner, Bulisa Mbano, were not answered.
“The mine is operating though at a smaller scale but we are hoping the coming in of the new investor will help the turnaround on the business; recapitalisation and ramping up production,” another person said, but would not give the timeframes.
Makomo largely produces thermal coal for power generation.
Its main customer is Zimbabwe Power Company, a unit of ZESA, which operates the Hwange Thermal Plant.
At some point, the company had plans to build a 600-megawatt power station in Hwange.
According to officials at the company, its financial distress was compounded by payment delays by ZESA of coal delivered to its thermal plants, including the small ones.
Zimbabwe usually reserves the country’s coal output for domestic electricity generation, but started shipping the fuel after demand dipped from the Hwange Power Plant.
Thermal coal markets were a prominent beneficiary of Europe’s power sector turmoil in 2022, with prices surging more than 250 percent through mid-March as utilities and trading firms scrambled to replace lost supplies of Russian natural gas with other fuels.
Benchmark European thermal coal prices remained close to historic highs throughout 2022 on sustained higher use across the continent, averaging roughly US$285 per tonne for the year, compared with about US$115 a tonne in 2021.
Newcastle coal futures, the benchmark for the top consuming region of Asia, slid towards US$200 per tonne, a level not seen since February 2022, as signs of sluggish demand offset concerns about supply disruptions from key exporter Australia.
Warm weather, particularly in the U.S and Europe, and lower natural gas prices decreased the reliance on coal for generating power. European coal imports are likely to decline nearly 30 percent from a year earlier and 23 percent from December, Kpler data showed.
At the same time, uncertainty about China’s reopening has also clouded the short-term outlook for the commodity. On the supply side, offering some support to prices, coal shipments from Australia, the world’s second-largest exporter, have been disrupted by heavy rains in the coal-mining states of Queensland and New South Wales and the closure of a key railway line after a collision.
Additional reporting-Wires
