‘Use it or lose it’ test for gas miners

THE Government expects to conclude talks this month with private sector investors keen to commercially exploit coalbed methane (CBM) gas in Matabeleland North province as the “use it or lose it” policy comes under test.

Although Zimbabwe has vast reserves of CBM with the largest being located in the Lupane area, commercial exploitation of the resource has failed over the years due to lack of serious investors.

Zimbabwe is battling energy generation gaps and is importing gas from neighbouring South Africa yet it has vast resources.

Early last year, a South African mining firm, Tumagole Consortium, expressed commitment to investing R55 billion into the coal-bed methane gas project in Lupane. In 2015, Russian energy giant, Gazprom, also expressed an interest in the extraction of coalbed methane gas in the same place. Local companies such as Sable Chemicals and Sakunda Energy have also shown keen interest.

Despite the hype, the Lupane methane gas project remains a pipe dream and now the Government wants to press the concession holders to act and utilise the resource for the benefit of the economy or risk losing them.

At the moment Zambezi Gas (Pvt) Limited and Discovery Investments (Pvt) Ltd are the only two mining firms registered by the Government to exploit natural gas in the Lupane area. Mines and Mining Development Minister, Winston Chitando, told Business Chronicle that talks towards an agreement with private sector players interested in exploiting methane gas were underway with emphasis being placed on utilisation.

“Government is very serious and working hard to ensure there is utilisation of our CBM resources for the development of the country. We expect by the end of October to have a Memorandum of Understanding (MoU) with one of the holders of a major CBM concession for the construction of a power station,” he said.

“Discussions are also taking place with another holder of a CBM concession to ensure its utilisation. The development of the Lupane CBM gas project has the potential to boost the country’s energy generation capacity.”

Minister Chitando said the Government was forging ahead with the “use it or lose it” policy with a view to ensure the nation benefits from exploitation of its vast natural resources.

“On all coal and CBM resources and indeed on all mineral resources Government is actively implementing the use it or lose it principle. To date, 213 initial assets are being processed for that with the first 40 definitely being affected by the end of October,” he said.

“At the end of the day we would want to see all concessions and specifically those of coal and CBM being utilised for the development of the country.”
Minister Chitando is on record as saying the Government will vigorously enforce the “use it or lose it” policy to force companies to develop their mining concessions instead of keeping them for speculative purposes.

Coal-bed methane gas is found in Matabeleland North in the area stretching from Lupane to Binga as well as the South-East Lowveld area in Chiredzi. Experts say natural gas occurs in the Karoo stratigraphic sequence above coal measures. Uses of natural gas include domestic use for heating and cooking, industrial uses in electricity generation and production of chemicals such as ammonia-based fertilisers.

Exploration and pilot production works that were conducted in Lupane showed that the resource can be exploited commercially for domestic and industrial use. Coal-bed methane gas can also be used to produce hydrogen, which in turn is used in the manufacture of ammonia for fertiliser.

According to official reports, Zimbabwe’s gas reserves are estimated to be more than those of all other countries in the region combined. For instance, it is estimated that Hwange and Lupane have over 800 million cubic metres per square kilometre while further studies say the country has more than 40 trillion cubic feet of potentially recoverable gas in the Lupane-Lubimbi area, enough to generate millions of dollars in potential revenue and create hundreds of jobs.-chronicle.o.zw