IN a landmark moment for Binga District in Matabeleland North Province, London-listed natural resource investor behind the Lubu coking coal project, Contango Holdings, on Tuesday commenced production of washed coking coal, setting the tone for a major transformative high-impact project in the region.
The mining firm has been accelerating the assembling of machinery in recent months ahead of planned production. Coal is an integral element of the Government’s target to grow mining earnings into a US$12 billion industry by 2023, which will lay a strong foundation for Zimbabwe’s broad vision to transform into an upper middle-income economy by 2030.
The coming on stream of the mine feeds into the Vision 2030 agenda as hundreds of jobs will be created for locals and benefit downstream industries. Announcing the start of production, Contango Holdings Plc chief executive officer, Mr Carl Esprey, described the development as a “landmark moment” with significant potential across a variety of revenue streams.
He said the firm intends to focus on unlocking the potential of Lubu from this very solid foundation.
“This is a landmark moment for Contango. It is no small feat to bring a mine into production and something most junior mining companies never achieve.
“I appreciate this process has taken longer than expected, but we are now producing a high-quality coking coal product and very soon will be a revenue-generating company,” said Mr Esprey.
“We have achieved this during turbulent markets and without significant dilution at the plc level, which is testament to the team assembled in the country and the attractiveness of the Lubu Project.”
Mr Esprey said the focus is on how best to expand operations at Lubu, leveraging off on producer status. The planned expansion is premised on discussions with potential strategic partners, he noted.
“We have advised previously that we intend on manufacturing coke at Lubu, which is expected to increase our margins from US$80/tonne to over US$300/tonne at current pricing. We have continued to pursue this avenue in discussions with potential strategic partners,” he said.
“The sheer scale of Lubu opens up significant potential across a variety of revenue streams and we intend to focus on unlocking the potential of Lubu from this very solid foundation.”
By exploiting its huge untapped coal deposits, Binga, which shares the borders with Hwange, Lupane, and Gokwe districts is primed to leapfrog past development hurdles and increase its contribution to the mainstream economy through enhanced economic activities covering mainly tourism, mining, fishing, and agriculture.
Matabeleland North Provincial Affairs and Devolution Minister Richard Moyo yesterday said the mine has absorbed several youths from the local community through employment opportunities as the mine seeks to expand.
“This is a huge development for Binga District. I am told that many youths have been employed at the mine and that will change the lives of the community,” he said.
“Also, as a province, our gross domestic product would be improved because of high economic activity from the mine.
“Again, investment of such huge propositions is further confirmation of the Second Republic’s commitment to transform the business environment by enacting policies that attract investors.”
The investment comes at a time when the Government under the Second Republic is taking deliberate steps to mainstream speedy development of Binga in line with the devolution agenda, which aims to ensure inclusive development across the country.
The firm noted that stockpiles of coking coal have already been established by the Wirtgen Surface Miner, which can mine at a rate of up to 1,000 tonnes per hour of coking coal.
The Surface Miner continues to extract coking coal and is increasing the wash plant stockpiles further. It noted that it will continue to undertake studies on washed coal production to ensure optimization.
The firm has previously indicated that once the wash plant is calibrated and operating efficiently, it is expected to be able to produce 20 000 tonnes of washed coking coal per month.
In addition, it said the surface miner (Wirtgen 2200SM) has a cutting width of 2 200mm, is ideal for selective mining, and can mine up to 500 tonnes per hour.
“Samples will also be sent to several parties who have indicated they would look to enter into long-term offtake contracts. This includes the company’s potential strategic partner under a Memorandum of Understanding and complements Contango’s existing offtake for 10,000 tonnes a month of washed coal.
“All coking coal produced, including coal dispatched as samples, will be sold at factory gate, with the current MMCZ price still set at US$120 per tonne. The company expects to announce the first sales of washed coking coal in June 2023,” said Contango.
The first offtake was signed with AtoZ Investments (Pty) Ltd to purchase 10 000 tonnes per month of washed coking coal produced at Lubu. The Lubu Coal Project covers 19 236 hectares of the highly prospective Karroo mid-Zambezi coal basin, located in the established Hwange-Binga mining area in north-western Zimbabwe. In order to associate with the locals, the miner has now renamed the Lubu project to Muchesu Coal. Muchesu is the local village in the broader Lubu region. – The Chronicle
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