Multi-billion coal-to-fuel project on track
February 24, 2019
Government and Magcor have completed setting up a special purpose entity — Vectol Zimbabwe — to spearhead the much anticipated US$5,2 billion coal to fuel project in Lisulu, Hwange.
- Offices for the joint venture company having been secured in Borrowdale.
- A Chinese technical partner had also been secured for the venture.
- A subsidiary of Vectol Zimbabwe — Vectol Mining —had also been formed to conduct the actual mining.
- The project now awaits full funding from the investor.
Red flag raised over $5,2 billion coal deal
May 27, 2018
- Its alleged Nkosikhona Holdings does not have known history in extractives according to the company’s online profile.
- The company does not appear among South Africa’s liquid fuel producers.
- The company only made headlines in the Zimbabwean media after clinching the multi-billion deal with government. Apparently, no South African or international media has ever written anything about it.
Hwange Colliery : Fuel-from-coal deal snake oil?
May 24, 2018
Brett Chulu Comments On The Deal:
- Magcor Consortioum, whose sub-Saharan office is in Lusaka will be a key partner.
- Hwange’s current coal production rate is 8,9 times smaller than the required rate of daily coal output to meet Mnangagwa’s 50 000 barrels of fuel from coal a day target.
- Massive investment in coal mining is needed as a prerequisite to the successful coal-to-liquid production.
- Magcor’s financing model is very attractive; it offers 100% finance with a maximum interest of 2% per annum, with a five-year no-payment grace period. If this financing model were to materialise, interest payment would be about US$104 million per year. The three million litres surplus fuel from the Lisungu plant should generate six times cover for the interest.
- There is a hurdle, a big one. Michael J. Glynn, the president of Magcor is on record as saying Magcor, needs the backing of legislation that underwrites a sovereign guaranteed backed loan.
- Zimbabwe is not credit-rated by the trio of Fitch, Moody’s and Standard & Poor’s. It will take extraordinary negotiation abilities by Magcor to convince its financing partners to extend financing to the PPP venture where the public partner has no investment grade credit rating.
- Magcor requires legislation that outlines how PPPs work in Zimbabwe. We do not have clear PPP legislation in the mould Magcor requires.
Conclusion: The weight of evidence points to a 50-50 chance of the project succeeding.
$5.2b coal project not pie in the sky-Govt
May 19, 2018
- Verify engineering produced a bankable feasibility study in December 2017.
- JV & Shareholder Agreements were signed on 17 May, 2018.
- To begin immediately after the ground breaking ceremony on June 1, 2018.
- Geologists to be deployed on site this week, while mining equipment is currently being mobilized from South Africa.
- Magcor Consortium of Canada will bankroll the project.
- Coal mining venture is expected to begin June 2018.
- Construction of the beneficiation plant in Lusulu will take between 3-4 years.
- Vectol will in September invite companies to bid for the construction of the plant.
- An estimated 50 0000 metric tonnes of coal reserve mined by Berify Engineering at its Mkwasine mine over the last 14 years have since been transferred to Vectol as part of the deal.
- Projecting between 15 000 to 20 000 direct and indirect jobs.
- Plant will produce 8m litres of fuel.
Govt, Nkosikhona Holdings seal $5,2bn fuels deal
May 18, 2018
Government yesterday signed $5,2 billion deal with a South African company — Nkosikhona Holdings — that will see the country produce over 8 million litres of liquid fuels per day from coal in Lisulu, Hwangwe.