TA Holdings group on Thursday said it required at least $200 million to replace the old hydro-electrolysis plant at Sable Chemicals.
Speaking during a shareholder briefing in Harare yesterday, company chairperson Shingai Mutasa said the company had recognised that the use of electrolysis to make hydro energy was very costly.
He said as a result the company had approved the switch over to coal gasification technology as a cost-cutting measure.
“This is a very compelling project and raising money will not be difficult,” said Mutasa.
“This project will be financed by some of the funds the country is expected to receive from China.”
The company has for some time been mulling the switch from electrolysis to coal gasification, a process that is estimated could cut power usage to 30 megawatts from 115 megawatts when operating at full throttle.
Mutasa said the results from Sable Chemicals were disappointing but the future prospects of the company remained positive in the medium term, once the transformation to coal gasification technology takes place.
Kwekwe-based Sable Chemicals runs the world’s biggest electrolysis plant producing ammonium nitrate for fertilisers.
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TA Holdings group this week reported a loss after tax of $5,1 million. Sable Chemicals, in which the group has a 51% interest, incurred an after-tax loss of $8,3 million during the 2010 financial year.
Production levels at Sable Chemicals during the year under review remained below budget due to plant breakdowns in the early part of 2010 and lower than planned for ammonia imports as a result of logistical problems for imports coming through South Africa.
“Whilst the results from Sable Chemicals are disappointing, the future prospects for this company are positive in the medium term, once the transformation to coal gasification technology takes place,” TA Holdings said in a statement.
“The feasibility study to investigate the viability of this is currently underway and results are expected by the end of the first half of the year which will give clarity to the potential of this investment.”
Last year, Sable Chemicals announced plans to increase its installed capacity of 240 000 tonnes per annum.
Production at the country’s sole ammonium nitrate producer has been in reverse gear since 2000.
