Russian-linked miner bemoans logistics constraints

LIBERATION Mining Pvt Limited is a Russia- linked company which came into Zimbabwe last year and invested $10 million into coal mining destined for the export market.

By Tatira Zwinoira

NewsDay business reporter Tatira Zwinoira (ND) sat down with Liberation Mining managing director Victor Tskhovrebov (VT) at the just-ended Zimbabwe Mining Investment Conference to find out more about the company’s operations. Below are the excerpts of the interview.

ND: When you were presenting yesterday (Tuesday), you said your company started operations last year?

VT: Not operations, but exploration and preparation in September 2017.

ND: So you came in last year, and started operations when?

VT: The development of the mine still continues from September till now.

ND: Which means you actually have not started operations yet?

VT: It is preparations for the operations.

ND: So when are you expecting to start operations?

VT: In one or two months from now and actually the second phase of the washing plant is coming in the next five or six months. So in five or six months it will be fully constructed and commissioned for operations.

Since the coal in here (Zimbabwe) is pretty high ash, we need to wash it to process to get a sellable product.

ND: You said you were going to focus on mainly exports in your presentation, which markets were you looking at?

VT: Any market. Any buyer from any place is welcome.

ND: Are you also going to possibly look at the local market because coal is an energy mineral and there is room for energy investments in the country?

VT: It depends on what kind of product we can process at our facilities.

If it is thermal, yes we can sell. We will sell any product which we can produce but the focus is on more value added kinds of coal so PCI coal or cooking coal.

ND: What brought you into the Zimbabwean market to setup shop?

VT: I do not know, um, we were eyeing Zimbabwe for a long time and the shareholder of my company (Alexander Isaev) studied the geology of Zimbabwe two to three years ago and at some point he decided that Zimbabwe would be good destination to invest in.

At that time, we did not care about power. Mugabe (former President Robert Mugabe) was still in power and no one was expecting any change, therefore, we were not afraid of that.

We know how to work in such environments and we are not afraid to do business.

ND: Does your company deal with other minerals?

VT: Yes, it does. In Indonesia, our group is constructing one of the biggest ferro-nickel smelters in the world, we mine coal there and have manganese project and some oxide. In Russia, also, we have gold, platinum, and ferro coal.

ND: Why invest in coal, most investors when they come they talk diamonds or gold?

VT: We like to move in the opposite direction.

It is good that nobody wants to invest in coal therefore in time the supply would shrink and it would drive prices up which for us would be beneficial.
If nobody invests in coal we like that.

ND: When you finish setting up shop, what kind of tonnage will your mine be producing after you begin operations?

VT: Believe me, we will be the biggest coal company in this country. Our base scenario, within five years, we will be producing 50 million tonnes per annum, but mostly for exports.

ND: How about in your first year?

VT: 1,5 million to 2 million tonnes.

ND: You said the government had been helping a lot to get you guys to setup giving the necessary documentation. Did you have any challenges?

VT: Of course, we did as anybody in this country. One of the biggest challenges is the currency issue. When this issue is fixed then a huge part of other issues will automatically be resolved. But for now, spare parts are not available, equipment is limited and the equipment which is already here is old, so you have to constantly maintain that, which is a big issue.

ND: How much are you investing into your coal project?

VT: For now, we have invested around $10 million.

ND: If things improve, are you expecting to increase that investment?

VT: Of course, we will. As I said, we started the second phase of purchasing a washing plant and that is an additional investment.

ND: Are you able to tell me how much that was?

VT: I am not quite sure in figures but maybe it is up to $15 million.

ND: Something else that you said was that out of all the countries you have been to, Zimbabwe was not really as attractive compared to other countries you have been in. Explain?

VT: There are more attractive countries and less attractive countries, but you choose which camp you want to be.

ND: So would you say Zimbabwe is attractive or not?

VT: I would say it is slightly down from the middle. It is obviously not the worst country to do business but basically changes which are required are not something extraordinary.

I mean just to cancel excessive regulation it does not require any physics or high maths. People are smart here, they know which regulation is excessive it can be done easily but political will is needed.

ND: So which one has been the most challenging?

VT: Logistics has been the most critical one.

Coal mining is not really a mining business, it is mainly a logistics business as you have to deliver your coal to the end user or to the port. Zimbabwe is a landlocked country and the railway system is not functioning quite well. Yes, we know it requires maintenance …. a lot of work needs to be done but the tariffs charged by the National Railways of Zimbabwe are so high and that creates a closed circle.

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