Government completes Sable Probe

21 October 2009

Harare — GOVERNMENT has completed a study on the nature and extent of problems that led to the shutdown of Sable Chemicals electrolysis ammonia plant.

Sable Chemicals closed the plant, the largest hydro-electrolysis ammonia plant in the world, two months ago over unsustainable power tariffs.

Sable chief executive, Mr Charles Changunda earlier said the plant gobbled 31 megawatts a month, which translated to a US$1,2 million power bill every month, throwing operations into serious viability problems.

After the plant shutdown the Ministry of Industry and Commerce instituted investigations to establish the magnitude of Sable Chemicals' problems and see how Government could help bring the plant back to life.

Industry and Commerce Minister Welshman Ncube said meetings were held with executives of TA Holdings, Sable Chemicals and Chemplex Corporation.

The Government also consulted Zesa Holdings, which was cited as the cause of the plant shutdown.

TA Holdings holds 51 percent of Sable Chemicals while the Government-owned Chemplex Corporation and Yara Zimbabwe own 36 and 12 percent, respectively.

A report on the findings from the study is being compiled and would be presented to Cabinet next week.

"Cabinet directed that an enquiry into the matter be undertaken.

"We held meetings with people from Sable (Chemicals), TA (Holdings), Chemplex Corporation and Zesa Holdings -- cited as the reason of the plant closure," said Minister Ncube.

Sable Chemicals is the country's sole producer of ammonium. Presently, the company is importing ammonia from South Africa for production of ammonium.

The shutdown of the electrolysis ammonia plant was a major blow to companies such as the troubled Zimbabwe Iron and Steel Company and the Zimbabwe Iron and Smelting Company which relied on the firm for gaseous oxygen.

The Kwekwe-based company had tried to negotiate with Zesa Holdings for a reduction of power tariffs from the current US5,6 cents per kilowatt.

The local power utility declined the proposal arguing that it would compromise its own viability, as that would be tantamount to supplying power at below cost.

Faced with no option Sable Chemicals had indicated that it would engage regional power utilities who could supply the power at about US4,5 cents per kilowatt.

Alternatively, the company would import ammonia from South Africa and operate the plant at Zesa Holdings tariff rate, but only if it could build ammonia stocks of about 3 500 tonnes monthly to sustain ammonium production.

Sable Chemicals electrolysis plant, with 14 electrolytes, has a capacity to produce 20 000 tonnes of ammonium nitrate per month and uses hydro-electricity from Kariba and Munyati.

Source - The Herald 21 October 2009