eBusiness Weekly
Martin Kadzere
Parrogate Zimbabwe has halted construction of a multi-million dollar chrome smelting plant at the Zimbabwe Mining Development Corporation’s Alaska complex in Mhangura after the Government refused to approve the lease agreement.
Last year, Parrogate signed a Memorandum of Understanding with ZMDC–which owns Alaska Copper Smelting Complex that would have seen Parrogate leasing the plant for 25 years. Under the agreement, Parrogate intended to modify the existing facility into a ferrochrome plant in a $20 million investment deal.
But the Government, through the Ministry of Mines and Mining Development raised concerns over the tenure of the lease, arguing the contract had not been negotiated in the best interests of ZMDC. ZMDC, wholly owned by the Government is responsible for spearheading development of the country’s mining industry.
Sources told Business Weekly that the project had been halted and Parrogate was looking for an alternative site in Glendale in Mashonaland Central Province.
“There was some activity at Alaska Complex. Parrogate had moved on to the site on the basis of the MoU but the Ministry raised some issues do with tenure of the proposed lease agreement and all the works have now been stopped,” said one source who requested not to be identified. “By now, the project would have been at an advanced stage. It was going to be so significant given its proximity to chrome mines.”
Parrogate director Pradyomn Ganediwal confirmed the development, saying the company would re-negotiate the contract. “It’s true that we have problems at Alaska and these started during the old administration,” said Ganediwal in an interview.
“We have however re-engaged the authorities and the ZMDC to see if we can renegotiate.” Efforts to get a comment from the ZMDC proved fruitless by the time of going to print.
Ganediwal, however insisted that the company was interested in moving ahead with the project.
“We are committed to see the project coming to fruition and that is what we are looking at,” he said.
The plant would have the capacity to process 2 500 tonnes of ferrochrome a month, which should generate, at the present market rate, about $40 million per year.
The plant will initially rely on chrome ore from small scale miners in the surrounding areas such as Dawernedale and Mutorashanga but the company would later apply for own claims.
The project would create about 400 jobs and bring back life to Alaska town. Alaska Copper mine shut down operations in the late 90’s following depletion of the deposits.
The mine was shut down at the turn of the millennium following the closure of Mhangura Copper Mines, which produced concentrate for the smelter. MCM closed its shafts after ore reserves fell to unviable levels. Exploratory studies undertaken prior to MCM closure–also owned by the ZMDC–indicated the existence of sub-economic resources, quantified at 0,65 percent, which would have seen the mine operating at a loss.
At the time of closure, MCM was mining at a depths of 1 000 metres thereby increasing costs of extraction.
The closure of the smelter and the mine turned the once thriving town of Alaska, located 15 kilometers west of Chinhoyi in Mashonaland West into a ghost town as delivery of essential services, which were supported by the mining activities, collapsed. At the time of the closure of the mine, more than 2 000 people were left jobless.
While the smelter and refinery was placed under care and maintenance as ZMDC made efforts to source concentrate from third parties, it eventually became unsustainable.
Over the years Zimasco, a unit owned by China’s Sinosteel and ZimAlloys had enjoyed the monopoly of the chrome mining sector and owned over 80 percent of the mining claims.
Small scale miners participated in the chrome industry only as tributors to these two multinational companies. To ensure wider inclusion of indigenous players in the chrome sector the Government then directed that 50 percent of the claims held by the two companies to be released to other small scale players. Zimasco ceded 22 000 hectares of land to the Government which has about 800 claims. Chrome ore producers are allowed to export excess chrome ore after satisfying the local demand.
Currently, Zimbabwe has three large chrome smelters owned by Zimasco, ZimAlloys and Afrochine. In 2015, the Government lifted a four year ban on chrome ore exports to boost foreign currency generation. The Government had banned export of raw the commodity in April 2011 to force mining companies to process the metal locally.
