eBusiness Weekly
Africa Moyo
The cost of Ammonium Nitrate (AN) fertiliser, which is largely on the upper side in the country mainly due to high costs of the major component, ammonia, is set to come down once coal – bed methane gas exploitation starts in Lupane — Matabeland North, a senior Government official reveals.
The ammonia the country is using to produce AN fertiliser, is produced through an expensive industrial process at Sable Chemical Industries in Kwekwe and of late the product has been imported from South Africa, further putting pressure on foreign currency requirements and the price of the commodity.
But it is hoped that once coal-bed methane gas exploitation starts in Lupane, ammonia would be available at considerably lower costs, resulting in fair prices for AN.
Sable Chemicals’ equipment is understood to be antiquated resulting in high production costs.
At the moment, AN costs about between $37 and $43 per 50 kg bag depending on the retailer.
Lands and Agriculture Minister Mr Perrance Shiri last week said: “One thing which makes our top dressing, that’s ammonium nitrate, expensive is the use of ammonia, which is either produced at Sables at a very high cost or imported from South Africa.
“I understand there are plans underway to develop coal-bed methane fields in the Lupane area and once that’s done, we should be able to access more affordable ammonia, which should impact positively on the price of fertilisers.”
Government has indicated that there is a company keen to plough $700 million into the exploitation of coal-bed methane gas, which would be used for many things.
Areas along the Zambezi corridor are known to be rich in CBM gas reserves and in 2012, China Africa Sunlight Energy proposed a $2,1 billion energy project to be undertaken in Lupane.
Presidential visit boon for Sable
President Mnangagwa and Vice President Constantino Chiwenga visited Sable Chemical in June to assess the company’s challenges and pledged to provide funds to kick-start operations that would result in the availability of AN.
It could not be established how much Government intends to avail to Sable Chemical to boost its operations.
However, the company has indicated that it requires $200 million to establish a new plant that would result in a surge in AN output to almost 200 000 tonnes per year in the next two years.
Said VP Chiwenga at last week’s 6th Annual Agribusiness Conference held concurrently with the Harare Agricultural Show: “We went with the President to Sable, in June and . . . we now know their requirements and there shouldn’t be any problems as far as we are concerned in terms of fertilisers.
“We have their requirements, which are very simple and we said we are going to find the money and give to Sable so they can produce the quantities we require here (and) above all, they must start selling their fertiliser to Zambia, Malawi, Tanzania and Angola.
“Now that the elections are over, Sable can keep on knocking at our doors so that the matter is fulfilled. We took a position together with His Excellency the President (Mnangagwa) that we give Sable the money, enough to produce for the country.”
VP Chiwenga said once Sable Chemical starts exporting, it would use the proceeds to fire its operations that require foreign exchange.
During his visit to Sable Chemical, President Mnangagwa said it was critical for Government to support the firm considering its centrality the country’s industrialisation agenda and the success of the modernisation of the agricultural sector.
Further, President Mnangagwa said Sable Chemical was key to economic revival hence Government’s desire to assist it with the foreign currency it badly requires to ramp up production.
In July last year, Sable Chemical was operating at 30 percent capacity as it battled to rediscover its footing following the remodelling of its plant to improve efficiency and drastically reduce its electricity consumption.
The plant now consumes between 6MW and 10MW, down from a staggering 90MW, which is equal to the installed capacity at Bulawayo Thermal Power Station.
Sable Chemical completed remodelling its plant in November 2015.
The old electrolysis plant gobbled electricity during manufacturing of ammonia, a key raw material in the production of AN, and was discontinued in October 2015 after a deal was struck between Government, management and ZESA.
The company’s electricity bill spiked $150 million at one point, suffocating the firm’s operations in the process.
The historical electricity bills have since been settled.
Sable Chemical plans to increase production to “at least 200 000 by 2019 to; reduce imports of nitrogen fertilisers into Zimbabwe, save foreign currency and improve Zimbabwe’s balance of payments (and) economies of scale”.
The company aims to ride on the success of Command Agriculture to boost operational capacity.
Command Agriculture, an import substitution scheme introduced by Government in the 2016/ 2017 summer cropping season to increase food production in the country and consequently ensure food security.
Fertiliser production at Sable plummeted to a record low of 40 000 tonnes in 2009.
At full capacity, the plant churns out 240 000 tonnes of AN, which was all consumed by local farmers in the 1990s.
When production rises to near capacity, 300 people would be directly employed.
