CHINESE steel giant Dinson Iron and Steel Company (Disco) is finalising a deal to construct a second 100-kilometre powerline to fire up its US$1,5 billion plant in Zimbabwe, which begins production this month, officials said this week.
Disco, a unit of the Fortune 500-ranked Tsingshang, said on Wednesday, the five million tonnes-a-year steel and ferrochrome operation, said by authorities to be ‘Africa’s largest’, was almost complete.
The 400 kilovolt (kv) powerline would be Disco’s second to link the Manhize-based plant to Zesa Holdings’ grid at Sherwood near Kwekwe. Disco is already constructing another ‘quick win’ 88kv powerline to run on the same stretch.
In an interview with the Zimbabwe Independent this week, Wilfred Motsi, projects manager at Disco, said mobilisation of funds was almost complete, and a contractor engaged.
“We have the 88kv line, which we are constructing as a quick win and the 400kv powerline, which the contractor is finalising on resource mobilisation,” Motsi told the Independent.
“As for the plant, we are expecting to start production in February 2024 (this month). Government has been helping with facilitation of statutory obligations and bottlenecks. Everything is on target and we appreciate the support we are getting from government and the local communities at large,” Motsi added.
The plant will require 100 megawatts (MW) during the first phase.
On completion, power demand would rise to 800MW, according to Motsi.
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Under the 88kv deal, the Chinese firm said last year it would extend a US$55 million loan to Zesa, which will be used to construct the powerline.
The Manhize plant will be commissioned at a period when global steel prices are projected to remain subdued during 2024, despite a modest recovery in the Chinese market during the second half of 2023.
The depressed prices, which are expected in other markets outside China, may keep a leash on average global prices, according to research firms including BMI, a unit of Fitch Solutions.
In its December Resource and Energy quarterly, the Australian Office of the Chief Economist said globally, steel prices remained weak due to falling demand from manufacturers and construction firms in developed markets.
It is a sector wide concern that has unsettled markets across the globe, including in Zimbabwe.
In a paper titled 'Softening Mineral Prices Weighing Down Viability of Mining Projects', submitted to authorities, by the Chamber of Mines in October last year, miners said the industry had gone through its worst 12 months in decades.
The industry had witnessed softening prices in most key minerals mined in Zimbabwe with rhodium (dropping by -74%), lithium (-69%), palladium (-41%), diamond (-60%) and nickel (-8%) the most affected.
But Motsi struck an optimistic tone this week, saying there was still significant demand.
“I am very optimistic,” he said.
“Demand for steel is high and steel producers in Africa are not producing enough for the market.”
The plant will also open at a time when power supply has been erratic in Zimbabwe despite adding 600 megawatts to the national grid after commissioning two units at Hwange thermal power station at a cost of US$1,5 billion.
Despite prolonged rolling blackouts, Zimbabwean authorities have promised Disco that domestic generation will be enough to meet its steel operation requirements.
“Zesa said it is banking on the Hwange 7 and 8, they are in negotiations with Zambia for the Batoka project,” Motsi said last year.
“So far, we have invested about US$750 million into the plant, including capital equipment,” he added.
