CONTANGO Holdings, which owns Muchesu Coal Mine in Binga, Matabeleland North Province, is eyeing a long-term offtake agreement with an unnamed multinational company that has placed an order for 1 000 tonnes of washed coking coal bulk sample.
The London Alternative Investment Market-listed resource group said it looked ahead to entering a long-term offtake agreement with the undisclosed multinational company once the bulk sample test is successfully concluded at the firm’s facilities in South Africa next month.
Coal, which has been an integral part of the Government’s plans to grow mining to a US$12 billion industry by the end of this year, is available in abundance in Zimbabwe along with other key minerals like gold, platinum, lithium, chrome and diamonds.
In an update released this week, Contango stated that the said multinational company required a minimum of 7 000 tonnes per month.
“Contango has received approximately US$116 000 from a large multi-national company as payment for the previously reported circa 1 000 tonne bulk sample of washed coking coal.
“Over half of the bulk sample has been mined, screened, washed, and is ready for collection, with the balance due later this month.
“Given historic test work undertaken by the multinational company, as well as Contango’s ongoing verification of the coal quality and characteristics of the bulk sample, the company believes there is a high probability of entering into a long-term offtake with this multinational company following the successful completion of their tests in January 2024,” it said.
In August this year, Contango announced that it had received a coal export permit from the Minerals Marketing Corporation of Zimbabwe, paving the way for the commencement of exports from the Binga colliery project.
At the time of granting of the coal export permit, Contango said it had made its first sale to TransOre International FZE, a United Arab Emirates-registered entity managing a portfolio of global commodity supply chains.
TransOre has pledged to play a central role in the Binga coal project for the benefit of Zimbabwe and under its offtake arrangement with Contango, it expects to secure 20 000 tonnes per month of washed coking coal.
“However, current discussions are concerning a larger long-term contract, which the board is inclined to progress with given the complications around the current offtake partner, TransOre, which has not yet provided further orders or payment for washed coking coal as envisaged under the July 2023 offtake agreement,” said Contango.
TransOre holds an allocation for exporting coal through the Dry Bulk Terminal at the Maputo Port in Mozambique.
Contango has a 70 percent interest in Muchesu Coal Mine, with the remaining 30 percent held by supportive local partners.
The company said it remained in discussions with other potential offtake partners of both coking and industrial coal.
This would be envisaged as complementary to any contract with the multinational company.
Muchesu Coal Mine is one of the signature investment projects under the Second Republic, which is expected to yield high-value benefits for locals and the economy at large.
The colliery project, which covers 19 236 hectares of the highly prospective Karroo Mid Zambezi coal basin located in the established Hwange mining district in north-western Zimbabwe, was commissioned by President Mnangagwa in July this year.
Herald
