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Sable Chemicals is struggling to raise $750 million required for the establishment of a coal gasification plant at its Kwekwe factory.

The company has been engaged in negotiations with foreign banks to fund the project for quite some time now, but nothing has been concluded yet.

In an interview on the sidelines of the Buy Zimbabwe conference held yesterday, Industrial Development Corporation chief executive Mr Mike Ndudzo said designs for the plant have been completed but funding remains a big challenge.

“The setting up of the plant is expected to eliminate Sable’s huge electricity bill associated with the current method of electrolysis.

However, the capital required for setting up a new plant is too much.

“We approached big financial institutions that have the capacity to fund our project and obviously these people have to bring their own requirements and questions,” said Mr Ndudzo.

Sable Chemicals is an associate company of Chemplex Corporation, which is also a subsidiary of IDC.

Chemplex Corporation has a 36 percent stake in Sable while the majority stake of 51 percent belongs to TA Holdings and the remaining 12 percent is held by Norsk Hydro.

Mr Ndudzo said the financial institutions have outlined a number of concerns which they were failing to address. “The biggest question is on how we are going to pay back the money. They are questioning the readiness of the market for our products,” he said.

“These institutions are also requesting to be given an authority to control the pricing of the product on the local market, which up to now has affected our efforts to secure funding,” said Mr Ndudzo.

Sable Chemicals currently uses electrolysis to produce hydrogen from water for the manufacture of ammonia, a process which consumes a lot of electricity. Ammonia is used to make ammonium nitrate fertiliser, which is a critical input in the country’s agricultural sector.

Mr Ndudzo said producing hydrogen from coal is a strategy that will enable Sable Chemicals to generate its own electricity, with surplus electricity being fed onto the national grid.

Source : The Herald