HARARE-- Zimbabwe's Hwange Colliery Company (HCCL) has sealed an agreement to supply Zimbabwe Power Company (ZPC) and will soon open up new coal concessions to meet additional coal demands for units 7 and 8 of the ZPC's thermal power station at Hwange in northwestern Zimbabwe, an HCCL director says.

Hwange Power Station, the largest coal-fired power station in the country, is set to undergo a 1.0 US billion dollars expansion to increase its generating capacity by an additional two units to produce 600 megawatts (MW) of electricity.

At the moment, the power station has an installed capacity of 920 MW.

The expansion project, which is due to start soon, will be undertaken by the State-owned Chinese engineering and construction company Sino-Hydro which recently completed the expansion of the Kariba South power station across the Zambezi River where it forms the border between Zimbabwe and Zambia.

HCCL board member Ntombizodwa Masuku said Tuesday that plans were already in place to ensure adequate coal supplies when the additional units at the Hwange power station came online.

Masuku said Hwange Colliery had been granted new concessions in the western areas as well as at Lubimbi East and South, and an exploration company had already been engaged to explore the new areas.

It is the Western areas where we have an off-take agreement with ZPC to supply coal for the (power station) expansion project, she said.

We will also be engaging (international professional services consulting copany) KPMG for the funding issue to help the company look for investors, either through debt financing or equity financing. So we have that in place for Hwange 7 and 8 and if all goes well according to our plan we anticipate that we should be able to start production in the Western areas by early 2020.

Masuku said although thermal coal was a low value product compared with other types of coal, such as coking coal, HCCL would ensure availability of sufficient supplies to the power station. Thermal coal is a low value product and thermal coal alone cannot sustain Hwange Colliery unless we look at other high value products, which really have been sustaining Hwange and giving profit to the company, she said describing HCCL's role to supply coal to the ZPC as an obligation to the nation.