ZIMBABWE’S investment agency says a Chinese company has expressed interest in establishing a US$400 million coal-fired power plant in the country as the southern African nation races against time to comply with a looming ban on the use of fossil fuels.
Experts say Zimbabwe, currently battling a huge energy deficit due to limited investment in the capital-intensive sector, has one of the largest coal reserves on the continent and may in future find itself in a Catch-22 situation as traditional source markets shift to renewable sources of energy such as hydro and wind.
Zimbabwe heavily relies on coal for electricity production, with four out of five of its stateowned power stations being thermal powered.
The country could find itself in a fix when the ban on coal comes into effect. According to the Zimbabwe Investment and Development Agency (Zida) second-quarter report for the period ending June, the mining sector attracted the most investment during the period under review, with 62 new licenses issued and a projected investment value of US$202.7 million.
The construction sector was the second-largest recipient of investment, with six new licences issued and a projected investment value of US$59.78 million. The services sector saw a significant increase in investment in the second quarter of 2023, with 43 new licences issued and a projected investment value of US$41.94 million.
“The global boom in demand for energy has seen an increase in the number of investor inquiries into the sector,” reads the report.
“In Q2 2023, 68% of projected investment value for all licences were issued in the energy sector. The highest projection for investment was from Zhongjin Heli Energy (Pvt) which proposed to bring US$400 million towards coal mining and thermal power generation in the Matabeleland North province. This is expected to eventually lead to increased power generation and reduction of the power supply deficit should all the projects be implemented as planned.”
Zida says in 2022, licences were issued to investors from 22 countries, including Zimbabwe. During the first six months of 2023, the agency managed to draw investors from 32 countries.
“During both periods, China had the highest number of investors and investment value by a considerable margin, with mining being the most preferred sector, followed by the manufacturing sector,” the report says.
World leaders committed to a shift away from coal at the Glasgow climate summit, with signatories pledging.
In 2021, world leaders, including Zimbabwean President Emmerson Mnangagwa, converged on Glasgow, Scotland, during the UN Climate Change Conference and pledged to end all investment in new coal power generation domestically and internationally.
Countries of the global south currently play catch-up with industrialised nations which have for decades been relying on fossil fuel to power their thermal stations, among other uses.
Africa’s most industrialised nation, South Africa, got a shot in the arm when it secured commitments for US$8.5 billion over the next five years from Britain, France, Germany, the United States of America and the European Union to reduce carbon emissions and develop new renewable energy projects.
Zimbabwe heavily relies on coal for electricity production, with four out of five of its stateowned power stations being thermal powered. The country could find itself in a fix when the ban on coal comes into effect.
World leaders committed to a shift away from coal at the Glasgow climate summit, with signatories pledging to end all investment in new coal power generation domestically and internationally.
They also agreed to phase out coal power in the 2030s for major economies, and the 2040s for poorer nations.
Data shows Zimbabwe holds 553 million tonnes of proven coal reserves, ranking 38th in the world. China has directed billions of dollars into coal power in other countries over the past decade, largely as part of its Belt and Road Initiative (BRI), its massive, international infrastructure development project. During this period, the country ranked as one of the world’s largest funders of overseas coal-based energy, along with South Korea and Japan.
Two years ago, Zesa executive chairperson Sydney Gata told journalists visiting Hwange Power Station that China’s decision has instantaneously affected two major projects in Zimbabwe.
“It must be noted that the economies of countries such as Botswana, South Africa and Zimbabwe were constructed on fossil fuel as the primary energy source,” Gata said.
“The economy of Zimbabwe has been touted as the fastest growing economy in Africa by the IMF and the World Bank. This growth was based on a fossil fuel economy. Hence decisions to cut funding on fossil fuel energy will leave a profound gap in the economic and social stability of the Sadc countries. Their targets for United Nations (UN) Sustainable Development Goals (SDGs) will be missed, as all the SDGs are predicated on electricity supply which is available, accessible and affordable.”
Chinese President Xi Jinping recently said at the UN General Assembly that China — the world’s largest public financier — “will not build new coal-fired power projects abroad”.
Chinese banks have already swung into action.
Three days after Xi’s speech, the Bank of China announced it would no longer provide financing for new coal-mining and power projects outside the country from the last quarter of this year.
Xi’s statement is expected to affect at least 54 gigawatts — which involve Zimbabwe’s projects — of proposed China-backed coal plants that are not yet under construction.