British company commissions Zimbabwe’s newest coking coal mine – and the country wants more

Drilling for grade control at Contango's Muchesu Mine in Binga

It was not just just the layers of coal that stood out as President Emmerson Mnangagwa pulled the veils on the country’s newest coal mine on Monday. It was also the thick layers of irony.

Western governments are pushing developing nations such as Zimbabwe to ditch coal, but it is a British company that has just opened a new coking coal plant. The company may, in the near future, sell its coal to Chinese steel manufacturers in Zimbabwe.

Contango, listed in London, started building the Muchesu plant in 2022. In May, the company produced its first coking coal, which is used in steel making. Mnangagwa made the site his first stop, as he visits more projects in Matabeleland North, including a new Chinese coal mine.

Mnangagwa said it was “pleasing to note that a UK-based company” is developing the project, “despite the country putting us under sanctions”. With climate change and “an ever-changing geopolitical environment”, investment in coal is still necessary, Mnangagwa said at the plant.

“This is more so for us in Africa with vast deposits of coal,” he said.

Zimbabwe last year exported US$166.4 million worth of coking coal, up from US$39 million in 2020, according to government figures. Government hopes the likes of Contango can deliver more.

“This is a landmark moment for Contango. It is no small feat to bring a mine into production and something most junior mining companies never achieve,” Contango CEO Carl Esprey said when the plant started running.

His company is lining up buyers for its coking coal. Contango has signed a deal with TransOre, a UAE commodities trader that supplies coal to Europe and the Middle East. Under that deal, Contango will sell up to 20,000 tonnes of coking coal at US$120 per tonne.

Transmore wants more coal, says Contango, adding: “TransOre has also expressed its interest in taking any additional coal that becomes available, either in the event of mine expansion or if the expected contract with the MNC does not materialise.”

Contango is also talking to an unnamed “global multi-national company, which is expected to complete its due diligence shortly”. Its coal may be bought by ArcelorMittal of South Africa, as well as Tsingshan, which is developing the Manhize steel plant near Chivhu.

Zimbabwe wants to build a coal hub in Matabeleland North, which is already home to producers such as Hwange Colliery, Western Coal and Makomo Resources. New projects in the area include investments by Afrochine Energy, a unit of Tsingshan.

A new license has recently been issued for a large coal plant in the area, according to a recent report by the Zimbabwe Investment Development Agency.

“The highest projection for investment (in the second quarter) was from Zhongjin Heli Energy which proposed to bring US$400 million towards coal mining and thermal power generation in the Matabeleland North province,” the agency says.

Zimbabwean coal producers don’t have it easy getting their coal to market, because of the country’s decayed rail network. For Contango, TransOre has the advantage of having a logistics affiliate African Rail International. It has rail access, locomotives and port access through the Dry Bulk Terminal at Maputo.

“They bring a sizeable logistics operation, which we believe is more aligned with Contango’s objectives moving forward as we develop Muchesu,” Contango CEO Carl Esprey says.