Tsingshan schedules coke oven construction at planned Mvuma stainless steel plant

A Tsingshan plan in China: The company signed an MoU to set up in Zimbabwe
A Tsingshan plant in China: The company signed an MoU to set up in Zimbabwe

Chinese steel giant Tsingshan will start construction of coke oven battery at its planned new stainless steel plant in Mvuma in the second half of the year, Mines Minister Winston Chitando has said.

Tsingshan, the world’s largest producer of stainless steel, signed an outline agreement in June last year for the building of a US$1 billion plant in Zimbabwe, after completing a feasibility study.

“The first phase of the project will be an outlay of $1.7 billion and over time, as the output is revamped, the output will go up to over $5 billion,” Chitando said after a Cabinet meeting on Thursday.

In a statement, Cabinet said the stainless steel project entails the export of raw iron ore as well as value addition of iron ore to stainless steel, initially carbon steel.

“Ramping up of ferrochrome production to achieve the required output is already in progress.  Construction of a coke oven battery to the stainless steel plant will commence in the second half of this year.”

The stainless steel investment was one of several MoUs that President Emmerson Mnangagwa signed in 2018, as he sought investment to shore up the economy. Mnangagwa had earlier in 2018 met Tsingshan chairman Xiang Guangda in China.

However, many of the pledges of investment have not turned into real projects due to worsening foreign currency shortages and investor concern over policy uncertainty and political instability under Mnangagwa.

Zimbabwe stainless steel: prospects and risks

Tsingshan will carry out the project via its local subsidiary Afrochine, which produces chrome ore at its plant at Selous.

The company’s plans in Zimbabwe come at a time it is upending the world nickel market. Tsingshan accounts for about 15% of the world’s stainless steel output, and has been increasing output at its 3 million tonnes per year Indonesia unit, Tsingshan Indonesia.

There were, however, concerns in the industry over the glut of stainless steel supply in China, which drove down prices of the steel last year, hitting nickel producers such as Zimbabwe and causing the shut down of steel mills worldwide. However, some Chinese mills have started restocking as stainless steel prices recover in 2019.

Tsinshan will have to skip over a few hurdles, mostly to do with Zimbabwe’s poor infrastructure, before the first steel rolls out of its planned plant.

Tsingshan Indonesia has its own power supply and mines its own nickel and chrome, making it a low cost producer. In the Zimbabwe project, one of the trials Tsingshan will have to overcome is power supply. The company is said to plan a 600MW power plant to fire up the project.

The project will also require the refurbishment of rail infrastructure, Cabinet’s statement said.

In 2018, government and Tsingshan officials said the planned new plant would need a feed of about 200 000 tonnes of nickel, the metal used in the manufacture of stainless steel. The plant is expected to produce two million tonnes of stainless steel at full production. Government awarded Tsingshan some iron ore mining rights near Chivhu last year.