UK firm in talks with Chinese steel giant for Hwange coking coal deal
CONTANGO, the London-listed resources company, is in talks with Afrochine for the supply of coking coal to be produced at Contango's Lubu project in Hwange.
A statement by Contango says it is in discussions with the "Zimbabwean subsidiary of a major Chinese industrial company and one of the world's largest stainless steel
producers".
According to the coal company, the potential offtake partner "has a sizeable footprint in Zimbabwe and is planning to construct a US$1 billion carbon steel plant in the country, with capacity of two million tonnes of steel per annum".
World number one stainless firm Tsingshan, through its local arm Afrochine, plans to set up an iron ore mine and steel plant near Mvuma, a long-delayed project that the government is desperate to kick off midyear. Afrochine, which runs a nickel smelter at Selous, is building coke batteries in Hwange to prepare for production.
"Given the Lubu Coking Coal Project's proximity to Hwange, the Company and the Potential Offtake Partner have entered into discussions with the view to Contango supplying the coking coal for the coke batteries on a long-term offtake," Contango says in an announcement to the London Stock Exchange on Friday.
Coking coal is a key component in steel manufacturing.
The company said given the "potential significance of an agreement", it would halt mining operations at Lubu until these talks are done. Contango expects discussions to be completed by April. A site visit is planned in April and Contango will open a trial pit and a bulk sample will be sent to Afrochine so it can conduct a burn test, needed to assess the quality of the coal.
