Zimbabwe Sable Crisis Requires Win-win Scenario
October 19, 2015
Features, Opinion & Analysis
Zimbabwe Herald
Holdings recently switched off, to minimal supply, the country’s sole Ammonium Nitrate (AN) manufacturer, Sable Chemicals, to divert 40 megawatts, the firm had been receiving, to residential areas.
Sable Chemicals uses an expensive process — electrolysis — to produce hydrogen from water used to manufacture AN, a major ingredient in fertiliser processing.
It’s a fact that the firm owes Zesa Holdings’ subsidiary, Zimbabwe Electricity Transmission and Distribution Company, over $150 million in unpaid power bills and it is assumed that by diverting the 40MW to the residents, it would be one of the solutions to manage the power crisis.
In business, surely every company should pay for the services rendered and, likewise, the management and shareholders of Sable Chemicals were supposed to find ways of liquidating their power bill before these drastic and painful measures were taken.
Nearly all companies face serious financial problems due to the sanctions induced hardships that have seen manufacturing firms operating at 20 percent capacity. This is a precarious situation given that the cost of doing business such as labour, transport, rent and other essential overheads remain constant.
After this has been said and done, the main question that arises is: To what extent does the decision to limit supplies to Sable Chemicals impact on the production of fertiliser in Zimbabwe and what will be the impact on national food security?
Does the country need to continue offloading hundreds of people on the streets and to whose benefit? Is Sable Chemicals not a necessary evil the country should contend with until the economy stabilises?
Surely, these questions need to be answered.
In Zimbabwe, the composition of fertilisers is Nitrate/Phosphate/Potash (N/P/K). Nitrate is produced by Sable Chemicals, phosphate by Chemplex Corporation and potash is imported from outside African suppliers.
Therefore, cutting supplies to Sable Chemicals means fertiliser companies such as Windmill and Zimbabwe Fertiliser Company (ZFC) among others, would have to import AN to process different brands of fertiliser.
This calls for Government to come up with an immediate solution to avoid fertiliser shortage in the midst of the forthcoming rainy season. Inasmuch as some players in the fertiliser industry and Government might argue that the AN manufacturing process is expensive, the human resource cost is equally high because 500 jobs are at stake. The importation of AN would be as good as exporting jobs to the nations that are going to supply us with this commodity.
Whether the country in future would continue to import AN to manufacture fertilisers, the critical issues are that the commodity must be available on the market and farmers should access it at cheaper prices.
The country cannot afford to record depressed crop yields and more loss of jobs in the agriculture sector because of shortage of fertiliser on the market.
Leaders should immediately think outside the box to ensure that the country has its own supplier of AN because we cannot rely on the importation of two major components in the manufacture of fertiliser.
We need as a country to have total control of our raw materials because some of the countries we are going to import the ingredients from might not supply on time, resulting in serious shortages of the commodity on the market.
Besides, the importation of ingredients to manufacture fertiliser, this is against the spirit of the country’s economic blueprint, Zim-Asset, especially the cluster that deals with Beneficiation and Value Addition.
We challenge authorities to immediately find alternative sources of power to ensure Sable Chemicals is on full production and not consuming too much power.
The plant, established in 1972, obviously now has antiquated equipment and there is need for the shareholders to retool the firm so that it operates efficiently.
This is a huge homework for Chemplex Corporation and TA Holdings, the owners of Sable Chemicals.
Features, Opinion & Analysis
Zimbabwe Herald
Holdings recently switched off, to minimal supply, the country’s sole Ammonium Nitrate (AN) manufacturer, Sable Chemicals, to divert 40 megawatts, the firm had been receiving, to residential areas.
Sable Chemicals uses an expensive process — electrolysis — to produce hydrogen from water used to manufacture AN, a major ingredient in fertiliser processing.
It’s a fact that the firm owes Zesa Holdings’ subsidiary, Zimbabwe Electricity Transmission and Distribution Company, over $150 million in unpaid power bills and it is assumed that by diverting the 40MW to the residents, it would be one of the solutions to manage the power crisis.
In business, surely every company should pay for the services rendered and, likewise, the management and shareholders of Sable Chemicals were supposed to find ways of liquidating their power bill before these drastic and painful measures were taken.
Nearly all companies face serious financial problems due to the sanctions induced hardships that have seen manufacturing firms operating at 20 percent capacity. This is a precarious situation given that the cost of doing business such as labour, transport, rent and other essential overheads remain constant.
After this has been said and done, the main question that arises is: To what extent does the decision to limit supplies to Sable Chemicals impact on the production of fertiliser in Zimbabwe and what will be the impact on national food security?
Does the country need to continue offloading hundreds of people on the streets and to whose benefit? Is Sable Chemicals not a necessary evil the country should contend with until the economy stabilises?
Surely, these questions need to be answered.
In Zimbabwe, the composition of fertilisers is Nitrate/Phosphate/Potash (N/P/K). Nitrate is produced by Sable Chemicals, phosphate by Chemplex Corporation and potash is imported from outside African suppliers.
Therefore, cutting supplies to Sable Chemicals means fertiliser companies such as Windmill and Zimbabwe Fertiliser Company (ZFC) among others, would have to import AN to process different brands of fertiliser.
This calls for Government to come up with an immediate solution to avoid fertiliser shortage in the midst of the forthcoming rainy season. Inasmuch as some players in the fertiliser industry and Government might argue that the AN manufacturing process is expensive, the human resource cost is equally high because 500 jobs are at stake. The importation of AN would be as good as exporting jobs to the nations that are going to supply us with this commodity.
Whether the country in future would continue to import AN to manufacture fertilisers, the critical issues are that the commodity must be available on the market and farmers should access it at cheaper prices.
The country cannot afford to record depressed crop yields and more loss of jobs in the agriculture sector because of shortage of fertiliser on the market.
Leaders should immediately think outside the box to ensure that the country has its own supplier of AN because we cannot rely on the importation of two major components in the manufacture of fertiliser.
We need as a country to have total control of our raw materials because some of the countries we are going to import the ingredients from might not supply on time, resulting in serious shortages of the commodity on the market.
Besides, the importation of ingredients to manufacture fertiliser, this is against the spirit of the country’s economic blueprint, Zim-Asset, especially the cluster that deals with Beneficiation and Value Addition.
We challenge authorities to immediately find alternative sources of power to ensure Sable Chemicals is on full production and not consuming too much power.
The plant, established in 1972, obviously now has antiquated equipment and there is need for the shareholders to retool the firm so that it operates efficiently.
This is a huge homework for Chemplex Corporation and TA Holdings, the owners of Sable Chemicals.
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