Sables Plant Crisis - a Stitch in Time Saves Nine

4 October 2012

Sable Chemical Industries' plans to de-commission its electrolysis plant in January next year makes sad reading for Zimbabwe's agriculture-based economy especially at a time when the nation is making plans for the forthcoming season. The Kwekwe-based company uses the electrolysis plant to split water and oxygen to generate hydrogen used in manufacturing ammonia. Ammonia is a critical component in the manufacture of ammonium nitrate fertiliser, which is critical in good growth of plants.

But Sable intends to switch off the plant to cushion itself from the US$2 million power bill it incurs for the 70 megawatts it consumes every month.

This is because the plant, which started operating in 1972, is now too old and expensive to run apart from the fact it consumes too much power.

Sable Chemicals, Zimbabwe's sole manufacturer of ammonium nitrate fertiliser would resort to full importation of ammonium nitrate to produce the fertiliser.

Of great concern are the potential side effects of importing for a financially constrained and agro-centred economy.

Admittedly, liquidity is an issue in Zimbabwe and Sable has been paying huge monthly bills just to keep the energy intensive plant running.

But there was a general agreement among stakeholders in the agricultural sector that farmers always got the critical farming input on time in the shops whenever they needed it.

While Sable will certainly cut down on the power import bill, the economy in general will lose millions of dollars because of the imports.

External outflow of hard currency is the last thing this illiquid economy requires as it needs funding to keep the wheels of industry turning.

Considering the centrality of agriculture to the economy, which constitutes 16 percent of GDP-hiccups in the importation of ammonia, would affect ammonium nitrate fertiliser production at Sable.

There is no guarantee that importing ammonia from South Africa will not have its fair share of logistical challenges that will affect imports.

Such a development would have unbearable consequences for an industry that supplies 60 percent of inputs processed by industry and also consumes almost a similar amount of products from that sector.

In addition, the fact that a whopping US$660 million is required to set up the coal gasification plant, an alternative for hydrogen production, means the country would rely on imports for a long time.

Against this background, there is need for a meeting of minds to see what could be done to ensure the electrolysis plant keeps running.

Rather than allow the plant to switch-off Government, which already is a major shareholder in the company, might need to increase its power subsidy. Currently, Sable gets power supply at a concessionary rate of US3 cents per kilowatt-hour against US7, 53c for the rest of commercial users.

What is of great concern at this moment in time is that Government has been rallying all stakeholders to pool their resources to ensure that the agriculture sector gets the much -- needed support. It does not make sense therefore that the powers that be did not see this coming and fertiliser supply was always one on the key inputs.

This is a very sad development indeed and we will live to rue this sad chapter in the history of agriculture.