Sable impairment knocks TA profits

HARARE - TA Holdings (TA) has warned that it will incur a loss in the year to December 2013 on the back of an impairment charge against its investment in fertiliser maker Sable Chemicals (Sable).

“The impairment arose due to the uncertainty over the future returns to be realised by the group from… Sable,” it said, adding that the charge did not have an impact on group cash flows.

The investments group — holding a 51 percent stake in Sable — is set to present its financials for the period by April 30.

The Kwekwe-based Sable, currently operating at 40 percent capacity utilisation and employing close to 500 workers, has been struggling mainly due to high production costs, particularly electricity charges.

Its 42-year-old plant requires 115 megawatts to power a 14-unit electrolysis plant.

The power is supplied by national utility Zesa Holdings through a dedicated sub-station.

For quite some time now, the company has been seeking investors to switch off the electrolysis plant completely and changeover to coal gasification in phases, as it seeks a more cost-effective way of producing hydrogen.

Jack Murehwa, Sable chief executive, this week said the change of technology at the Kwekwe plant was imminent following indications that a team of Chinese experts to undertake the coal gasification project is expected at the beginning of next month to start work on the technical design. “ It has to happen for the continuation of local production of nitrogenous fertilisers,” he said.

“Sable continues to work on the coal gasification project as this has the shortest time horizon,” he added.

Sable, Zimbabwe’s sole ammonium nitrate (AN) manufacturer, shelved the coal gasification project in December last year due to funding constraints.

It produces between 70 000 and 80 000 tonnes of AN fertiliser monthly.

The company has the potential to reach production capacity of up to 240 000 tonnes of the commodity per month, enough to meet Zimbabwe’s demand.

Meanwhile, Sable Chemicals’ parent company TA Holdings yesterday issued a profit warning advising shareholders that its profit for 2013 have been eaten away by impairments.

Comments (1)

surely the government ought to do something to such a strategic player in the agric sector. undoubtedly the operation of this company at full capacity will increase agricultural is just a matter of common sense and commitment of resources. let us not also ignore the probable negatives of coal gasification .this is not rocket science

kudakwashe machinyi - 29 April 2014

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