There can be little doubt that national Covid-19 lockdowns have had an impact on progressing projects on the continent. However, there are those projects that continue to progress amid turbulent times. That is why LSE-listed Contango Holdings’ Lubu met coal project in Zimbabwe has my attention this week.
Despite a 30-day national lockdown that has been in place throughout Zimbabwe since 5 January 2021, Contango has been able to continue to advance Lubu. This is due to the fact that mining is classified as an ‘essential’ industry by the Zimbabwean government.
Lubu continues to reach key developmental milestones. For instance, the site was recently inspected by the Environment Management Agency (EMA) following the camp site rehabilitation and access upgrades that have now been completed. Furthermore, a meeting with the Binga District Council has now been scheduled for early this month to outline the two pit locations at Lubu ahead of pit development.
Modest disruption to progress
Contango expects to finalise its discussions with the proposed mining contractor imminently ahead of opening the two pits at Lubu this month. This will be a significant milestone for Contango and will enable ongoing met coal offtake discussions to be finalised. In addition, it will allow the requested bulk samples, which will provide first revenues from Lubu to Contango, to be delivered to a number of multi-national companies who are assessing the viability of constructing plants at Lubu. The manufacture of met coal at site would provide a significant boost to the value of the product generated at Lubu, which is already considered to be highly valuable.
Carl Esprey, executive director of Contango is highly optimistic about Lubu’s prospects. “Lubu is advancing well ahead of the unveiling of the first open pit this month, he stated. “I must commend the hard work and dedication of our on-site team in Zimbabwe who has persevered through pandemic adversity with relatively modest disruption to the planned development schedule. Our offtake negotiations continue to progress well and the opening of the pit in the next few weeks will allow these discussions to be finalised.”
Recently, global met coal prices have been on the rise. Therefore, given the recent developments, I believe Lubu is well positioned to benefit from this demand. What’s more, its development bodes well for Zimbabwe and will be a significant contributor to the country’s mining sector.