Tancoal seeking grace period to settle 24.1bn/- royalty backlog

10Jul 2020
The Guardian Reporter
Dar es Salaam
The Guardian
Tancoal seeking grace period to settle 24.1bn/- royalty backlog

Struggling to pay U$10.4 million (over 24.1bn/-) in royalty backlog to the government, Tancoal Energy Limited is requesting for a grace period until its coal sales normalise after its markets have been affected by the coronavirus outbreak.

Tancoal’s Ngaka mines.

In its latest report, Intra Energy Corporation which is Tancoal’s holding company, said in its June monthly report that its sales plummeted from 60,901 metric tons in May last year to 24,067 tons only in May 2020.

Tancoal Energy Limited which operates Ngaka Coal Mines in Ruvuma region is jointly owned by IEC with 70 percent and National Development Corporation which has 30 percent.

“Sales were lower than the prior year due to the effect of Covid-19 on the business of both domestic and export customers and competition from small miners. Coal produced during the month was 34,229 tonnes, May 2019 production was 62,393 tonnes,” the company stated in its report.

The coal mining company said it has capacity to increase production to meet customer demand if the market gets back to normal. Tancoal’s main export markets have been badly affected by the coronavirus in East Africa where many governments have imposed lockdowns.

“Tancoal is continuing discussions with the Ministry of Minerals and the Mining Commission on the payment terms for the US$10.4 million of past royalties and is requesting a moratorium on payments until sales tonnages increase over the 45,000 tonnes per month level,” the IEC said in its report.

The Chairman of IEC, Graeme Robertson said May continued the low sales tonnages witnessed in April as a result of industrial slowdown from the COVID19 Pandemic.

“Increased coal supplies from nearby small mines at low prices aimed at gaining market share were also a factor in lower supply tonnages. These are expected to face increased mining costs once shallow coal has been depleted and are not considered a long term threat as quality is not to the standard of Tancoal,” Robertson said.

He further noted that IEC’s fundamentals are changing as it gravitates more into the gold development sector with increased enthusiasm given the new gold area in the Minas Do Lurio concession.

“IEC is also investigating other potential areas and has commenced the process to a listing of Intrafrican Resources to raise funding to further increase equity in IML and support the next stage of development to target a small scale production area to generate sufficient cash,” he added.

IEC through its subsidiary called Intrafrican Resources Limited, has invested in Intra Minerals Limited, a company registered in Mauritius. Intrafrican currently owns 15 percent of IML.

A new gold bearing area has been located approximately two kilometres from the original Savanne Area where survey and trenching have indicated the potential for a resource. “The second area exhibits visible gold in quartz veining. Samples of quartz and soil have been taken, crushed and prepared for washing with evidence of gold in the samples,” the Australian Stock Exchange listed company stated in its report.

Top Stories