Biggest China Bank Walks Away From $3 Billion Zimbabwe Coal Plan

(Bloomberg) —

China’s biggest bank has dumped plans to fund a $3 billion coal-fired power plant in Zimbabwe, in a blow to a two-decade effort to develop the project, according to a coalition of 32 environmental groups.

Industrial and Commercial Bank of China Ltd. told Go Clean ICBC, which includes environmental activist group 350.org, that it wouldn’t fund the 2,800-megawatt Sengwa coal project that RioEnergy Ltd., a unit of RioZim Ltd., is seeking to develop in Northern Zimbabwe.

Last year Caleb Dengu, RioEnergy’s chairman, said that ICBC had signed a formal notice of interest in funding the plant, that would be constructed by China Gezhouba Group, while associated transmission lines would be built by Power Construction Corp. of China Ltd. A withdrawal would be a second setback to the bank’s coal funding plans after a permit to build a coal-fired plant in Lamu in Kenya was canceled by the government last year.

“ICBC also confirmed that they will not fund the Lamu coal project in Kenya as well as the Sengwa coal project in Zimbabwe,” Go Clean ICBC said in a June 18 email to 350.org given to Bloomberg by 350.org.

The decision further narrows the funding options available to developers of coal projects in Africa as western and South African banks have come under increasing pressure from their shareholders not to fund developments that could contribute to climate change. While ICBC confirmed receipt of a query from Bloomberg, it didn’t immediately respond.

The Chinese lender is under scrutiny over the environmental impact of funding coal projects and is in discussion with the coalition to “chart a clear road map to stop funding coal,” Go Clean ICBC said in the email. Nathalia Clark, the associate director of Global Communications at 350.org, declined to give further detail.

The coalition had planned to roll-out a global campaign last week against the lender’s coal activity, which it suspended due to the ongoing dialog.

RioEnergy is seeking alternative financiers, a person with direct knowledge of the matter said, asking not to be identified because ICBC’s withdrawal hasn’t been formally announced. Simba Mhuriro, the general manager at RioEnergy said he wasn’t privy to the matter and couldn’t comment. Wilson Gwatiringa, a spokesman for RioZim declined to comment.

Sengwa was initially owned by London-based miner Rio Tinto Group, the one-time parent of RioZim Ltd. It was set aside as Zimbabwe’s relations with the U.K., its former colonizer, deteriorated. After the project was revived in 2016, General Electric Co. and a unit of Blackstone Group LP didn’t pursue initial inquiries.

The backing of ICBC was seen by RioEnergy as a fresh start in a plan to develop the plant and end recurrent power outages in Zimbabwe.

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By Matt Earle

Matthew Earle is the Founder of MiningFeeds. In 2005, Matt founded MiningNerds.com to provide data and information to the mining investment community. This site was merged with Highgrade Review to form MiningFeeds. Matt has a B.Sc. degree with a minor in geology from the University of Toronto.

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