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The Economic and Environmental Costs of Sable Chemicals

sables

By Farai Maguwu

With the biggest consumer of electricity in Zimbabwe entering the carbon market – a fertilizer manufacturing plant – questions are raised about the implications for the climate, for electricity users in Zimbabwe and for how we want to farm. This report is a follow-up from EJOLT report 2: The CDM in Africa.

Sable Holdings, a subsidiary of Chemplex Corporation Limited has become the first company in Zimbabwe to implement a Clean Development Mechanism project that aims at reducing the emission of nitrous oxide from its fertilizer manufacturing plant in Kwekwe. Sable Chemicals is Zimbabwe’s sole manufacturer of ammonium nitrite fertilizer. The CDM project will see the installation of a nitrous oxide abatement facility that facilitates the catalytic decomposition of nitrous oxide into nitrogen and oxygen. Nitrous oxide is ranked fourth among the greenhouse gases, coming after water vapor, carbon dioxide and methane. Though not toxic, nitrous oxide is a major contributor to global warming and it can stay in the atmosphere for up to 120 years. Sable chemicals say they have been emitting nitrous oxide into the atmosphere all along, hence the need to abate it into harmless gases. According to the proposal Sable will also install a DeNOx facility that will significantly reduce the emission of NOx emissions. NOx emissions are nitrogen oxides (NO and NO2) that contribute to acid rain. The project is funded by the Standard Bank of South Africa. Chemplex Corporation chief executive officer Mr Misheck Kachere claims the successful implementation of the project will ensure that environmental pollution as a result of their fertilizer manufacturing activities would be reduced to zero![1] At the same time the company announced that it will diversify from electrolysis to coal gasification in phases. We argue here that the operations of Sable are neither economically viable nor environmentally friendly.

Sable receives preferential treatment from government on the basis that it is Zimbabwe’s sole producer of ammonium nitrate fertilizer. However, the economic benefits of Sable Chemicals to Zimbabwe need further scrutiny. The overconsumption of electricity by Sable Chemicals is hurting other industries and ordinary consumers, thereby undermining government efforts to revive the economy. Further, we argue that plans to ‘switch off the electrolysis plant completely’ in preference to coal gasification will significantly contribute to global warming through the emission of carbon dioxide.

In terms of power consumption Sable is the single biggest consumer of electricity in Zimbabwe. Sable owns the biggest electrolysis plant in the world which currently consumes around 80 megawatts per hour. It buys electricity at a government subsidized rate of 3c per unit whilst the commercial rate is 9c per unit. The balance is paid to ZESA by government on behalf of Sable Chemicals.[2] In 2009 Sable Chemicals received a lifeline of USD 3 million from government to revive its electrolysis plant which had been shut down over high power tariffs. Efforts to meet the electricity needs of Sable Chemicals have resulted in acute power shortages elsewhere in the country. The Sable electrolysis plant requires massive electricity to separate water into gaseous hydrogen and oxygen. Other electricity users have suffered severe load shedding and capacity underutilization whilst government pays the Sables’ bills. Ironically, whilst government is doing everything possible to maintain electricity supply to Sable, including giving it subsidies and lifeline financial assistance from time to time, ostensibly to boost agriculture, a report produced by the agricultural industry revealed that the sector was experiencing serious viability challenges due to load shedding.[3] The report observed that despite an increase in demand for agricultural products, the country was relying on imports as local industry remained in the doldrums due to power shortages. By bailing out the fertilizer producer without meeting the electricity needs of downstream fertilizer users government is attempting to solve a problem by creating an even bigger problem of reducing agricultural productivity.  There is no justification for the lion’s share of electricity Sable chemicals is consuming.

 

When operating at full capacity Sable Chemicals require 115 megawatts, equivalent to the size of a power station, to fire its plant. The company pays an electricity bill of over USD20 million per month, and is the largest single consumer of electricity in the country. Whilst government is using tax payers funds to bail out Sable Chemicals, tens of thousands of poor Zimbabweans are living in darkness either having been switched off due to non-payment of ZESA bills or simply due to load shedding. Still tens of thousands more have lost their jobs due to low productivity partly attributed to erratic power supply. The preferential treatment Sable is getting ahead of other industry players and ordinary consumers is unsettling. Mutare Board and Paper Mills which was the biggest employer in Manicaland, PG Plate Glass and Cairns Foods Limited have all closed and sent thousands of workers home due to the same viability challenges affecting Sable. Several other industries have also closed in Matabeleland and elsewhere in the country. This makes the Sable subsidies and lifeline assistance highly suspect as government has been reluctant to assist other struggling companies. Given high levels of corruption in government, there are fears some individuals may be receiving kickbacks in exchange for government lifelines and subsidies to Sable.

 

Sable has announced that it will diversify from hydro power to coal gasification in phases. This move, whilst cutting the cost of production, has a negative effect on the environment. The burning of coal results in massive amounts of carbon dioxide being released into the atmosphere. Carbon dioxide traps heat radiated from the earth and radiates it back to the earth’s surface, thereby contributing to global warming. According to the US Global Change Research Program carbon dioxide emission has been “the principal factor causing warming in the last fifty years”[4]. Coal produces more carbon dioxide than any other fossil fuel when burned, making it the biggest anthropogenic cause of global warming. One ton of coal burned can produce on average two tons of carbon dioxide, making coal-fired electricity generation a major driver of pollution.

 

The ‘Clean Development Mechanism’ project would have broken new ground if, among other things, it sought to generate clean renewable energy for the Sable Chemicals plant and the surrounding communities. Countries that have used coal powered plants to generate electricity such as the USA and Canada are taking drastic measures to reduce the use of coal due to its greenhouse effect whilst Sable Chemical is moving in the opposite direction.

 

But coal gasification is not the only problem with the industrial activities of Sable Chemicals. Scientists have established beyond any shadow of doubt that ammonium nitrate fertilizer is a major contributor to surface and groundwater pollution through the process of leaching which also leads to the multiplication of algae in water bodies such as dams and lakes. This is however in sharp contrast to the assertion by Sable Chemicals that ‘the proposed CDM project activity will not result in any water pollution.’[5]

 

Studies conducted by Vincent Banek (2010), supported by observations by Nkwonta and Ochieng (2008),) and Collins (2010) showed that in some parts of Africa about 50% of water pollution is caused by fertilizer run off from agricultural fields.[6] In its fourth national report to the Convention on Biological Diversity, Zimbabwe Ministry of Environment and Natural Resource Management also reported that run-off of nitrogenous fertilizer from sugar plantations in the low veld was polluting rivers. Other researchers have also observed a high concentration of nitrates in the now heavily polluted Lake Chivero. Recently the Zimbabwe Broadcasting Corporation reported that ZIMPHOS, also a subsidiary of Chemplex Corporation Group of Companies and a sister company of SABLE is affected the quality of water in the area.[7] Other researchers have accused the company of dumping toxic waste from its fertilizer plant into Mukuvisi River which is one of the three rivers that feed into Lake Chivero, the main supply of water to Harare.

 

Recently scientists at the University of California discovered that the chief cause of increased nitrous oxide in the atmosphere was nitrogen-based fertilizer, ‘which stimulates microbes in the soil to convert nitrogen to nitrous oxide at a faster rate than normal’.[8] The researchers also looked back into history and noted that there was a sharp increase in atmospheric nitrous oxide in the 1960s when there was a boost in agriculture due to an increase in production of cheap synthetic fertilizer. They suggested that fertilizer application must be timed so as to avoid rain, ‘because wet and happy soil microbes can produce sudden bursts of nitrous oxide’.[9] Tilling of fertilized land is also a major contributor to nitrous oxide emissions as it enables the greenhouse gas to exit the soil. The no-till farming technique which reduces nitrous oxide emission by between 40% and 70% has been strongly recommended. Some farmers are switching to organic fertilizer made up of animal manure or vegetable matter or a combination of the two. Dead leaves and crop residues can be buried in a compost heap to produce organic fertilizer for the next season

 

Realizing the role of fertilizer in emitting nitrous oxides, other researchers have recommended removal of subsidies on fertilizer and the imposition of fertilizer tax. These measures are being put in place out of realization that in the long run fertilizer use has a social cost to society similar to the one paused by carbon emission. Sable Chemicals is currently producing 240 000 tons of fertilizer annually. The socio-environmental costs of fertilizer use are a negative externality which will be shared by all humans irrespective of race, nationality, gender or religion. Further, fertilizer can also leach from agricultural fields and flow through rivers into dams and oceans where it will cause algae blooms which will in turn cause harm to aquatic life.

Therefore there is need to educate farmers on alternatives to synthetic fertilizer. But more importantly a fertilizer tax will raise awareness faster as well as discouraging the use of synthetic fertilizer. Applying a fertilizer tax will ensure that the final price of fertilizer reflects the environmental / social costs of fertilizer consumption. Fertilizer tax will encourage innovation in the same manner that carbon tax has led to the invention of new engines, alternative means of travel such as walking to and from work and cycling and some less effective market based mechanisms. Revenue collected from fertilizer tax can be invested in research and alternative methods of boosting agriculture without compromising the environment.

In conclusion, one element that is clearly missing in the Sable project proposal is consultation with the residents of Kwekwe where the project will take place. There is need to fully explain the pros and cons of Sable activities and assist residents make informed choices. Also since Sable is bailed out by tax payers funds, it is important for the parliament of Zimbabwe to make the ultimate decision on any future lifeline assistance or subsidies to Sable.

 

End Notes

[1] The Chronicle, 28 December 2011. Sable Chemicals to implement Clean Up Project, http://184.106.232.134/index.php?option=com_content&view=article&id=27745:sable-chemicals-to-implement-clean-up-project&catid=38:local-news&Itemid=131

 

2Mhlanga, Blessing. “Sunsidy standoff cripples Sable Chemicals” Newsday on the web, 12 March 2012. 4 September 2012 http://www.newsday.co.zw/article/2012-03-12-subsidy-standoff–cripples-sable-chemicals

 

3 “Continued power cuts hit agricultural sector.” Chronicle on the web, 31 may, 2012. 4 September 2012

 

4.  United States Global Climate Change Program, Global Climate Change Report, p14, http://www.globalchange.gov/images/cir/pdf/Global.pdf

 

5Sable Chemicals N2O Tertiary Abatement Zimbabwe Project Design Document , version No. 2, 17 December 2011:

 

 6 Vincent Banek (2010), The water pollution in Africa: A study of the causes and the effects. Carl. H. Kumpf Middle School. http://www.scribd.com/doc/31940501/Vincent-s-Research-Paper

 

7 Fertilizer company polluting water table, http://www.zbc.co.zw/news-categories/local-news/22010-fertiliser-producing-company-polluting-water-table.html

 

8Robert Sanders (2012), Fertilizer use responsible for increase in nitrous oxide in the atmosphere. http://newscenter.berkeley.edu/2012/04/02/fertilizer-use-responsible-for-increase-in-nitrous-oxide-in-atmosphere/

 

9Robert Sanders (2012), Ibid

 



[2] Mhlanga, Blessing. “Sunsidy standoff cripples Sable Chemicals” Newsday on the web, 12 March 2012. 4 September 2012 http://www.newsday.co.zw/article/2012-03-12-subsidy-standoff–cripples-sable-chemicals

[3] “Continued power cuts hit agricultural sector.” Chronicle on the web, 31 may, 2012. 4 September 2012

[4] United States Global Climate Change Program, Global Climate Change Report, p14, http://www.globalchange.gov/images/cir/pdf/Global.pdf

[5] Sable Chemicals N2O Tertiary Abatement Zimbabwe Project Design Document , version No. 2, 17 December 2011:

[6] Vincent Banek (2010), The water pollution in Africa: A study of the causes and the effects. Carl. H. Kumpf Middle School. http://www.scribd.com/doc/31940501/Vincent-s-Research-Paper

[8] Robert Sanders (2012), Fertilizer use responsible for increase in nitrous oxide in the atmosphere. http://newscenter.berkeley.edu/2012/04/02/fertilizer-use-responsible-for-increase-in-nitrous-oxide-in-atmosphere/

[9] Robert Sanders (2012), Ibid

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