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Sikhumbuzo Moyo recently in Hwange
A PORTUGUESE mining and construction company, Mota-Engil, has clinched a $260 million deal with struggling mining giant, Hwange Colliery Company, which will see the company taking over all the mining operations at HCCL for the next five years.
The contract will see Mota-Engil taking over drilling works, detonation, load and transportation of coal.
Speaking to Business Chronicle on the sidelines of the Kamandama Golf tournament in Hwange over the weekend, Mota-Engil managing director Blake Mhatiwa said his company was ready to start operations and was confident that the fortunes of the coal mining giant would turn around.
“We will be doing the mining for Hwange after it was realised that they (Hwange Colliery Company) are incapacitated in terms of equipment. As Mota-Engil we have the necessary equipment to do the job. Hwange will source for the market and sell their coal and then obviously pay us after that,” said Mhatiwa.
He said his company was expecting the equipment to start arriving in the country anytime soon.
“Our machines are quite big, made for heavy duty mining and drilling. We sincerely believe Mota-Engil will determine the future of Hwange Colliery and the subsequently the economic turnaround of the country as Hwange is a strategic and crucial company,” said Mhatiwa.
Hwange has been going through difficult times as a result of equipment incapacitation that saw employees going for months without pay due to cash flow problems.
In a bid to return HCCL to profitability, the company’s board proposed to unbundled it into into six Strategic Business Units (SBUs) – Hwange Colliery Holdings, Hwange Coal Mining, Hwange Plant and Equipment, Hwange Coal Processing and Cokeworks, Hwange Hospital and Hwange Properties & Estates.
HCCL also plans to resize senior management positions and appoint a chief operating officer. A consultant has already been engaged to rationalise costs.
Recently, the company board had resolved to retrench about 1,500 employees before the government stepped in and ordered a stop to the retrenchments.
Operations of HCCL have remained constrained as a result of lack of working capital and antiquated machinery that has seen the company producing 200,000 tonnes of coal against an envisaged 500,000 tonnes.
Board chairman Farai Mutamangira, who has indicated that he won’t be seeking re-election at the forthcoming annual general meeting set for month-end, said the company was seeking alternative funding options including the much touted $100 million from the Development Bank of Southern Africa.
The company also turned down a $50 million dollar loan from Willoughby – an investment vehicle owned by its single largest shareholder, British tycoon Nicholas van Hoogstraten, over what management viewed as unfavourable terms.
Van Hoogstarten was demanding exclusive management control for five years.
As at December 2013, the company’s debt stood at $172 million.
Mota-Engil is a Portugal-based multinational company with a labour force of close to 20,000 worldwide.
Online Reporter