HCCL partners with Chinese firm in new US$50m mine project

Business Reporter

HCCL Holdings Limited, formerly Hwange Colliery Company Limited, has partnered with Chinese company Zhong Jiani Investment (ZJI) for a US$50 million new underground coal mine in the Hwange district.

The mine has capacity to produce 80 000 tonnes of coking coal per month and has an expected lifespan of 25 years.

HCCL has undergone a strategic restructuring, resulting in the creation of seven independent companies.

The new entities include Hwange Mining and Processing Company, Hwange Property Company, Hwange Medical Company, Hwange Zambezi Agriculture Company, Hwange Lubimbi Energy Company, Hwange Khula Fund, and the joint venture with Zhong Jiani Investment for the underground coal mine.

The US$50 million 3-Main North project, which is expected to significantly boost production, comes amid the company’s ongoing reconstruction programme under the leadership of administrator Engineer Munashe Shava.

Hwange entered reconstruction in 2017.

According to Mr Akim Mutiti, the technical project consultant for the new coal mine, substantial investments have already been made into exploration activities, the development of three shafts, and the construction of a washing plant.

“It is a joint venture asset being developed by HCCL and ZJI,” said Mr Mutiti.

“It is an underground mining asset, which is expected to produce around 80 000 tonnes per month, and for the first phase, this project requires close to US$50 million…to develop the underground mine and its infrastructure together with the washing plant,” said Mr Mutisi.

Construction of the three 1 100-metre tunnels for the new mine is progressing well, with 450 metres already completed and coal seams expected to be reached by November.

The washing plant is nearing completion, with 90 percent of construction work completed.

The facility houses the coking coal washing machine, which cleanses the coal before feeding it into coke oven batteries for coke production – an essential energy source for firing industrial smelters.

With initial production expected at around 80 000 tonnes per month, plans are in place to ramp up output using optimised mining methods for maximum coal recovery.

In terms of the partnership, HCCL holds a 23 percent stake while Zhong Jian Investments owns the balance.

Once operational, the mine’s revenue will contribute to the construction of a coke oven battery that will process the extracted coking coal into high-value coke products, HCCL acting managing director Mr William Gambiza said.

He said HCCL also planned to increase its stake in the project to 33 percent.

HCCL has begun the reconstruction of its existing coke oven battery. This facility will temporarily process coal from the 3-Main North mine until a new, permanent coke oven battery is built at the new mine site.

The coal miner is experiencing a palpable resurgence after undergoing reconstruction and implementation of a strategic Business Improvement Project.

During a recent media tour of HCCL’s operations in Hwange, Mr Gambiza highlighted the company’s successful journey from past challenges to a positive upswing. The positive trajectory, he said, is evident in both increased production and revenue generation.

During the first six months of the year, the company recorded output of nearly two million tonnes and revenue of US$87 million.

The financial turnaround has not only bolstered HCCL’s operations but has also allowed the group to invest in crucial capital projects. These strategic investments further solidify the company’s path toward sustainable future growth.

In addition, it has made significant progress in settling outstanding debts, successfully paying off the majority of its creditors.

Mr Shava said as part of his turnaround strategy, a critical review of the business model revealed numerous activities that were significantly eroding the company’s value.

In response, a strategic plan to eliminate the value-depleting activities was formulated and the comprehensive approach proved successful, transforming HCCL from a loss-making entity to a revenue-generating company.

“When we looked at the Hwange business model, it was saddled with a lot of value-eroding activities,” said Mr Shava.

“So, as the starting point, what we did was to look at it from the perspective where we meticulously formulated a strategy…a business model that (eliminates) the issues that were eroding the business.

“This has culminated in positive results, which saw us now being able to (move) from a loss-making business to a revenue-generating business.”

Mr Shava believes establishing these seven entities as independent entities under HCCL Holdings will unlock significant value for shareholders by ensuring they operate profitably.

Previously, some of the entities functioned as departments within HCCL, hindering their potential to operate independently and contribute value. This prior structure burdened the company and eroded shareholder value.

The ongoing turnaround is also a breath of fresh air for workers who no longer face the anxiety of waiting months for their salaries.