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Martin Kadzere
HCCL Holdings has achieved significant progress in its turnaround efforts since undergoing reconstruction and implementing a Business Improvement Project (BIP), acting managing director Mr William Gambiza has said.
Mr Gambiza told journalists during a media familiarisation tour of the company’s operations in Hwange last week that the coal miner had overcome past difficulties and was now on an upswing.
The positive trajectory, he said, was reflected in improved production and revenue.
The financial turnaround has allowed HCCL, formerly Hwange Colliery Company Limited, to invest in various capital projects, further solidifying its progress to sustainable growth.
It has also paid off most of the creditors.
“I am super excited to join the HCCL family and be part of the reconstruction journey,” said Mr Gambiza.
“It’s a journey that is focused on re-building HCCL Holdings and requires consideration of several business issues. The BIP requires us to take a deeper look into the current portfolio of operations and projects.
“Among other things, the initiative demands us to sort out our project pipeline. It’s simple, ditch bad projects and keep the good ones.
“Generally, the company should move in the right direction, in response to market dynamics.
“The company should operate competitively, manage costs, and protect margins on a continuous basis.
“It is very important to take cognisance that production and costs remain key to the company’s competitiveness. Therefore, BIP will explore low-cost and high-margin opportunities,” said Mr Gambiza.
The BIP is a business culture transformation initiative aimed at repositioning the company’s competitiveness.
Key deliverables for the BIP revolve around ESG, market share, productivity, plant efficiencies, costs, financial returns,sales, revenues, project management, capital structure, balance sheet optimisation, value accretive partnerships, governance and compliance.
The project aims at achieving high business productivity per man shift, promoting, and maintaining disciplined organisational spending, sales growth, effective contractor management, efficient debtors’ management, and growth in market share among other issues.
Mr Gambiza indicated that the project also seeks to build a team that upholds company values, shares one vision and purpose as well as introduces modern mine planning that involves the use of a dynamic investment policy that allows HCCL to respond to market dynamics and forces.
It has already begun several major capital projects, including the US$8,5 million reconstruction of its coke oven battery and the installation of a washing plant at its 3-Main underground mine.
Construction is well underway on the coke oven battery, which is expected to be operational by November of this year.
The coke oven battery plays a critical role in converting coking coal into high-value coke, a product with a wider market potential both regionally and internationally.
The battery has a 15-year design lifespan and a production capacity of 200 000 tonnes per year.
In addition to the coke oven battery, HCCL invested US$3 million in a washing plant situated at its 3-Main underground mine.
This plant cleans coking coal before it enters the battery and has a processing capacity of 720 000 tonnes per year. The 3-Main mine itself is currently under care and maintenance, as running it has become uneconomic.
HCCL is exploring ways to optimise its operations for future viability.
It also made a strategic investment of about US$200 000 to increase process plant availability from an average of 40 percent to 80 percent.
Plant availability refers to the percentage of time the plant is operational and ready for use.
HCCL has implemented a contract mining model, leading to a rise in production while also significantly reducing mining costs.
This shift has brought down costs per tonne from US$33 to about US$22 when compared to their previous in-house mining operations.
Mr Gambiza emphasised the critical role of production and cost control in the company’s competitive edge.
Accordingly, the BIP will continue to identify and pursue opportunities that deliver both low costs and high margins.
He, further emphasised that the BIP will prioritize a data-driven approach to customer value management (CVM).
This critical business strategy focuses on understanding customer needs and tailoring operations to deliver maximum value.
He highlighted the importance of identifying and understanding customer demand, as it forms the foundation for strategic mine planning. By aligning production with customer appetite, HCCL can ensure efficient resource allocation and meet market expectations.
HCCL was placed under reconstruction in 2017 after facing operational and financial challenges. Its administrator, Mr Munashe Shava, outlined the critical first steps taken to revive the company.
He gave a thorough review of the HCCL business model, which revealed numerous activities that were significantly reducing the company’s value.
In response, the company meticulously crafted a strategic plan to address these issues.
The plan prioritised aggressive implementation to eliminate the value-draining activities. The comprehensive approach yielded positive results, transforming HCCL from a company suffering losses to a revenue-generating entity.
The new-found financial strength even allowed them to settle outstanding debts, including those owed to trade creditors and the Government.
“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.”
The strategic restructuring resulted in the creation of seven independent companies. These include the Hwange Mining and Processing Company, Hwange Property Company, Hwange Medical Company, Hwange Zambezi Agriculture Company, Hwange Lubimbi Energy Company, Hwange Khula Fund, and the 3-Main North JV Company, a joint venture with Chinese firm Zhong Jiani Investment focused on developing a new underground coal mine for US$50 million.
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