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Dumisani Nsingo, Senior Business Reporter
THE Board and management of coal mining company Hwange Colliery Company Limited (HCCL) could be heading for the exit after the Government expressed dissatisfaction over the diminishing prospects of turning around the company.
The Government in November gave the board and management a 90-day ultimatum to turn around the fortunes of the coal mine but a few weeks before the expiry of the ultimatum, there seems to be no change.
In a brief telephone interview with Sunday Business last week, Mines and Mining Development Minister Walter Chidhakwa painted a gloomy picture about hopes of the struggling coal-mining giant getting to its feet soon, casting doubts on the ability of the company’s management and board to increase production within the 90 days ultimatum he issued in November last year.
“I hear there are problems at Colliery but I am waiting to get a briefing about them as I will visit the mine before the end of this month,” said Minister Chidhakwa.
During his impromptu visit to the coal mining giant in November last year, Minister Chidhakwa demanded that productivity be increased within 90 days.
Improved production was highly anticipated at HCCL following the purchase of equipment worth $31,2 million from a Belarus firm, Belaz and BEML of India through a vendor financing scheme secured from PTA Bank and India Exim Export Bank respectively. However, not much has been realised from the use of the machinery.
A few months after the commissioning of the equipment management admitted that about five of the heavy machinery that were acquired had faults, prompting one of the major shareholders, Mr Nick Van Hoogstraten who holds a 30 percent stake in the mine to come out in the public and allege underhand deals over the manner the deals were structured.
The major shareholder, Government, was to relieve the company’s board chairman Mr Farai Mutamangira of his duties in October for the role he allegedly played in the purchase of the equipment, among other issues.
HCCL is on record saying it produces about 300 000 tonnes of coal per month, a far cry from the country’s new biggest coal producer, Makomo Resources, which produces more than 350 000 tonnes per month despite having started operations in 2010.
“To be precise production has never increased beyond 200 000 tonnes per month even though they were always saying it was more than 300 000 tonnes per month.
“To make matters worse the underground mine and the coke oven battery are not functional as you are aware,” said a source privy to the on goings at the mine.
Work at the underground mine stopped about seven months ago after the major mining equipment, the continuous miner broke down. The underground mining reserves have the best quality coal and a much longer life to ensure the mine’s going concern status.
The continuous miners has been used at the underground mine for the past 10 years and about $6,3 million is needed to rehabilitate this strategic equipment.
About $20 million is also needed for refurbishment of one of its strategic units, the coke oven battery.
The state-of-the-art coke oven battery, which was constructed by a British company, Otto Simon Carves in 1987, was decommissioned in June 2014.
In 2010, the oven successfully underwent corrective maintenance after being down for four months owing to shortage of coal washing medium (magnetite), which led to a shortage of clean coal stocks for the battery.
The coke ovens contribute about 50 percent of the company’s total revenue. HCCL supplies the coke on the local market and exports to South Africa and the Democratic Republic of Congo.
Currently HCCL is engaged in a coking toll agreement with the Hwange Gasification Company and South Mining Company. Due to mounting operational constraints, the Colliery has accumulated about $20 million in salary arrears.
Of late, HCCL has faced lawsuits running in millions of dollars after creditors and some former employees dragged it to court for failing to pay them.
Bongani Ndlovu