Hwange Colliery life extended by 20 years

Africa Moyo – Business Reporter

THE allocation of new coal claims – holding more than 900 million tonnes of reserves – to Hwange Colliery Company Limited by Government is expected to add up to the miner’s growth and recovery prospects and increase the life of mine by 20 years.

The claims are located about 40km from current operations.

Government, which holds a 38 percent stake in the business, is the biggest shareholder. The coal miner is of strategic economic importance, supplying industries across the country and firing thermal power stations at Hwange, Harare, Bulawayo and Munyati.

Its viability is critical to other economic sectors like manufacturing and agriculture, and provides business to rail operator the NRZ.

HCCL recently commissioned $31,2 million state-of-the-art mining equipment that is expected to increase throughput from current mines.

The equipment, acquired from India and Belarus and financed by Export and Import Bank of India and PTA Bank, will help the company increase monthly output to about 500 000 tonnes from the current 300 000 tonnes.

Government, through the ministries of Finance and Mines and Mining Development, guaranteed the two facilities. HCCL managing director Engineer Thomas Makore said the new claims were for open cast and underground mining.

“In terms of life of mine, you need a life of mine that is over 20 years; so the concessions we are getting will enable us to extend the life of our mine by over 20 years.

“It is open castable reserves and underground reserves. I think from an investor point of view and a balance sheet point of view, we will have a life of mine that is well beyond 20 years and that is healthy for our balance sheet and healthy for our investors.

“(In terms of size) we are talking about 900 million tonnes of reserves, that is what we are expecting. It is about 40 kilometres from here (Hwange); so, we will use the same infrastructure such as rail to access that reserve,” said Eng Makore.

HCCL’s legacy debt stood at $136 million on December 31, 2014 and the coal miner also owes Government $78 million.

Over the past two years, the company has spent more than $60 million to retire part of these obligations.

Government has however agreed to take over the debt.

For the year to December 2014, Hwange recorded a $37 million loss, with non-recurring items accounting for $13 million of this. Plans are afoot for an $88 million rights issue “in the next few weeks” to clean HCCL’s balance sheet “so that PTA and the Indian Export and Import Bank do not deal with a company that is bankrupt”, said Mines Minister Walter Chidhakwa.