adminOliver Kazunga Senior Business Reporter
AILING Hwange Colliery Company Limited (HCCL) is negotiating a number of debt clearance instruments and creditor payment plans with the government as part of turnaround strategies. Once Zimbabwe’s largest coal miner, HCCL is saddled with a huge debt overhang of close to $300 million to different creditors who include its workers and suppliers.
The listed company has been on a loss-making path despite support from the government with creditors attaching its key properties in a bid to recover their money.
HCCL managing director Thomas Makore told Business Chronicle yesterday the colliery has the potential to reclaim lost ground with the support it was getting from the government.
“The government is committed to bailing out HCCL. It’s (government) coming in through debt instruments and a creditor payment plan in support of HCCL’s turnaround strategy,” he said.
Mines and Mining Development Minister Walter Chidhakwa said recently that in support of HCCL’s revival strategy, the government has given the colliery the green light to convert $69 million debt into equity as well as giving new mining concessions.
“We hope the debt instruments and creditor payment plan coupled with the new mining concessions that the government has given us will see us turning around the company,” said Makore.
“The recent announcement of a new board led by Winston Chitando will also strengthen corporate governance of the company and see us returning to profitability.”
Following the acquisition of new concessions, he said, the company was in the process of sourcing $20 million needed to carry out exploration work at the new coalfields.
In 2015, the government guaranteed two capitalisation transactions that were vendor-financed through the PTA BELAZ facility to the tune of $18,2 million and the Indian Exim Bank’s $13,03 million BEML facility.
The transactions saw HCCL acquiring new mining equipment that included 10 dump trucks, five front end loaders, two wheel dozers, two excavators, two water bowsers and three bull dozers.
Vice President Phelekezela Mphoko commissioned the machinery in July last year. Despite acquiring new machinery, Hwange is yet to improve on its production levels with reports that it was struggling to meet daily operational requirements such as fuel and explosives.
It was hoped that with the new equipment, coal output at the company would rise from 200,000 tonnes per month to 450,000 tonnes including production from the South African contractor, Mota-Engil.
The company has said it is undertaking a retrenchment exercise through trimming its bloated top management in a move expected to save up to $4 million.
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