Hwange seeks to cut down labour costs

Martin Kadzere : Senior Business Reporter

COAL miner Hwange Colliery Company is looking at cutting down labour costs in an exercise that will see the company abolishing majority of senior positions, sending some workers on early retirement, putting some on unpaid leave and outsourcing more functions.The proposed restructuring, which has been submitted to the Government for approval may see the company cutting down its annual wage bill by $15 million, sources have said.“The proposals entails putting some workers on forced leave in areas where there are no operations such as the coke oven battery and underground mine,” said one source.

“The company has also proposed termination of 200 casual workers, early retirement of 300 people, abolishment of some senior positions and re-assigning some.”

Another source added the company proposed that out of 23 managers, only eight would remain.

“The company wants to do away with general managers and outsource most of the functions.”

Hwange acting chairman Mr Jemester Chininga confirmed the restructuring of the “management and operations” but declined to provide specific details of the exercise.

“We are restructuring the management and operations to achieve the turnaround of the business,” he said.

“We will be approaching the Government to consider our final plan.”

Government is the majority shareholder in Hwange with about 37 percent stake.

Some workers at the company said the changes would be announced very soon, “maybe Monday”.

Hwange Colliery has been facing operational challenges resulting from undercapitalisation and the use of obsolete machines. This has resulted in the company losing the market to new players and has gone for several months without paying salaries.

Last week, managing director Mr Thomas Makore said new equipment acquired from Belarus and India last year remained underutilised due to working capital shortages needed to optimise its usage.

In June last year, the coal miner commissioned the new equipment worth about $32 million and monthly production was expected to reach over 500 000 tonnes per month.

However, monthly coal production has remained below 200 000 tonnes.

“It’s tough, but obviously we are doing our best to keep the company afloat,” Mr Makore said.

“We acquired new equipment but we are not fully utilising because there is no working capital to achieve optimum usage of the machines.”

Mr Makore said the company, whose shares trade on the Zimbabwe, Johannesburg and London Stock Exchanges needed about $7,5 million to build up enough stocks of consumables such as fuel, explosives and lubricants. Some faulty equipment had been “fixed”.

He said the company would only be able to assess performance once enough consumables were secured.

On the issuance of Treasury Bills to Hwange’s creditors by the Reserve Bank of Zimbabwe, Mr Makore said the central bank was working with Finance Ministry to finalise the issue.

The RBZ intends to issue TBs to creditors of Hwange Colliery to avoid litigations. Hwange’s trade creditors would be issued with TBs, which they can liquidate on maturity or use as security to borrow, at a discount. Hwange owes various creditors in excess of $60 million.