adminentered into a BOT arrangement (Hwange Coal Gasification) in 2007 with Taiyuan Sanxin Economic and Trade Company. Hwange Colliery holds 25 percent stake while TSETC holds the remainder.
Under the deal, the Chinese partners were supposed to set up a coke oven battery with an annual capacity of 300 000 tonnes while Hwange’s contribution to the investment was to provide coking coal at a subsidised price.
However, the business relationship got strained, with the coal mining giant accusing its partners for failing to honour some of their contractual obligations. For instance, TSETC is said to have installed a coke oven battery with annual capacity of 150 000 tonnes, half the capacity of what was agreed under the BOT.
Sources said TSETC also overstated its monetary investment, claiming it had spent US$40 million on the coke oven battery installation “when in fact it spent less than US$10 million”.
Furthermore, sources raised allegations of misrepresentation of financial information including under-declaration of profits by Hwange Coal Gasification. Reliable sources said Hwange “believes” the value of coal delivered to HCG could now be more than what TSETC invested, “the reason why they now need a majority stake”.
Hwange Colliery Company has since sought a High Court order seeking an annual general meeting with the main agenda being the conversion of the BOT into a joint venture.
The AGM was held on Wednesday.
Earlier, Taiyuan Sanxin Economic and Trade Company had sought a High Court order to postpone the meeting, arguing it was organised without its consent.
“The AGM was held in the context of reviewing the BOT into a joint venture with Hwange assuming the majority shareholding,” said one source familiar with the developments.
“This was triggered by a number of issues raised by Hwange, including under-declaration of profits by Hwange Coal Gasification, failure by TSETC to install a battery with annual capacity of 300 000 tonnes and also the monetary investment they have made. Thus, the AGM provided the platform for resolving the issue.”
Efforts to get an official comment from Hwange Colliery and TSETC were fruitless.
Online Reporter