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Dumisani Nsingo, Senior Business Reporter
THE Government has identified the personnel to constitute a new board of directors to run Hwange Colliery Company Limited (HCCL) as it seeks to turn around fortunes of the company amid revelations of an imminent managerial restructuring process at the coal mining company.
The company has over the years been facing a myriad of challenges, which had a negative impact on its production costs, and faced with an obligation to meet its costs, its debts accumulated to enormous levels.
In January, the Minister of Mines and Mining Development Walter Chidhakwa gave HCCL’s management a three-month ultimatum to move the company out of the woods failure to which they risked being ousted.
In an interview, Minister Chidhakwa confirmed the new board but said names will be released once all formalities have been done.
“We have appointed a board of directors that has a geologist, mining engineer, metallurgist and mechanics. Of course we have a lawyer, an accountant but they have to go through the Government system and once the processes are finalised we will be able to announce them, its basic, we have already agreed but naturally the process has to go through that formality,” Minister Chidhakwa said.
He said the ushering in of new board of directors as well as the reshuffling of management was likely to give the embattled company a new lease of life.
HCCL’s board is being chaired by Mr Jemister Chininga on an acting capacity while Mr Thomas Makore is the managing director. Mr Chininga was put at the helm following the ousting of the then board chairman Mr Farai Mutamangira in October last year.
“Once you are able to get a board of directors with the necessary experts, board members that are able to provide the necessary expertise towards the revival of Hwange that should constitute the beginning of a process to turn around its fortunes. We also have to strengthen the management team.
“There are “gaps” in the management team but that can’t be done by me or the Ministry but it has to be done by a board of directors and I’m confident that the quality of the members that we have appointed will have the ability to choose the right leadership at Hwange,” Minister Chidhakwa said.
According to sources privy to the goings-on at the coal mining giant, Mr Mutamangira’s ouster was as a result of the role he allegedly played in the botched $31,2 million equipment deal the company conducted with an Indian and a Belarus firm.
HCCL purchased the equipment from a Belarus firm, Belaz and BEML of India through a vendor financing scheme secured from PTA Bank and India Exim Export Bank respectively.
The equipment was commissioned in June last year but barely a month after that some of the equipment started experiencing problems. Some of the equipment was also burnt before it was even used.
Management admitted a few months later that about five of the heavy machinery that were acquired under the new deal 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 move comes as latest audited financial results for the year ended 31 December 2015, show that the company has continued bleeding with losses widening and capacity nose diving. The results show that losses widened to $115,1 million in 2015 compared to $37,9 million recorded in December 2014.
It admitted that the new equipment has also failed to bring the anticipated change at the coal miner as they have experienced major technical challenges with the BEML excavators.
“There have been rigorous engagements with BEML to resolve the problems by supplying new spare parts and deploying technical experts at own expense. In addition, the warranty for these machines has been extended by a further six months or 1 000 hours and the supplier has guaranteed availability of the machines,” said the company.
It also stated that the BEML excavators would be tested under full load for a period of one month with the working capital facility from Agribank enabling the company to purchase requisite fuel, explosives, lubricants and spares, thereafter it would be ascertained whether or not the machines meet the performance specifications.
HCCL however, said it was projecting a short term recovery plan premised on a new business model to address the viability challenges of the company with the $7,5 million coal pre-financing facility structured through a major customer and syndicated by two local financial institutions giving impetus to the new business plan and ensuring the attainment of the monthly production targets of 350 000 tonnes per month from July onwards.
Bongani Ndlovu