Hwange boss gets ‘dismissal powers’
MIMOSA Mining Company executive chairman, Winston Chitando, has been given the “full powers” to execute a purge of Hwange Colliery Company Limited (HCCL)’s top executives during an ongoing restructuring aimed at saving the ailing firm, a Cabinet Minister has revealed.
Chitando was appointed chairman of HCCL in June.
He has been asked to flash out deadwood, even those who may be cronies of Cabinet Ministers and politicians, Mines and Mining Development Minister, Walter Chidhakwa, told sector players at a mining conference in Harare recently.
Government has a 37 percent shareholding in HCCL, which has listings on the Zimbabwe, Johannesburg and London bourses.
The company has been struggling financially over the past few years, undermined by deterioration in output, mounting debts and working capital constraints.
Poor management triggered by politically motivated appointments had also affected HCCL, but Chidhakwa declared that the honey moon was over in remarks made at the launch of the State of the Mining Industry Survey done by the Chamber of Mines of Zimbabwe.
Long serving executives had been intimidating directors against firing them due to their relationships with politicians, he said.
There were indications that within management, some executives had amassed substantial powers to the extent that they were no longer responding to directives by the board.
HCCL owes employees more than US$50 million in unpaid salaries and US$25 million to the Mining Industry Pension Fund.
“We have done a number of things (at HCCL). We have been very brutal, especially on the management structure,” Chidhakwa said.
“We now have a management that is responding to the board, not the incestuous relationships that we used to have. It was just something unacceptable. I told the board chairman that if there is a friend of the Minister who is supposed to be retrenched let them go. I told the board chairman to be bold. I said take a position. Your position is to sustain the company. If you get fired get fired for what is right. After he carried out retrenchments, I asked him if anyone had come to him to say I am a friend of the Minister. None came. I have also been tough with them not to be corrupt,” said Chidhakwa.
HCCL recently completed the retrenchment of about 16 managers, costing the firm US$1,2 million in exit packages.
The retrenchments were part of a restructuring programme announced at the beginning of the year, as the coal miner moved to contain costs, which were also blamed on huge executive packages.
In February, workers, who were fighting to have the coal mining giant placed under judicial management to “prevent it from going bust” said in High Court papers that management and the previous boards had mishandled eight contracts costing the firm millions of dollars.
A dismal performance at HCCL has serious ripple effects on the output of entire coal mining industry, which cascades into hundreds of downstream sectors that depend on coal, such as the tobacco sector.
The State of the Mining Industry Survey indicated that coal, together with diamonds, were the only major minerals to record a drop in output this year, with the problems at HCCL constributing to the slide.
Chitando has a huge task ahead.
Although HCCL narrowed its loss by 36 percent to US$28 million in the six months to June 30, 2016, from US$44 million during the comparable period the previous year, problems continue at the firm.
Revenue fell by 30 percent to US$24,5 million as total sales registered a 15 percent decline to 585 689 tonnes due to working capital constraints.
Administrative costs during the half year period under review went down by 79 percent to US$7,5 million driven by cost containment measures.
Chitando said the struggling miner was working on a scheme of arrangement to liquidate amounts owed to creditors and possibly return to profitability.
“The scheme is due to be finalised with the company’s creditors in the last quarter of this financial year. It is predicted that the scheme will ensure that there is a structured plan for paying the company’s debts,” he said. Financial Gazette