By Fairness Moyana
Hwange Colliery Company Limited (HCCL) says its hopes of securing working capital lie in the “imminent” finalisation of about $150 million Treasury Bills (TBs) as part of the scheme of arrangement to address its more than $300 million legacy debt.
With output dropping to a record low of 36 000 tonnes per month from a peak of about 300 000 tonnes, the colliery firm has admitted insolvency, which management blames on severe working capital constraints.
Portuguese-owned mining contractor, Mota-Engil who were producing around 200 000 tonnes per month from HCCL’s Chaba concession, have suspended production after the Colliery failed to clear its arrears, estimated at more than $50 million.
The Government, as HCCL’s major stakeholder, approved Treasury Bills amounting to $150 million early 2016 in a bid to address creditors’ unrest, which resulted in the company losing over $20 million in lawsuits.
However, the Scheme of Arrangements, which is a payment plan to service creditor obligations, has been dogged with implementation delays due to various reasons, that include a court challenge by workers who sought judicial management as well as efforts by the major shareholder to balance the needs of all ailing companies.
The giant colliery, as such, has been struggling to pay the nominal $200 staff allowance consistently and is saddled with a 36 month salary backlog.
HCCL managing director, Engineer Thomas Makore, said in an interview that the company was in the final stages of securing the TBs meant to address its creditor payment obligations as part of efforts to turnaround the firm.
“There are things that need stakeholders’ approval so that we can accelerate the turnaround programme. Concerning the Scheme of Arrangement we are in the final stages of getting approval for Treasury Bills. The delay is that a lot of companies are in a similar position and also need these Treasury Bills so one has to balance all the needs of other players in the economy. It is not a Hwange programme as many may believe,” said Eng Makore.
He said management was working on a cocktail of measures to bring the company back to viability with sights set on the revival of underground mining, which is going to be in two phases.
“For the resuscitation of the underground mining we issued closed tender inquiries to companies that are interested to do contract mining for us, which closed on 2 December 2016 and we got some submissions and we are busy with the evaluation. Our strategy is the resuscitation of underground mining drawn into two phases. The first being the resuscitation of our own equipment and we need about $6.5 million. The second phase will involve putting a second production suite, which will cost between $12 and $15 million in order to boost our integral turnaround plans,” Eng Makore said.
The company’s three-main underground mines have not been operating since early last year, a development that cost HCCL millions of dollars in potential revenue as the mines are the main source for production of its coke and coking coal.
Eng Makore said the company wanted to take advantage of the rebound in coal prices on the market with coking coal realised from underground mining being the more profitable.
The company rolled out various measures to turn around its fortunes.
They include cost reduction, realigning operations, restructuring of the balance sheet and meeting customer requirements by increasing production. The Chronicle
