Hwange abandons tender

Tri-listed coal miner, Hwange Colliery Company Limited (HCCL), has put on hold the process to select a contractor to resuscitate its underground operations, closed three years ago, saying it was expensive to outsource, the Financial Gazette’s Companies & Markets (C&M) has learnt.

Several bidders, whose identities could not be immediately established, were vying to win the right to resuscitate the Zimbabwe Stock Exchange-listed resources company’s 3-Main Underground Mine, the main source for coke and coking coal.

The adjudication process had started last year in October but the company’s managing director, Thomas Makore, told this newspaper last week that the process had been put on hold.

He said: “For underground resuscitation of operations, we are doing it ourselves. We discovered that it was expensive to give that work to companies that had bid for the project, so we have put it on hold.

“What we are doing now is we are looking for between US$12 million to US$16 million to resuscitate the mine. We are currently negotiating with somebody, whom I cannot name at the moment, and we are hopeful the deal will go through.”

HCCL used to be the largest coal miner in the country until the emergence of Makomo Resources, which has chipped off its market share. It also has pockets of its shares trading on the Johannesburg and London stock exchanges, where the coal miner has secondary listings.

C&M also learnt that HCCL has not concluded the evaluation of potential partners for its concessions at Western Area and Lubimbi East and West holding deposits in excess of one billion tonnes of coke. The concessions are expected to increase the life of the mine by about 70 years.

Currently, HCCL is left with coal deposits lasting about five years on its current concessions.
HCCL has been making losses for more than a decade and owes millions to tax authorities, employees and workers’ pension fund.

The company owes employees more than US$50 million in unpaid salaries and more than US$25 million to the Mining Industry Pension.

The coal miner faced serious funding challenges, prompting it to rope in Portuguese contractor, Mota-Engil, a few years ago to mine its Chaba open cast mine.

Under the terms of the contract worth about US$260 million, Mota-Engil has been mining 200 000 tonnes of coal a month from Chaba while HCCL produces about 60 000 tonnes of coal monthly.

Recently, the coal miner suspended plans for a cash call to recapitalise its operations and disentangle itself from debt and is now talking to creditors to reschedule some of its debts.

Government, a major shareholder in HCCL, had stopped the company’s proposed rights issue, demanding that a raft of reforms to turn around the company’s fortunes be implemented first.

Government controls about 37 percent shareholding in HCCL while British tycoon, Nicholas van Hoogstraten, through his investment vehicle Messina Investments, owns a 30 percent interest in the company.

The National Social Security Authority has a 5,87 percent shareholding while Mittal Steel Africa Investments controls a 9,76 percent stake.

HCCL employs more than 3 000 workers and supports a town of about 55 000 people. It is, therefore, viewed by government as a strategic operation. Financial Gazette