The Sunday Mail
Part of the equipment that was commissioned last week
Garikai Mazara
“You have made a commitment in front of the Vice President of the Republic of Zimbabwe and before all these esteemed guests, what we wait for is the delivery, the fulfillment of the promise. This equipment should not be put to waste,” was the resonating challenge by the Minister of Mines and Mining Development, Hon Walter Chidhakwa to Thomas Makore, the managing director of Hwange Colliery Company, as the company commissioned its $31,2 million worth of equipment last week.
Makore, in his opening remarks, had promised the turn-around of the fortunes of the company, even promising to surpass the envisaged 450 000 tonnes target by a further 50 000 tonnes. As bullish as he was in his remarks, a closer look into the affairs of Hwange will reveal that the turning around of its fortunes is not entirely in its hands, as there are several factors that will have a direct effect.
Even if the colliery were to meet the envisaged target of half-a-million tonnes of coal, the resulting challenge would be how to move the produced coal to its intended strategic markets, especially in view of the not-so-attractive price of coal on the international market.
“We are aware of the many challenges that face Hwange, even as we embark on this new journey brought about by this new equipment. Hwange is strategic to the nation, I would want to say it is the heartbeat of the nation. And its revival is, to a very large extent, the revival of the national economy. If we are to reach our desired levels of production, that will mean that the National Railways of Zimbabwe have to come to the party, they need to up their game.
“That means all the coal consumers in industry and commerce have to also up their production because there will no longer be that excuse that there is no coal to meet production. But most importantly, we will be able to meet our quota of coal to the thermal power station, which in turn means that electricity supply to the country will be improved and probably more stable and predictable,” explained Makore on the sidelines of the commissioning ceremony. Even if the National Railways of Zimbabwe does come to the party, the other challenge facing the colliery will be the opening up of new markets, to take up the remainder of its production target.
“This is a challenge that we are currently seized with, the opening up of new markets, as you might be aware that besides coal not attracting the prices that we would want on the international market, to compound our woes we now have several coal producers, right here in Zimbabwe and the region.
“Besides, we are facing the challenge of alternative energy, as some consumers are opting for other energy sources. But that is not to say we have to sit and relax, the commissioning of this equipment is an indicator not only of the thrust of the company to turn around things, but it should give a pulse of how the whole nation is intent of getting out of the economic slowdown. We are as enthusiastic about turning around the fortunes of this company as much as we would want to see the country turn the corner.”
But how useful will be such equipment with a workforce that has gone for between 9 and 15 months without being paid?
“We are aware of our obligations to our workers, that is why management has come up with the three-plan policy. In the first stage of the plan, Hwange is to pay all workers a flat $200 allowance, then move into half salaries and then meet full obligations when production is back to 100 percent.
“And that turn-around is not confined to just meeting our obligations to our staff, suppliers and contractors, in actual fact it is a turn-around strategy premised on five pillars. These are recapitalisation, contract mining (for example the one we have with MotaEngil), divisionalisation, balance sheet restructuring (the conversion of debt to equity) and as highlighted earlier on, customer diversification.”
Besides challenging the mine that everyone’s eyes will be on it, Minister Chidhakwa had some good news for the company. He announced that a rights issue will be on the tables soon, possibly in the next quarter, to convert the Hwange debt into equity. Market watchers, though, will be following the developments at Hwange with a keen interest, as the newly commissioned equipment will mean a new breath of life into the company, and possibly a viable stock market option.
The other good news that the Minister had for the company was the possible granting of mining concessions to the colliery.
“All the paperwork has been done and everything is with the President’s Office and once we are granted the concessions that we requested, this will not only boost investor confidence, but will help us when we seek finances because we will be having concessions to back up our requests.
“Another key issue is that we are looking at expanding our business development initiatives as we explore opportunities in coal bed methane gas, power generation in collaboration with the Zimbabwe Power Company and the very exciting prospect of converting coal to liquids such as diesel and ammonium nitrate. The conversion of coal to diesel is not exactly a new invention and companies like Sasol are doing it and we would be happy if we could adopt such ideas into our economy, that will directly impact on our fuel import bill.”
Whilst Makore said his vision is for Hwange to be the most innovative and successful mining company in the country and the region, to be an employer of choice and to positively contribute to the national economy, for him to share and achieve that vision he needs the backing of his staff and fellow management team.
And it is a vision that he will have to clearly spell out at the company’s annual general meeting, scheduled for Tuesday in Harare. Historically and traditionally, annual general meetings for Hwange have been emotive, especially if “compatriot shareholder” Nick van Hoogstraten is factored in. Van Hoogstraten has a penchant for having his way and say at such meetings.
