The Sunday Mail
Enacy Mapakame
HWANGE Colliery Company Limited’s second-largest shareholder Mr Nicholas van Hoogstraten, who holds 30 percent equity in the coal miner, believes judicial management has become the only option available to avert collapse.
However, Government is strongly opposed to such an action, meaning the company’s two biggest shareholders hold different views on which course to take going forward.
In an interview with The Sunday Mail Business last week, Mr van Hoogstraten alleged that “massive corruption” and “incompetence” were the twin factors bringing the coal giant to its knees.
He warned that HCCL could face the same fate as Ziscosteel, which effectively closed 16 years ago under similar circumstances.
Judicial management usually allows financially-troubled companies to find their footing under a court’s supervision.
“What else can you do at Hwange?” asked the multi-millionaire investor who has interests in over a third of companies listed on the Zimbabwe Stock Exchange.
“We should only keep it open for one purpose, to supply sufficient coal to the power station for electricity. We shouldn’t be doing anything else. It is a disaster, it is going to be another Zisco.”
HCCL’s interim results for the period ended June 30, 2015 indicated that losses had widened to US$15 million from a profit of US$4,5 million in the comparable period in 2010.
Debts from tax liabilities, unpaid salaries and suppliers topped US$170 million at the end of 2015.
Government, which holds 37 percent of Hwange, has expressed an interest to take over some of the obligations, particularly those owed to State entities such as the Zimbabwe Revenue Authority.
‘Mickey Mouse equipment’
The tough-talking Mr van Hoogstraten noted that the controversy plaguing Hwange, where management allegedly procured malfunctioning equipment from Indian suppliers Bharat Earth Movers Limited – which he described as “mickey mouse” equipment – vindicated his claim that most of the challenges at the company were a result of executive “ineptitude”.
The equipment, financed through a vendor financing scheme secured from the India Exim Bank, was part of the US$31,2 million equipment commissioned by Vice-President Phelekezela Mphoko on June 19, 2015 and includes excavators, dumpers and various other “state-of-the-art” items.
But as soon as the equipment was put to use, the defects cropped up. Hydraulic leaks are some of the defects affecting the equipment.
Though there were suspicions by HCCL engineers that the equipment delivered was not what they had inspected in India, management did not act swiftly to address the situation.
“What did I say about that mickey mouse equipment? . . . But they bought sub-standard crap . . . Unfortunately, I made myself unpopular by speaking the truth,” charged Mr van Hoogstraten.
“Management at Hwange are not the shareholders . . . The owners are Government and myself. What is going on there is corruption and incompetence.”
HCCL managing director Mr Thomas Makore said last week he could not comment as the company was in a closed period.
“Mr van Hoogstraten is indeed the second-largest shareholder but right now we are in a closed period, we are auditing our end of year results and for us to make comments is not right as per ZSE listing rules,” he said.
Recently, Mines and Mining Development Minister Walter Chidhakwa ordered Hwange’s top management to slash their salaries by half.
Though Mr van Hoogstraten is now agreeable to the judicial management process, in 2014 he tried to rope in Swiss-based global resources giant Glencore to manage the affairs of the coal miner for a stipulated period.
At the time he dangled a US$50 million carrot to help rehabilitate the business if his proposal was adopted.
Last week Mr van Hoogstraten said: “Now, we might be having a problem, in the meantime the price of coal has come down dramatically in the last three years. So, with hindsight, maybe it wouldn’t be such a good investment.
“At that time, with Glencore, we would have secured guaranteed supplies to the power station, which is all important.”
The coal miner can potentially produce 740 000 tonnes per month but its design capacity means it can only dig up 450 000 tonnes monthly.
To meet demand, Hwange has roped in a contract miner – Mota Engil – to produce 200 000 tonnes per month. Hwange shares have crashed 21 percent in the past 12 months, with its market capitalisation dropping by more than a quarter to US$5 million, which is less than half the value of listed peers such as RioZim and Bindura Nickel Corporation.
◆ See also B3
