Recapitalising Hwange Colliery an urgent matter

Recently announced plans to recapitalise Hwange Colliery Company Limited are the missing link needed to inject fresh impetus into Zimbabwe’s industrial sector, stakeholders say.
Under the Government recapitalisation approved plan, HCCL will retire a debt of more than US$90 million owed regional and global financiers with a State guarantee.

Government holds a 37,1 percent stake in HCCL, with businessman Mr Nicholas van Hoogstraten’s Messina Investments holding 16,76 percent.

The coal-producing giant has grappled with cashflow problems that have led to depressed productivity. Hwange has been producing 200 000 tonnes of coal per month against projections of 450 000 tonnes.

Debts have seen prospective investors shun the company, which they view as more of a liability than a potential investment destination. As of December 2013, the company owed around US$172 million.

Portuguese firm Mota-Engil  recently clinched a US$260 million deal with HCCL to take over all mining operations for the next five years.

HCCL also recently bought loading and drilling equipment worth US$15 million from BEML of India, financed through a loan from Export and Import Bank of India.

Downstream industries like power utility ZESA, the National Railways of Zimbabwe, NewZim Steel and Sable Chemicals saw their operations suffering from the coal giant’s limp performance.

This in turn adversely affected Zimbabwe’s southern region industrial hub and the economy at large.

HCCL employs about 3 200 people.

In a recent update to shareholders, HCCL board chair Mr Farai Mutamangira said the company would be unbundled into six strategic units: Hwange Colliery Holdings, Hwange Coal Mining, Hwange Plant and Equipment, Hwange Coal Processing and Cokeworks, Hwange Hospital and Hwange Properties and Estates.

HCCL also plans to realign senior management and appoint a chief operating officer. Hwange Colliery Company Limited managing director Engineer Thomas Makore said: “We are optimistic that the plan will come to fruition as we seek to uphold production requirements.”

HCCL will spend more than US$46,8 million on new heavy plant machinery to double production.