HomeBusinessBoard reads riot act to Hwange executives

Board reads riot act to Hwange executives

The Hwange Colliery Company Limited (HCCL) board has read the riot act to management, giving them 30 days to shape up or ship out, as patience runs out after production remained flat on last year’s figures, despite a $31,2 million investment in new equipment.

BY OUR STAFF

In June, HCCL commissioned the equipment that was acquired from Belaz and BEML under vendor-financed facilities. PTA bank funded the $18,2m purchase of equipment from Belaz. India Exim Bank financed the purchase of equipment from BEML.

The new equipment was expected to see production rising to 500 000 tonnes per month from 300 000 tonnes.

However, things have not gone according to plan.

HWANGE COAL MINING

 

 

 

 

 

 

 

 

 

 

“The board is saying management is playing too much politics and is deeply immersed in power struggles. It has given management a 30-day ultimatum to shape up or ship out,” a source told Standardbusiness on Friday.

“With the new equipment, we expect output to be high, not a marginal increase.”

Mining of coking coal at the three main underground mines has been stopped following the breaking down of the continuous miner which has already been brought to the surface, with management haggling over whether to decommission the state-of-the-art underground equipment, or source for fresh funds to procure a new one, insiders said.

HCCL managing director Thomas Makore told Standardbusiness it would take six to eight weeks to repair the equipment at the underground mine.

“Yes, it is true we have a major repair on the equipment on major operations. We are still finalising the scope of the work which needs to be done and it’s a very extensive amount of work which is involved,” Makore said.

“Once we finalise the scope of work, we need to agree on how to fund the repairs. We are working with six to eight weeks to repair the equipment.”

On production, Makore said the group was working towards ramping up production, but was currently operating at the same capacity of 300 000 tonnes as last year.

“We are ramping up production since the introduction of the new equipment.  We are in the process of securing new working capital. The production is still the same as last year at 300 000, but we are ramping up production,” Makore said.

At the commissioning of the new equipment in June, Mines and Mining Development minister Walter Chidhakwa challenged the HCCL board and management to deliver expected results as the time for excuses was over. Government also committed to allocate more concessions to the coal miner that had in recent years lost its dominance to Makomo.

“We expect the dividend from here to be fed into the national fiscus. Some board members think that their responsibility is to get school fees for their children and not serving the interests of shareholders,” Chidhakwa said.

HCCL board chairman Farai Mutamangira was unavailable for comment as his office said he was out of the country on business. Sources also said while the board was turning the heat on management, the directors had maintained confidence in Makore, who took the reins of the debt-beleaguered company last year at a time it was teetering on the brink.

The Makore-led HCCL has been starved of working capital and has been in fire-fighting mode, dealing with legacy issues. The bulk of the revenue generated has been used to resolve past “sins” such as debts instead of working capital.

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