The Hwange Colliery Company Limited (HCC) $100 million line of credit deal with Development Bank of Southern Africa (DBSA) has hit a snag following revelations the financial institution was concerned about political meddling in the affairs of the company.
The mining company has been battling to raise funds for recapitalisation for years in order to boost output.
Sources told NewsDay the involvement of business tycoon Billy Rautenbach was being cited as one of the reasons why the deal had not materialised, a development rejected by the HCCL management.
HCC chairperson Tendai Savanhu said the company was not being affected by any political meddling.
“For starters, Hwange is a public-listed company not owned by the government. Whoever is speaking of political meddling is not well informed. Rautenbach is just a contractor, he has no equity in the company. Wherever that is coming from is not correct,” he said.
“The situation is that DBSA wanted to know the actual coal reserves the company has. A report detailing their requirements has since been submitted to the bank and we are now waiting for their response.”
Contacted for comment Rautenbach spokesperson Lillian Muungani said:
“We are not aware of this development. Why don’t you refer this question to Development Bank of Southern Africa. We have no direct relationship with Hwange Colliery Company.
“What is obtaining is that Clider Minerals (owned by Rautenbach) does most of the coal mining for the power station.”
The development comes at a time when the government has moved a motion to oust the current board at the forthcoming annual general meeting set for August 3.
The two major shareholders in HCC, the government and business tycoon Nicholas van Hoogstraten have resolved to fire the entire board, including its chairman Savanhu, as part of a restructuring exercise.
In a statement accompanying the company’s 2010 financial results, Savanhu said HCC had managed to secure short-term funding it had used to procure equipment that has boosted production at some of its mines.
“The company is working on securing additional coal concessions in order boost its resources and reserve base,” he said.