Hwange seeks RBZ forex bailout

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Hwange Colliery Company

COAL miner Hwange Colliery Company Limited (HCCL) is currently engaging the Reserve Bank of Zimbabwe (RBZ) to allocate it $4 million to start underground mining before the end of this year, an official has said.

BY MTHANDAZO NYONI

HCCL managing director, Thomas Makore, told NewsDay on the sidelines of the company’s stakeholder cocktail in Harare on Thursday that the coal miner was turning around, but foreign currency shortages were constraining it.

“We are currently resuscitating our underground operations. That’s an investment of about $6 million and then we have put money into resuscitating some of our open cast equipment into processing. So it’s wide-ranging elements to ramp up our production,” he said.

“However, we still need a lot more working capital because our operation is big, our volumes are high and mining is a capital intensive business. The challenges right now are foreign currency to pay for spare parts for our equipment. The challenges are access to working capital. I think those are the two major factors that are constraining us.

“For example, we need to complete our underground mining resuscitation. We need about $4 million. So we are engaging efforts right now [with RBZ] to try to secure the money so that we can start underground mining before end of this year.”

Makore said the staff motivation was strong and their turnaround programme was well-supported by their stakeholders.

“So a lot of the gears are turning, but there are still a few gears that need to turn so that we really accelerate and we reach the levels that we want,” he said.

Makore said their production has risen to 300 000 tonnes per month from an average of 30 000 tonnes at the beginning of the year. Their focus up to year-end is to reach 400 000 tonnes per month.

He said the long-term future for HCCL was very bright because they have signed two 25-year coal supply agreements, one with Zimbabwe Power Company and the other with Per Lusulu power, an independent power producer in Matabeleland North.

“We have signed another 25-year coal agreement with an independent power producer, who is also going to take up approximately 200 000 tonnes per month, both of these within the next three years,” he said.

Makore said the small thermal power stations were going to be refurbished in the next two or three years and they are going to take up more coal and as “our economy grows, industry will use more coal”.

“We are excited about the investment into Zisco. The resuscitation of Zisco, that’s another anchor customer for us and I think the commodity prices are very good. We want to re-enter the coke market. So in a five-year window we foresee a profitable and very successful Hwange Colliery,” he said.

The government has secured $1 billion investment for the revival of the Zimbabwe Iron and Steel Company (Ziscosteel), from a Chinese investor, R and F Company, in a deal that will result in one million tonnes of steel being produced in the next 18 months.

HCCL board chairman Winston Chitando said the Gijima 100-day rapid results projects, which focuses on production and productivity improvement implemented by the company, also brought with it improved performance from the second quarter of this year.

“The Gijima phase 2 project is also now in motion with the establishment of six teams focusing on safety, quality, processing, coal movement, exports and equipment availability.”

“To this effect production volumes, which have risen to 300 000 tonnes in the mid-year are expected to top 400 000 tonnes by year end when production at the three main underground mines resumes,” he said.