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Martin Kadzere :Senior Business Reporter

HWANGE Colliery Company has embarked on the second phase of its staff rationalisation, which will cut its labour force by almost 60 percent.The programme, which started last year, saw some executives and senior managers losing their jobs as part of the coal miner’s measures to cut costs and enhance viability.

Hwange, once the country’s largest coal producer has 2 400 workers on its payroll and this will be reduced by about 1 000, subject to approvals by key shareholders.

“Hwange used to operate at 80 percent capacity with 2 400 employees but now we are hardly producing a third of that,” said one source who requested not to be named.

“So the company is essentially keeping too many workers that have no work to do.”

Efforts to get a comment from Hwange managing director Mr Thomas Makore were unsuccessful.

Last year, deputy minister of Mines and Mining Development Fred Moyo hinted that Hwange’s labour force was unsustainable and the job cuts were inevitable.

Hwange is going through serious viability problems, stemming from undercapitalisation, which has seen the company using obsolete machinery, legacy debts, growing competition and declining uptake of coal products on the domestic market.

Hwange lost a significant market share to Makomo Resources, now the country’s coal largest mining company in terms of production.

In 2015, Hwange acquired equipment from Belarus and India under vendor financing transactions worth $32 million.

But the company had not been able to optimally utilise the machinery due to shortage of working capital.

Hwange is negotiating for a $7,5 million loan with a local bank.

The company is in closed period and is due to report its full year results next month. In the six months to June last year, revenue declined 30 percent to $24,5 million on low production and sales volumes.

However, the company narrowed its loss after tax to $22,7 million compared with $44,1 million loss reported during the same period in the prior year.

Monthly average production was 113 862 tonnes against budgeted monthly production of 340 000 tonnes.

Total sales tonnage was 585 689 against a budget of 1,771 million and an actual of 842 871 for the period. Coal sales for the period were 35 percent weaker to 211 858 tonnes from 326 075 tonnes sold in the same period last year.

The management said Hwange will turn around its fortunes from a loss position to net profit in financial year 2017 on improved operations and cost reduction initiatives.