Business Reporter
HWANGE Colliery Company is seeking to mobilise equipment worth US$50 million under a credit finance facility as it targets to double output in 12 months. The company is inviting bids for a wide range of equipment for its underground and open cast mines that could lift production to half a million tonnes per month, managing director Mr Fred Moyo said.
“It is difficult to get money from the banks and the model we are using will enable equipment suppliers to pass on credit to us through equipment supplies,” he said. “The response so far is quite good.”
Analysts say the model may fit well for equipment suppliers, who are struggling to push volumes due to global economic depression.
“I think various equipment suppliers will be interested in the arrangement since they are facing challenges in moving volumes,” said a Harare-based mining consultant yesterday.
“Investments in the mining sector are a bit subdued and not so many companies are expanding.”
Hwange, which has an installed capacity to produce five million tonnes of coal per year, has been operating below capacity due to its dependence on old equipment. It requires more than US$175 million for recapitalisation.
The company used to produce about 4 million tonnes of coal-related products 10 years ago, before production fell by about 50 percent between 2000 and 2009 when Zimbabwe’s economy contracted by 40 percent.
Hwange is expanding its export market base and is targeting South America and Asia. It would start supplying India in the next few weeks.
Its major export markets include Zambia and the Democratic Republic of Congo where copper production has been on the increase.
On the domestic market, the company anticipates growth in tobacco and improvement in capacity utilisation by manufacturers.