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Vice President Mphoko

From Africa Moyo and Martin Kadzere in HWANGE
VICE President Phelekezela Mphoko yesterday commissioned Hwange Colliery Company Limited’s mining equipment worth $31,2 million and urged the company’s management to optimally use the equipment.

The equipment, acquired from India and Belarus and financed by Eximbank of India and PTA Bank, will see the company increasing monthly output to about 500 000 tonnes from 300 000 tonnes, putting it on a sold path to profitability.

Government is the major shareholder in Hwange with about 38 percent shareholding.

Hwange is of strategic importance to the economy since it is the major supplier of coal to Hwange Thermal Power Station and its viability is critical to guaranteeing coal supplies to up and coming power projects and the manufacturing sector. Speaking during the commissioning of the equipment, VP Mphoko said the Government took pride in being directly associated with the achievement of this milestone in Hwange’s recapitalisation programme.

He said the acquisition of the equipment was a welcome development in the mining industry in general and for Hwange in particular, as it would help preserve jobs and support the community and the entire economy.

“The acquisition of this new open cast mining equipment is in line with the country’s national economic blueprint, Zim-Asset, and certainly supports the envisaged 7 percent annual growth rate, and the annual national coal output projection of 7,8 million metric tonnes for 2015 will certainly be easily achieved.

“This investment will put Hwange Colliery Company at a vantage position to totally turnaround, start posting meaningful profitability and thereby meeting shareholders’ expectations of increasing the net worthy of the company. There are important spin-offs from the initiative ranging from the preservation of a going concern to the safeguarding of employment of about 3000 of our local people. Government like all other shareholders in the company expects to start receiving some dividends sooner than later.”

It is not surprising that the Government of Zimbabwe, through the Ministry of Mines and Mining Development and the Ministry of Finance and Economic Development, were supportive of the two financing structures done with PTA Bank and the Reserve Bank of Zimbabwe on the one side and the Export and Import Bank of India on the other,” said VP Mphoko.

Government fully supported Hwange’s initiatives and subsequently established lines of credit with PTA Bank and Exim Bank of India to finance other key economic development projects.

The $31,2 million used to purchase the equipment is aggregated into Government debt.

VP Mphoko urged Hwange management to optimally utilise the assets so that full value was realised in the shortest possible time.

“More importantly, they should ensure that these loans are serviced as they fall due until the amounts are liquidated and release Government ‘s obligations as guarantor,” he said.

Mines and Mining Development Minister Walter Chidhakwa, who also attended the commissioning of the equipment, said the Government was committed in reviving Hwange and would follow its rights offer in the forthcoming capital raise which would see Government converting the $80 million it was owed by Hwange into equity.

Minister Chidhakwa added that Government would release more concessions to the coal miner to increase the life span of the company.

“We agreed in Government that to see Hwange die is a replica of seeing Kamativi die, of seeing Shabanie Mashaba die, of seeing Mhangura die and that, therefore, is anathema to the policy that Government has enunciated under ZimAsset.

“We agreed that we would give you concessions to extend the life of your mining activities and I want assure that you that this is going to happen. We went into discussions about that debt and I had the occasion to meet the second largest shareholder Mr Nick van Hoogstraten. I said to him do you have money so that we can resuscitate the activities of the business and he said to me, ‘Minister if you have money, I also have’.

“I went to the Minister of Finance and explained to him that we owed the Government as Hwange Colliery and we agreed to convert our debt to equity on condition that our partners in business will inject money that is equivalent to their shareholding structure in the business.

“That is the root we are following and I want to assure you that in the next few weeks, you will see a rights issue; you will also see the cleaning of the balance sheet of Hwange Colliery so that PTA and the Indian Export and Import Bank do not deal with a company that is bankrupt,” said Minister Chidhakwa.

Meanwhile, the company has invited bids for the supply of underground equipment worth $10 million under the second phase of the company’s recapitalisation programme.

Hwange managing director Mr Thomas Makore, had earlier told journalists that the coal miner was also seeking funds to revive its coke oven battery as it sought to push more coke volumes into regional markets.

“We have received expression of interests from interested suppliers of underground equipment and we are looking at them,” Mr Makore said.

Mr Makore also hinted that the company would diversify its customer base to improve volumes.

He said there were growing opportunities to supply the construction, tobacco and cement industries.