MANAGEMENT at Hwange Colliery Company Limited is confident of tying up a US$7,5 million deal with one of its suppliers through which the latter will pre-pay for a year’s supply of coal.
The facility is being organised through Agribank. The under-fire management, which has been given an ultimatum by its biggest shareholder — Government — to get back on the rails, is crafting a short-term turnaround strategy and Mines and Mining Development Minister Walter Chidhakwa was at the mine last month to assess matters for himself.
HCCL managing director Mr Thomas Makore confirmed that the company was sourcing working capital spur faltering operations.
“I confirm that there is a pre-payment facility of US$7,5 million being finalised by one of our major customers through Agribank. This is a prepayment for coal to be delivered to the customer over a period of 12 months. The other facility terms are the privy of the lender and the borrower. We are sure that the terms are competitive,” said Mr Makore.
Mr Makore, however, noted that the US$7,5 million facility could not be expected to materially change the company’s fortunes.
“The company’s challenges cannot be simplified and confined to shortages of fuel and mining consumables, which will be addressed by the US$7,5 million injection, but are diverse and cut across the organisation.
“The board is currently working on a short-term turnaround plan to address all the challenges of the company covering operations, balance sheet restructuring, legacy debts and human resources.
“The overall company’s business model has to be urgently reviewed to address the adverse performance and this exercise is in progress. This will ensure that the company operates at optimum efficiencies and the business will be able to create value for shareholders,” explained Mr Makore.
HCCL restated interim financials for the period ended June 30, 2015 — published last week — showed that the company’s loss position had in fact widened by over 400 percent from a year earlier to US$44 million due to a higher tax bill and declining sales. The coal miner was forced to republish its half-year performance after an additional US$28,5 million tax bill was not factored into the initial results.
Thus, HCCL’s obligations to the Zimbabwe Revenue Authority soared to US$69,1 million.Recently, Hwange purchased mining equipment worth $31,2 million from India and Belarus. But the equipment, mainly excavators sourced from Indian firm BEML, has been faulty.
This has further strained the relationship between management and Government. Government is ratcheting up pressure on underperforming parastatals to get maximum possible value out of its investments.