Farai Mtamangira survives chop

Published: 02 July 2014

Mine minister Walter Chidhakwa yesterday retained faith in Farai Mtamangira's Hwange Colliery Company Limited (HCCL) board amid expectations that the second largest shareholder Nicolas Van Hoogstraten would push for the board's ouster.

Save for Nkosilathi Jiyane and Lucas Nkomo's resignation, the coal miner's annual general meeting (AGM) was an ordinary affair after the British investor had indicated that the board had committed "criminal acts" by spurning his $50 million bailout and refusing to place the company under judicial management.

According to sources, there were no "fireworks" at the meeting as Van Hoogstraten's motion might not have won any takers against HCCL's new and vaunted turnaround plan - hinged on four key pillars.

Jiyane and Nkomo's exit came after government - which holds a 37 percent stake in HCCL - had earlier somersaulted on a plan to dismiss the entire team of directors by opting to replace the two.

Thomas Makore, the company's managing director, said they were expecting to take delivery of new equipment worth over $33 million in the coming two months.

"We have secured more equipment from India and Belarus and we are expecting it to be in the country by August or September latest," he said.

Makore noted that the equipment is expected to boost the coal miner's capacity to do business and improve its productivity.

"We are targeting to produce 300 000 tonnes of coke per month up from the current 150 000 tonnes per month," he added.

This comes as HCCL's fortunes have been plummeting for the past few months, with the coal miner having lost $30 million in 2013, after a profit of $3 million in 2012.

The value of shareholder equity also plunged to $75,8 million in 2013 from $106,6 million the previous year.

But worse than that, current assets went down to $85,1 million in 2013 from $104,4 million in 2012, and current liabilities escalated to $162 million from $125 million in 2012, rendering the company technically insolvent.

Hwange is of strategic importance to the state because the country's biggest thermal power plant, the Hwange power station, and satellite power plants in other parts of the country are dependent on its coal.

However, Makore said the company is looking at various strategies - such as debt and staff restructuring and new capital injections - to revive the company's fortunes. HCCL, which recently received an $18 million loan from PTA Bank, was also pursuing a $15 million credit line from India's Eximbank which it expected to secure by end of May.
- dailynews

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