Mines ministry working to re-position Hwange Colliery

The Deputy Minister of Mines and Mining Development Fred Moyo has said the ministry is working flat out with stakeholder in efforts to re-position the Hwange Colliery Company which faces serious operational challenges at the moment and has accumulated huge wage bill arrears and owes other service providers huge amounts.

Speaking in parliament Moyo said the Ministry is working with other shareholders to try and re-position the fortunes of Hwange Colliery Company.

"The focus areas at the moment are to re-craft the company's business model in order to lower overheads. The company will now have its main business being operated separate from the social service delivery sector of the current business structure. That will assist the company to recover costs as well as lower the overheads of its operations," he said.

"The second area of focus is one of creating a shared asset vision which is still to be discussed with ZPC and NRZ, but that is an area that is an area we are looking at focusing to try and to reduce the capital requirements of the company."

He said the third area of focus is to right size the employment levels of the company.

"The company currently employs over 3 000 employees. The business permutation indicates that the correct level of employment will be around 2 000 employees so that is another area of focus," Moyo said.

"The challenge that the company is facing as an immediate threat is one of litigation. Government, together with shareholders has put in place a scheme of arrangement that has been authorized by the High Court.

"The aim of the scheme of arrangement is to get the creditors to agree with the company to stay all litigation against the company and to approve the reconstruction business plan which I have talked about in my earlier comments."

Moyo said to this end, a meeting of the company and its creditors is planned for the 14th of July and we believe that there will be a meeting of heads and that the company will be protected against litigation, thereby allowing all revenues and finances that it has to be directed towards the productive efforts.

"So, we will be briefing the House on an ongoing basis as to the developments in the company," he said.

Chegutu MP Dexter Nduna said the capital injection that government has made into Hwange Colliery was what he was concerned about.

"It is feared, unless the Minister can allay those fears, that the equipment that was bought by a loan, that was injected into that company is obsolete. It is being used in a country which does not allow to be used because of its weather pattern.

"May the Minister clarify on that point whether the equipment that was put there and bought for the company is obsolete or not, and if it is - what is he doing in order to get a redress of that situation?" Nduna said.

But Moyo said he can confirm to the House that the equipment that has been ordered by the company is usable.

"I am also confirming that the equipment is in fact new and I do confirm as well that some pieces of equipment have not been in serviceable condition. In other words, these pieces of equipment have exhibited technical problems that are being addressed. The equipment that came from Belarus seems to be in good condition," said the deputy minister.

"The equipment that came from BEML of India has exhibited problems centered on excavators. This issue has been discussed with the supplier of the equipment.

"We have elevated the matter to the Embassy and I can confirm that the parties are cooperating although a permanent solution has not yet been ushered in."

He said the supplier of the equipment has extended the insurance and guarantees and the Embassy of India is doing everything they can to assist us to push the supplier to make sure that the equipment that is not working well is in fact brought to order.

"I must also say that our working conditions, the environment in which the equipment is working is not that conducive, not all the time to the proper use of the equipment.

"So, we have to do our part on our side as Zimbabwe, to make sure that the mine operates with the correct standards that are expected when they are using the kind of equipment that they have got," he said.

"As an overall comment, I want to say that the mining activity is a process; the equipment that is being used or that must be used must talk to each other.

"In other words, the equipment must be optimised so that it is of the correct sizes, correct cycles and have operators that are able to relate to one another.  This area of optimising the production process is what we are looking at and we are trying to resolve."

Moyo said the company also has the challenge of getting working capital to get fuel, to get consumable spares in place so that the equipment does not shut down.

"We are trying to get local financial sectors to assist the company. I am going to be talking to some of our bankers as early as tomorrow, to try and see if the company can in fact access some short term loan to close the gap of working capital shortages and I believe that we will be successful in these engagements," he said.

"It is our belief and hope that production will begin to pick up. As I have already said, this Hon. House will be kept informed on developments because we do realise that this is a strategic company. We do realise that coal stocks at some power stations are critically low."