Hwange sues Chinese firm

HWANGE Colliery Company Limited has petitioned the High Court seeking an order to compel Chinese firm, Taiyuan Sanxing Company Limited and Hwange Coal Gasification Company (PVT) Ltd to surrender a coke oven battery after breaching a Build, Own, Operate and Transfer (BOOT) agreement.

In the 2007 BOOT agreement, the firms were supposed to construct a coke oven battery with a capacity of 300 000 tonnes of coke per annum, but only completed the first phase of the project with half the contractual capacity.

Hwange Colliery assistant administrator, Mutsa Remba, said following the placement of his firm under administration in terms of the Reconstruction of State Indebted Companies Act on October 26, 2018, the administrators made investigations which revealed that the Chinese firm and its director, Guo Feng, were still using the coke oven battery at No.2 Village in Hwange, despite breach of the agreement.

"During the process of investigations and after diligent enquiries and verifications, the administrator found that the first and second respondents (Taiyuan Sanxing Company Limited and Hwange Coal Gasification Company) through the third respondent (Feng) are in possession of and operating the coke oven battery at No.2 Village in Hwange," Remba said.

"The coke oven battery should rightfully be transferred and handed over to the applicant (Hwange Colliery) as per the terms of an agreement between applicant and the first and second respondents."

In his founding affidavit Remba said sometime in May 2007 Hwange Colliery entered into a BOOT agreement with the Chinese firm for the construction of a coke oven battery with a design production capacity of 300 000 tonnes of coke per annum.

He further said, in terms of the agreement, Hwange Colliery and Taiyuan Sanxing Company were to establish a special purpose vehicle, which the two firms would co-own to facilitate the implementation of the project, thus in fulfilment of the agreement they incorporated Hwange Coal Gasification Company (PVT) Ltd.

"Pursuant to the BOOT agreement, the first respondent was to supply and construct a coke oven battery worth approximately US$40 million with a design capacity of 300 000 tonnes of coke per annum. The coke oven battery was to have a guaranteed economic life of 30 years from the date of commissioning," Remba said.

"The first phase of the construction of the battery, which consisted of the construction of 60 ovens with a design capacity of producing 150 000 tonnes per year, commenced in 2007 and was completed in 2009. The fist respondent was supposed to have commenced the construction of the second phase of the battery with the remaining 60 ovens to complete the coke oven battery. However, to date the first respondent has not commenced construction of the second phase of the coke oven battery.

The administrator said sometime in 2016, the Chinese firm was plagued with shareholder disputes which later began to affect Hwange Coal Gasification Company's operations as well as Hwange Colliery, as a shareholder.

"In order to mitigate the prejudice suffered by the applicant and the second respondent, the first respondent and the second respondent agreed to hand over the completed first phase of the coke oven battery to the applicant before the date of transfer referred to in the BOOT agreement," he said.

"Despite numerous communications between the applicant and the respondents, the respondents have not transferred or handed over the coke oven battery to the applicant as agreed."

Remba said he is, therefore, seeking a court order to serve the Chinese firm and its director with summons through a registered courier service or through the firm's email address.