Source: HCCL to ramp up coke production – Sunday News Nov 27, 2016
Dumisani Nsingo, Senior Business Reporter
HWANGE Colliery Company Limited (HCCL) has set plans to resuscitate its underground mine and take over its coke oven battery from Chinese company, Taiyuan Sanxin Economic and Trade Company.
HCCL managing director Engineer Thomas Makore said the company wanted to take advantage of the soaring prices of coke on the international markets to boost its business.
“The coke price has gone up by 200 percent . . . so we need to resuscitate 3-Main and we are also working on the termination of Hwange Coal Gasification Company (HCGC) Build-Operate-Transfer (BOT) agreement, so that we are able to produce thermal coal, industrial coal, coking coal from underground that will help us address all the markets. We want to export to South Africa and intensify our markets in Zambia and we also want to benefit from the Reserve Bank of Zimbabwe’s export incentives,” said Eng Makore.
The company’s 3-Main Underground Mine has been non-functioning since early last year and $6,4 million is needed to revive it. The 3-Main Underground Mine, is the main source for production of its coke and coking coal.
In 2010, HCCL entered into a BOT agreement with Taiyuan Sanxin Economic and Trade Company to form HCGC. Under the arrangement HCCL has a shareholding of 25 percent while the Chinese hold the remainder with the coal mining giant delivering coking coal to the coking plant while Taiyuan Sanxin Economy and Trade Company injected capital.
However, a forensic audit carried out in 2013 revealed alleged massive externalisation of funds from the gasification unit resulting in the coal mining giant seeking the BOT agreement to be revisited. To date the two companies are embroiled in a legal dispute over debts which they owe each other.
“We have a (HCGC) BOT agreement which is almost expiring and therefore HCCL is in the process of implementing its rights to takeover. It has taken longer because first of all we were not producing coking coal and then there were also legal disputes between us but we are sorting that out so that there is a smooth takeover and take advantage of the coke prices. It is something that was coming in terms of the BOT agreement,” said Eng Makore.
Last month the coal mining giant introduced a short working programme where workers are working two weeks per month in all departments, effectively slashing their earnings by half as the company battles to contain costs.
“The two weeks in, two weeks out started last month. It is one of our cost reduction initiatives and buttresses our turnaround strategy because when production is low, our core structure must also be low otherwise we are unable to survive. We believe it’s temporary as we kick in initiatives such as the scheme of arrangement and other things such as injection of working capital,” said Eng Makore.
He said the company was also working on a scheme of arrangement with its creditors to reschedule its more than $300 million debt, as its going concern status remains under threat.
“We have already started with cost reduction, reducing management and also streamlining operations. We had our strategic planning workshop and we want to realign and increase production,” said Eng Makore.