High Court approves Hwange protection

Source: High Court approves Hwange protection | The Herald June 24, 2016

Lloyd Gumbo Senior Reporter
The High Court has approved a request by Government and other shareholders at Hwange Colliery Company Limited to engage its creditors and stop all litigations against the firm to allow it to reconstruct.

Mines and Mining Development Deputy Minister Fred Moyo revealed this in the National Assembly on Wednesday while responding to questions from Zanu-PF MP for Chegutu West Cde Dexter Nduna who sought to know what mechanisms Government put in place to improve production at the firm following a fresh capital injection from Government for buying equipment.

Deputy Minister Moyo said there were a number of issues affecting HCCL though Government and other shareholders were working hard to improve the company’s fortunes.

“The focus areas at the moment are to re-craft the company’s business model in order to lower overheads,” he said.

“The second area of focus is one of creating a shared asset vision which is still to be discussed with ZPC (Zimbabwe Power Company) and NRZ (National Railways of Zimbabwe), but that is an area we are looking at with the focus to try and reduce the capital requirements of the company.”

Deputy Minister Moyo said the other focus was to reduce the company’s workforce from about 3 000 employees to 2 000 at most.

He said the biggest challenge that the company faced was litigation from its creditors.

“Government, together with shareholders has put in place a scheme of arrangement that has been authorised 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.

“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,” said Deputy Minister Moyo.

But Cde Nduna further inquired what Government was doing about the faulty equipment that was supplied by an Indian firm, Bharat Earth Movers Limited (BEML).

“The equipment that came from BEML of India has exhibited problems centred 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.

“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,” said Deputy Minister Moyo.

He said the company also faced working capital challenges that made it difficult for it to operate viably as they did not have money to buy fuel and other consumables.

Deputy Minister Moyo said they would engage financial institutions to provide short-term loans.

MDC-T MP for Hwange East Mr Tose Sansole asked the Deputy Minister to confirm that in spite of receiving new equipment, HCCL still relied on contract mining from Motor Angele instead of its own mining.

“I do concede that since the purchase of the new equipment up to date, the contractor, Motor Angele has in fact produced more of the coal that is being sold than the company itself.

“The reason has been that, as I said, the equipment that we bought was deployed in an area that would not have allowed the company to produce more and surpass the coal that is coming from the contractor.

“We have instructed the company to relocate the equipment to go to an easier to operate area that suits parallel to where the contractor is working. It is our expectation that entering July, the company should produce for the first time more coal than that which is coming from the contractor,” said Deputy Minister Moyo.

He said once that is done, they expect Hwange Colliery Company and the contractor, Motor Angele to produce at least 150 000 tonnes of coal per month each to satisfy the current market demand.