Home » Business » Hwange Colliery Company Recapitalisation Gathers Pace

HWANGE Colliery Company Limited has started receiving equipment mainly for its open cast operations as the recapitalisation of the coal mining firm gathers momentum.

Recently, Hwange concluded two deals worth $31,2 million with a regional and an international financial institution for the acquisition of the new mining equipment.

Under the vendor-financed deals, Hwange acquired equipment from BEML worth $13,3 million funded by India Exim Bank.

The other batch of equipment worth about $18,2 million will come from mining equipment supplier BELAZ under the PTA Bank loan facility.

Some components of the equipment from BELAZ are already at the mine.

“We have received 10 trucks and we are expecting 44 more,” managing director Mr Thomas Makore said.

“We are also expecting that equipment from BEML will be loaded into the ships by Friday.”

Engineers from BELAZ are at the mine to help in assembling and commissioning the equipment.

Hwange has been operating below capacity due to use of obsolete equipment resulting in production inefficiencies.

It is also saddled with huge debts amounting to $160 million and this has negatively affected the company’s ability to access lines of credit.

The delivery of the equipment will result in substantial increase in production, which will subsequently enhance the company’s ability to pay outstanding salaries by December.

The new equipment will result in increased combined monthly production (including contribution from the contractor) to at least 450 000 tonnes by the second half.

The combined production includes contribution from Mota Engil, a Portuguese company contracted by Hwange to produce 200 000 tonnes of coal per month from its open cast operations at Chaba Mine.

Mota Engil has, to date, produced close to one million tonnes.

Mota Engil’s contribution has enabled HCCL to stabilise production while procuring own new equipment prior to its commissioning, which is scheduled for May.

Hwange is of strategic importance to Government considering that the company is a significant supplier of coal to the Zimbabwe Power Company’s Hwange Power Station and its viability is critical for guaranteed supplies to up and coming power projects.

Apart from the lines of credit, the company has also obtained approval from shareholders to raise equity funding, mainly to settle its outstanding debts.

For a long time the Hwange’s balance sheet, which is heavily laden with debts and negative working capital, has been hampering the turnaround efforts of the coal mining firm.

As such, cleaning of the balance sheet would enhance its ability to mobilise lines of credit from regional and international markets.

Hwange has been battling the legacy debt amounting to $160 million, accumulated since 2006, according to the company.

Source : The Herald

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