HCCL retrenchments to save $4m per year

. . . 60 top and middle-level managers to exit

STRUGGLING Hwange Colliery Company Limited is set to save almost $4 million in salaries and allowances per year through a retrenchment exercise which will see 60 of its senior and middle-level managers being shown the exit as part of restructuring the company and bringing it back to profitability.

In an interview with Sunday News Business after the Kamandama Mine Disaster commemorations in Hwange on Monday, HCCL managing director Mr Thomas Makore said the on-going restructuring exercise aimed at ensuring the turnaround of the company was still at managerial level and was still to cascade to the lower level workers.

“The restructuring was at a management level, almost 60 managers positions have been made redundant so the restructuring at this level is only at managerial level so that’s where we are . . . we stand to save $3,6 million a year,” Mr Makore said.

Early this year, Mines and Mining Development Minister Walter Chidhakwa said HCCL’s management was bloated, a situation which contributed to the company’s costs exceeding its revenue.

The company had 24 executive managers with 13 of the administrators reporting directly to the managing director. HCCL’s lowest paid executive’s salary is pegged at $6 000 with the top hierarchy getting an additional $600 per day when on out of the country trips up until a directive by Minister Chidhakwa to cut salaries and allowances by 50 percent. The lowest paid employee at the coal mining company reportedly takes home $274 per month.

Mr Makore also said the Government has approved to issue $53 million Treasury Bills to creditors of the debt-ridden coal-mining giant and reschedule some of its $300 million of debt as part of efforts to return the coal miner to its knees.

“About $53 million Treasury Bills have been approved and we are in the process of setting it up. In other words what will be the tenure of the Treasury Bills and what will be the discount among other issues and how will we apply them to different creditors is what we are working on at the moment,” he said.

Treasury Bills are short-dated Government security, yielding no interest but issued at a discount on its redemption price.

Mr Makore said the company was also in the process of negotiating with its creditors after the High Court recently approved its scheme of arrangement.

HCCL is also engaged with Agribank for the disbursement of $7,5 million to be used for production and working capital.

The company’s exports are being stifled by the nonfunctioning of its 3-Main Underground Mine, which is the main source for production of its coke and coking coal. The underground mine ceased operations early last year and $6,4 million is needed to revive it.

“Our underground operations is still on stop, we are not doing a lot of exports because the product that has a good market in export is coking coal and coke. So we are also looking for funding for the resuscitation of 3-Main Underground and once we do that we should be able to resume operations three months after getting funding then we can start pushing for export markets,” said Mr Makore.

Presently, HCCL’s underground operations have a much longer mine life than its opencast concessions which are on the verge of depletion, a situation, which prompted the company to apply for additional concession and had their request granted by the Government last year.

“We are seeking funding for exploration and also finalising the selection of the company that will do the exploration for Western Areas and Lubimbi (concessions).

“Funding is very critical for those decisions and those decisions will be taken to the board and our principals. For exploration alone it’s between $8 and $10 million for Western Areas and about $8 million for Lubimbi,” Mr Makore said.

In an effort to further boost its coke production, HCCL is negotiating for a takeover of the Hwange Coal Gasification Company (HCGC).

HCGC was formed through a Build-OperateTransfer (BOT) arrangement between HCCL and a Chinese company, Taiyuan Sanxin Economic and Trade Company culminating in the commissioning of the coke oven battery in 2010. The deal was consummated with the Tendai Savanhu-led board that was appointed by the late Amos Midzi when he was then Minister of Mines.

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 massive alleged externalisation of funds from the gasification unit resulting in the coal mining giant seeking the BOT to be revisited. It is estimated that the coal-mining giant was prejudiced more than $100 million through the BOT.

“We are in negotiations (with our Chinese counterpart), we have a BOT that is valid for 10 years and its almost at the end of its tenure so we are negotiating for its early termination and takeover of that battery so that we can own it and produce while 3 Main Underground is also coming up,” Mr Makore said.