Hwange Colliery pays off US$350M debt
ZIMBABWE’S oldest coal producer, Hwange Colliery has repaid over US$350 million to creditors in fast paced deals executed by external administrators since slipping into reconstruction over a year ago, the Zimbabwe Independent has been told.
Frustrated creditors were owed US$400 million — which threatened to ground the business — when government took the bold step to call in external help and save the firm in 2022.
This week, Hwange Colliery administrator Munashe Shava said the remaining US$50 million, mostly owed to foreign creditors and government, would be settled within two years.
Government controls 42% shareholding of the firm, which trades its stock on the Zimbabwe Stock Exchange, and is of strategic importance to the economy, especially in power generation.
The Colliery runs a direct conveyor belt from its coalfields in Matabeleland North, to the State-controlled Hwange Thermal Power Station a few kilometres east.
The debt deals are part of several options being pursued by administrators to rebuild the firm, which plans to expand into agriculture, according to Shava.
He said the Colliery was already building a coke oven battery plant, as it tries to stir the troubled ship out of choppy waters.
In an interview with the Independent this week, Shava said the coal miner was out of the woods.
“The reconstruction of Hwange is progressing well,” Shava said.
“We have done most of the modalities expected, which include producing the state of affairs report and having statutory meetings with the shareholders. We also met with creditors to map the way forward. We used to owe close to US$400 million, but now we are left with a debt of less than US$50 million, which we anticipate to clear in the next 24 months. This shows we are on the right track,” Shava added.
He did not name the creditors to have been paid.
“The reconstruction scheme is not going to take long like other entities but we are expecting the firm to stand on its own in the next 24 months,” Shava said.
The revival of one of the country’s biggest coal producers has been in the spotlight since government completed a US$1,5 billion facelift of two units at Hwange thermal power station, which requires more throughput.
Power utility Zesa Holdings has been stockpiling coal since the units came online this year as buffer stock to ensure uninterrupted supplies, officials said.
“We have successfully raised nearly US$60 million, and we are using this internal funding to pay contractors and support some of the company's operations,” Shava said.
British tycoon, Nicholas van Hoogstraten, who holds about 30% equity in the business, claimed early this year government bungling had affected the business.
The tycoon, who uses his Messina Investments to house his shares in the Colliery, boldly claimed certain individuals entrusted as custodians of public assets were responsible for decimating miner.
In October 2022, he accused the unnamed individuals of ‘mortgaging national resources to so-called Chinese and Indian investors’ in exchange for bribes.
The Colliery, with some of the largest coal reserves in Africa, has resources strewn over 222 000 hectares.
At its prime, it used to produce 500 000 tonnes of coal every month supplying the now defunct steelmaker Ziscosteel and other regional steel firms.