10 October 2017

Zimbabwe: Hwange Cuts Working Hours. . . As Mota Engil Stops Mining Operations

Hwange Colliery Company Limited has introduced short time work arrangements as part of "cost cutting" measures amid reports that its contractor, Mota Engil, has suspended operations over an estimated outstanding $8 million payment. In a circular to workers last week, a copy seen by Chronicle Business, managing director Thomas Makore said the move follows a job evaluation and grading exercise, which necessitated the need to rationalise the company's cost structure after it emerged that some jobs were being duplicated.

"In August 2017 the company conducted a comprehensive job evaluation and grading exercise. It was a key finding of the said exercise that some jobs are duplicated and considered excess to requirements. This situation impacts on the company's cost structure, which in its current state is unsustainable. The company inevitably has to scale down on its total workforce to align with the business activity as well as the ability of the company to sustain. Unfortunately, your job is one of those that are excess to requirements. For the economic and sustainable reasons indicated above the company has decided to reduce expenditure by placing you on a two months' long two weeks in-two weeks out work arrangement," said Mr Makore in the circular.

Mr Makore said the move, which was agreed upon by the works council, also extends to those interested in voluntary retrenchment.

"This was after the works council agreed on this move on 25 September. During the said short time working arrangement, you are at liberty to also consider voluntary retrenchment, which is running for 60 days' period effective 2 October to 31 November 2017. The package payable in the event of voluntary retrenchment shall be disclosed upon your request," reads the circular.

The move has brought discontent and confusion amongst workers who feel the company is unnecessarily targeting them in addressing its woes while strategically forcing them to accept voluntary retrenchment.

"We thought that with approval of the scheme of arrangement we were on the right track to recovery, however, these letters are fuelling confusion and division amongst the workforce who now view the move as management's way imposing retrenchment on them. Remember the company failed to come up with the number it intended for voluntary retrenchment and this is swidely viewed as a strategy to leave one without any alternative," fumed a worker's representative member who requested anonymity.

Meanwhile contractor, Motal Engil has reportedly suspended mining operations after HCCL failed to honour its contractual obligations. Close sources from within the company said the giant coal miner was struggling to pay the contractor amid reports that operations at the opencast mine grounded to a halt last month after negotiations over payment between both parties failed.

Mota Engil accounts for 70 percent of HCCL's production, which stood at 250 000 tonnes per month is reportedly owed up to $8 million. Makore referred questions to his corporate affairs manager, Mrs Rugare Dhobbie, who was not reachable at the time of going to press. In a separate interview, Mr Makore had said coal production at the colliery was expected to surge by over 400 percent since the implementation of a 100 days Rapid Results Initiative in April. He said the initiative code named "Project Gijima" was proving to be a success.

"The project was successful. At the beginning of the project, we were producing 55 000 tonnes per month. By the end of the project we were producing 230 000 tonnes per month. Given the success, we launched Project Gijima II, which will focus on safety, equipment availability, processing throughput, quality, deliveries to customers and export sales," said Mr Makore.

He said lack of foreign currency was delaying the delivery of ancillary equipment to accompany the major mining equipment, Continuous Miner for the extraction of coal at the underground mine. Work at the underground mine stopped last year after the continuous miner broke down. However, the company took delivery of the mining equipment in August from South Africa where it had undergone refurbishment.

"The rest of the underground mining equipment needs foreign payments. We are working with our banks to mobilise the required foreign currency so that the rest of the equipment is delivered," said Mr Makore.

The company is in the process of accepting voluntary retrenchment proposals in an effort to cut its workforce after last year's moves to lay off 1 000 workers were blocked by the Government.

"We are paying 50 percent salaries to staff. This is because our value chain from mining production to processing and deliveries is not yet fully enabled. We are working on every element of the value chain so that we reach 100 percent capability and we will then be able to pay full salaries and the Scheme of Arrangement obligations. We have a salary backlog of 2,5 months," Mr Makore said.

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