10 May 2018

Zimbabwe: Struggling Coal Miner Plans to Sell Hwange Town Over $300m Debt

Photo: The Financial Gazette
Hwange Colliery (file photo).

A struggling local mining company has come up with a novel way to pay for its increasing debt and the salaries of employees dating back five years.

Hwange Colliery Company Limited (HCCL) is considering selling the town of Hwange for $300m, parliament heard earlier this week.

The company's board revealed the plan when they appeared before a parliamentary portfolio committee on mines on Monday, during which the dire situation in the mining town was laid bare.

"We are bedevilled with a lot of challenges in terms of maintaining the town itself infrastructure, water infrastructure and roads," said Masuku.

"We run a hospital that is serving the large part of Hwange district and we have other coal players in Hwange who are benefitting from the infrastructure that is being maintained solely by Hwange Colliery.

"We have tried to reason with other players but to no avail and I think that is also burdening Hwange Colliery."

Masuku added, "And instead of concentrating on our core business which is that of coal mining we find ourselves having to attend to these other issues from the little resources that we have while other players are benefiting from it.

Masuku said once the town is sold, this would allow the company to focus on its core business of mining coal.

"The major hope for Hwange is there; it's just that we need capital injection for us to be able to get Hwange to its blue-chip status.

Shareholders will meet the company's board to discuss possibilities of injecting fresh working capital into the business.

"We have a plan to sell ... some of our houses because the company is in possession of 5,000 houses which we may not need for all the workers we have and some of these houses are being occupied by our ex-workers," said Masuku.

"So, we are engaging our shareholders to have the town sold and also this will allow the company to focus on its core business which is mining."

She went on to reveal that the company has an obligation to pay $1.8 million every month to workers who are owed $70 million in salary arrears.

"Not only the workers, we have other creditors we also owe (including) the government itself.

"So, these are debts that have been accumulating mainly because of low production that the company has been facing for a couple of years.

"We are not breaking even and also we have been mining low value product and we are failing to go to high value product because of the continuous breakdowns of our mine."

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