The Sunday News
Dumisani Nsingo Senior Business Reporter
FORMER coal mining giant Hwange Colliery Company Limited’s salary arrears have ballooned to $19 million as the company has failed to pay its workers full salaries since November last year.HCCL managing director, Mr Thomas Makore, wrote a circular to all the workers advising them that the company was still failing to meet its salary obligations but hinted that it was working towards clearing them through increased business from the company’s turnaround plan which is under implementation.
The coal mining giant has not paid its more than 2 000 workforce salaries since November last year, a situation attributed to low sales volumes, lack of recapitalisation to replace its obsolete machinery and a shrinking market as a result of the opening of a number of coal mines.
“The payment of December 2013 staff salaries during the month of October 2014, as earlier circulated, was not accomplished. Management takes full responsibility for this failure. This was due to the disappointing low production volumes achieved for the month of September 2014.
“As a result of this poor performance, the revenue in-flows were also very low and far from target. The Company however, remains fully committed to regularise the payment of staff salaries monthly. The attainment of this goal is possible as reflected by the improvement of production and sales volumes realised in the month of October 2014,” read part of the company circular written by Mr Makore.
Contacted by phone to elaborate on the circular, Mr Makore said the company was grappling with the task of paying other debts believed to be more than $150 million but said with the effective implementation of its turnaround plan which hinges on increased production and efficiency the “beginning of good fortunes are within sight”.
He said: “We have a salary backlog of $19 million and on top of that we have legacy debts which have been accruing over the years … so we are doing everything possible to have a healthy balance sheet,” he said.
Mines and Mining Development Deputy Minister, Cde Fred Moyo, himself a former managing director of the company, could not be drawn to comment on the problems bedevilling HCCL saying “as a shareholder (Government) I cannot pre-empt the challenges being faced by the company before the board does so”.
He referred this paper to the board chairman, Mr Farai Mutangamira, who acknowledged that the company was in arrears with regards to payment of salaries but was quick to say “I am not in the know about the circular which you are talking about but surely how can someone put a circular to that effect?”
HCCL’s corporate identity and public relations manager, Mr Burzil Dube, said he was not aware of the circular but hinted that just like the majority of companies in the country, the coal mining giant was faced with challenges but “I can assure you we are coming out of these predicaments as we have implemented a number of strategies through our turnaround plan to see us through”.
The company has, however, seen some improvement in production levels over the past months and figures show that it produced 150 000 tonnes of coal for the month of September, improving last month to 200 000 tonnes.
Through its contract mining deal with Mota-Engil and its massive recapitalisation process which saw it investing in massive equipment over the last two years, HCCL has projected to triple its output this year.
HCCL has set a target to increase its monthly coal output from 150 000 tonnes, which was being achieved last year to more than 450 000 tonnes in the process realising a turnover of about $17 million a month.
Through its own coal-mining activities, HCCL is targeting to produce 250 000 tonnes to 300 000 tonnes with the rest being delivered by Mota-Engil.
“The working capital facility which the Company sourced has positively resulted in the gradual increase to operations capacity and volumes. As we increase our production volumes and sales, we should be able to meet the regular payment of staff salaries. While we work towards this goal, the Company has taken into consideration to implement action of “Plan B”, which was recently discussed with the worker leadership,” read part of the circular signed by Mr Makore.
He said the company would try to pay all its employees $200 across the board as part payment of last year’s December salaries “in order to cushion everyone against the current hardships” further stating that “the company will continue to pay normal salaries in batches (groups) as the cash inflows improve”.
