Dumisani Nsingo, Senior Business Reporter
COAL-MINING giant Hwange Colliery Company Limited says it has saved nearly $5 million in salary payments in six months after it introduced a short working programme last year.
Speaking at a Press briefing on Wednesday, HCCL managing director Engineer Thomas Makore said as part of the company’s cost reduction initiatives it had to cut the number of its management staff by 30 percent saving about $300 000 in the process per month, as well as introducing a short working programme where employees work two weeks per month in all departments, effectively slashing their earnings by half.
“Aligned to the negative gross profit . . . we also had to look at our core structure. We started last year with reduction in the size of management and we had to cut our management staff by 30 percent in April last year and in addition to that in October last year up to early April (this month) we went on a two weeks in two weeks out programme for the entire mine just to contain our costs so that we align them to our current activities . . . We were doing the two weeks in two weeks out programme so our salaries were basically 50 percent so we were paying that in full. It saved us about $800 000 per month and you multiply that by six,” said Eng Makore.
He added that the turnaround of the company was anchored on a Creditors’ Scheme of Arrangement.
“The Scheme of Arrangement is critical because it allows us to have an operating space in which we can implement our turnaround plans. I think you may be well aware that we were facing a lot of litigations in the early part of 2016 and the major part of 2015.
“These are litigations that emanated from creditors whom we owed a lot of money and we were behind in terms of our payment plans with those creditors. So the scheme of arrangement will help us to enter into a payment plan with the creditors.”
He said a creditors meeting will be held on 26 April and an approval by the creditors would see the Scheme of Arrangement being registered with the High Court.
“Through the Scheme of Arrangement we will also be able to unlock working capital from the banks. A lot of the financial institutions had stated to us that we needed to fix our balance sheet because our liabilities are currently within one year so we needed to convert those liabilities into long-term liabilities. We have already been supported by the major shareholder through the issuance of Treasury Bills and those Treasury Bills are essentially to support the Scheme of Arrangement,” said Eng Makore.
The Scheme of Arrangement, which is a payment plan to service creditor obligations, has been dogged with implementation delays due to various reasons, that include a court challenge by workers who sought judicial management as well as efforts by the major shareholder to balance the needs of all ailing companies.
He also said the company has reviewed its human resources policy in line with other mining players in the country.
“We had to look at the cost of our employment. We also had to look at the human resources policy, the benefits that our staff enjoys and compared them with other mining players in Zimbabwe and also benchmark to see whether our benefits, our costs of employment are comparable with other companies and when we did that, we saw that we had much more benefits and therefore our costs of employment is much higher than other companies. So we have reviewed those human resources policies so that they are in line with other mining companies and that process will result in a cost saving for the company and therefore allow us to operate with a cost of tonne which is competitive,” said Eng Makore.
The coalminer has also set sights at increasing its production from 40 000 tonnes to 100 000 tonnes by June.
“We are intervening in terms of ensuring the equipment is reliable and it’s available for operation. So that work is ongoing as we are speaking so that by middle of the year we increase our production to 100 000 tonnes per month added to that our contract miner, Mota-Engil has resumed mining and they will also be reaching about 200 000 tonnes per month by the middle of the year,” said Eng Makore.
The Portuguese-owned mining contractor which was producing around 200 000 tonnes per month from HCCL’s Chaba opencast concession, had suspended production after HCCL failed to clear its arrears, estimated at more than $50 million.
“We also have a thrust as part of our turnaround plan to increase export volumes, export of coking coal especially from underground operations and export of industrial coal to Zambia and then later on exports of coke to Zambia, South Africa and the DRC (Democratic Republic of Congo).”