HCCL set to retake coke oven battery

by Sunday News Online | Sunday, Apr 9, 2017 | 1575 views

thomas-makore

Dumisani Nsingo, Senior Business Reporter
HWANGE Colliery Company Limited (HCCL) is in negotiations to take over one of its strategic units in which the coal-mining giant is alleged to have lost over $100 million in a botched deal with a Chinese firm, Taiyuan Sanxin Economic and Trade Company.

HCCL managing director Mr Thomas Makore said negotiations to wholly take over operations of a coke oven battery from Taiyuan Sanxin Economic and Trade Company were in progress.

“We are still in negotiations about the takeover of the Hwange Coal Gasification Company coke oven battery,” he said. Further stating that: “The takeover will provide capacity to produce high value coke for the local and regional markets”.

Hwange Coal Gasification Company was formed through a Build-Operate-Transfer (BOT) arrangement between HCCL and a Chinese company, Taiyuan Sanxin Economic and Trade Company culminating in the commissioning of the coke oven battery in 2010. The deal was consummated with the Tendai Savanhu-led board that was appointed by the late Amos Midzi when he was then Minister of Mines.

Under the arrangement HCCL has a shareholding of 25 percent while the Chinese hold the remainder with the coal mining giant delivering coking coal to the coking plant while Taiyuan Sanxin Economy and Trade Company injected capital.

However, a forensic audit carried out in 2013 revealed massive externalisation of funds from the gasification unit resulting in the coal mining giant seeking the BOT to be revisited. To date the two companies are embroiled in a legal dispute over debts which they owe each other. In 2005 HCCL’s former board chairman Mr Farai Mutamangira was quoted by this publication as having said:

“We had done a structure with the Chinese on gasification which is really a mess. It was meant to succeed the current challenges we are facing with our battery as it was foreseen that the battery life was coming to an end but we created another problem in terms of the structure and burden.

“Put together I think the company was severely prejudiced of more than $100 million on that Hwange Coal Gasification project. I think it was one of the stupid things we have ever done as Hwange Colliery but anyway we are trying to mitigate that loss,” he said.

Mr Makore said the company was also making efforts to resuscitate or replace its own coke oven battery.

“Our coke oven battery reached the end of its economic life and underwent a controlled shutdown in 2014. The options available to the company is a complete refurbishment or replacement. This is a major project that will require a thorough feasibility study and detailed specifications of the systems and components. In due course, a team will be appointed to execute this important project,” he said.

Coking coal and coke are the company’s high margin products thus the reason the company was making concerted efforts to resuscitate its coke oven battery to operate at optimum capacity. HCCL’s coke sales volume decreased from 7 584 tonnes achieved in the first half of 2015 to 1 040 tonnes for the period under review (30 June 2016). This was attributed to the cancellation of toll coking arrangements.

Mr Makore said the Environmental Impact Assessment of its two new concessions was nearing completion of Lubimbi West and East. The new concessions hold deposits in excess of a billion tonnes of coal consisting of both coking coal and thermal coal at Western areas and Lubimbi West while Lubimbi East has prevalence of coal-bed methane gas, giving HCCL an additional estimated life of mine of above 70 years.

“We are implementing the last phases of completion of the environmental impact assessment for the Western Areas and Lubimbi West concessions. At the same time, appointment of a contractor to do the exploration is being finalised,” said Eng Makore.

The company states that it expects to pay retrenchment packages for its retrenched workforce in accordance with the Scheme of Arrangement. HCCL is consummating a scheme of arrangement with its creditors in order to present a structured plan of liquidating amounts owed to creditors.

“As part of our turnaround strategy, we have to reduce our costs in order to be competitive and profitable. The voluntary retrenchment process currently underway is part of this initiative, ideally we will start to re-employ when we commence mine development of the new concessions. The staff that will take up voluntary retrenchment will be paid in accordance with the Scheme of Arrangement. The issue is not the number of staff that are being targeted but rather the reduction in our production cost per tonne so that we are viable,” said Eng Makore.

@DNsingo

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  • ComradeK

    This man called Thomas is full of crap. He promised the Nation that he will be selling coke by April can he state a date when he will invoice for the 1st tonne. Why is he now telling us about taking over the battery, why is he not updating the Nation on how much coking coal he has mined awaiting processing. He is bull shitting the nation. Does he think retrenchment will make profits. As long as he is not mining he will still not declare a dividend even if he remains alone at the mine. The bottom line is to mine and sell the coal which is in abundance in the ground. The country is now importing power and coal from neighbouring countries is there a drought for coal or its just Hwange Colliery failing to mine. Why is the minister of Mines protecting this man. What is he benefitting from this inefficiency??????

    • S.Gumbo

      We believe Mr. Makore is doing a lot of underhand dealings with South African Suppliers who he is connected to to syphon money from Hwange Colliery as he can easily solicit for kick backs. Whatever the mine purchases from SA as components and consumables must be interogated because the money will end up in his account. His wife and kids still resides in SA a sign that he has no commitment for the Company and Country but just to loot and if he is not stopped he will leave nothing for Hwange Colliery and the workers.

      • ComradeD

        Thomas Makore does not have the capacity, experience nor background to turn around Hwange Colliery. He never worked for a mine since he qualified as an Electrical Engineer. The mine requires a mining Engineer or similar experience. After working for Triangle as a junior Engineer he went to SA but never worked for a mine until Chidhakwa his brother-in-law invited him back here to come and loot together. He is confused about what to do despite the 3 yrs he has wasted with Hwange Colliery LTD. He is a thief who deserves to be jailed together with his brother. Let’s see what happens to the $115m provided by Gorvenment.

        • S.charamba

          Giving Makore such kind of money it’s like giving a mad man a bag of money. He will just run with it but nobody will account for it.

  • C. Mambo

    You are very correct Comrade. By the time the Government realises it will be very difficult to manage that Organisation but it will just be another Kamative or Zisco but nobody from Government seems concerned. That man has been on the helm for 3yrs now but the situation has deteriorated since he joined so do we all expect a miracle to take place? The man is just Clueless.