The Sunday News
LEADING coal miner Hwange Colliery Company Limited (HCCL) board and management has admitted that its ignorance and failure to adhere to proper business principles resulted in the mining company losing more than $120 million through shoddy dealings.
Addressing journalists after a tour of mining operations by the company’s board of directors on Thursday, board chairman, Mr Farai Mutamangira said part of HCCL’s problems were self-inflicted largely due to poor decision-making by its board and management.
The latest revelation comes when the coal mining giant is owing its about 3 000 workforce close to 24 months in salary arrears.
It is also under the spotlight after some reports that some of the latest equipment it acquired under a $31 million loan facility from India was faulty.
“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,” Mr Mutamangira said.
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.
He said the company needed about $50 million to commission a new coke oven battery.
Mr Mutamangira said the company also put to waste about $20 million which was channelled towards the refurbishment of its coke oven battery by a South African firm five years ago.
The company’s coke oven battery went down in 2008 and was brought to life in 2009 only to halt operation two years ago.
“We sunk $20 million which again was money put to waste because that rolling rebuild was not properly managed . . . it was a mess again because after spending $20 million why did the battery go down?
“Some of those decisions were not decisions that you think were sustainable because if the $20 million was on the table we would not owe a single employee any money . . . it’s like we were throwing money into a bottomless pit, it happened in this mess while people were watching,” Mr Mutamangira said.
