The Sunday News
Dumisani Nsingo, recently in Hwange
MANAGEMENT of Hwange Colliery Company survived the chop on Friday but were ordered to cut their salaries and allowances by half and come up with results in three months, failure of which they will be axed.
Expectations were that Mines and Mining Development Minister Walter Chidhakwa would relieve the management of their duties after the turnaround deadline he had issued in October last year expired without the expected results.
In October last year, Minister Chidhakwa told the management that it will be axed if it fails to turn around the fortunes of the giant coal mine within three months.
However, Minister Chidhakwa on Friday ordered management to cut salaries and allowances by half. In addition he extended the management’s lifeline but promised that this time he will not hesitate to relieve the executives of their duties if results were not pleasing by the end of the next three months.
He said HCCL’s management was bloated, a situation which contributed to the company’s costs exceeding its revenue.
The company has 24 executive managers with 13 of the administrators reporting directly to the managing director, Mr Thomas Makore.
“Do we want to maintain a structure like this in these hard times? What’s your problem of coming up with a new structure? You have no money, you are broke. You should be confined to the dust bin as a company. The report I am getting today is worse than the one that I got three months ago. I gave you time, don’t let me keep on pushing you, just do your part,” Minister Chidhakwa thundered.
He instructed the management to cut their salaries and allowances by 50 percent. Sources claimed the company’s lowest paid executive has a perk of
$6 000 with the top hierarchy getting an additional $600 per day when on out of the country trips. Minister Chidhakwa said the pay cut would only be effected on the executives while the rest of the workers’ salaries will not be affected. The lowest paid employee at the coal mining company reportedly takes home $274 per month.
In his address, HCCL acting board chairman Mr Jemister Chininga, said the company was facing serious challenges resulting in production and sales volumes declining.
“The company’s business model is based on high volume. Emerging challenges are coming to our northern markets in the form of imports from Mozambique. In some cases these imports have taken half the market in Harare. Besides us working harder on our efficiencies, we will look at possibilities of anti-dumping measures and Government giving priority to the completion of the Nkayi-Lupane Road as this will reduce the cost of transportation for all coal producers and reduce diesel imports,” said Mr Chininga.
He said the company required a monthly working capital of $8 million to move out of the woods with a two months cover being the most ideal.
“For a start we expect a working capital facility of $7,5 million in mid-February and this should stabilise operations and the business to start generating sustainable revenues going forward. However, this funding is being held up by the process of obtaining approval from the parent ministry,” Mr Chininga said.
He said workers’ salary arrears which extend to two and half years had been “subservient to coal production requirements” but hinted that under the expected working capital facility the company intended to pay full salaries and maintain such payments.
“In future management is under instruction to secure an agreement with the workers on the clearance of accumulated salaries as part of an overall debt clearance strategy. The company has lost critical skills particularly engineers largely because of the welfare issues and failure to honour conditions of employment,” said Mr Chininga.
He said the company expects to increase production volumes to above the break-even point of 300 000 tonnes per month by March. As a parting shot Minister Chidhakwa made the executive swear to accept being relieved of their duties in the event they failed to meet their target in the next three months.
