HWANGE Colliery Company Limited (HCCL) says the approval of its Scheme of Arrangement with its creditors is set to turn around the struggling company.
The Scheme of Arrangement is part of the coalminer’s bid to settle its debt of US$352 million.
HCCL’s balance sheet has been causing concern in the market in the last three years, latching from a positive shareholders’ equity of US$37,2 million in 2014 to a negative US$167,7 million in 2016.
The coal miner owes various creditors US$180 million and its full year results released last month showed liabilities exceeding total assets by US$168 million.
Hwange Colliery has been facing a plethora of litigations and writs of executions which threatened to cripple its operations.
The company’s assets are protected through the Scheme of Arrangement.
In a statement, managing director Engineer Thomas Makore said the Scheme of Arrangement affords the company operating space to implement its business and turnaround plans.
These plans include, among others, cost control measures and strict financial management.
“The creditors resoundingly voted yes in support of the Scheme of Arrangement,” said Eng Makore.
“Hwange Colliery is grateful and acknowledges this decision as a watershed and turning point in its strategic plans.”
Eng Makore said the scheme will enable the company to access working capital from financial institutions.
“As part of its strategy, the company will convert current to long-term liabilities and seek short to medium and long-term working capital facilities from banks,” he said.
“The financial resources will be channelled to production activities at opencast, underground mines and metallurgical operations so that production volumes will increase to above break-even point.”
The company, said Eng Makore, would endeavour to ensure adequate supply of coal to the Zimbabwe Power Company (ZPC) for increased power generation while it focuses on exploring more local and export markets for both coke and coking coal.
“Adequate supply of coal to the national electricity utility will remain a priority while supply of profitable coal and coke grades to industry and export markets will ensure that the company operates profitably and meets its obligations in terms of the Scheme of Arrangement and monthly operating expenses,” said Eng Makore.
Government, which holds 37 percent shareholding in the listed miner, issued treasury bills of US$41 million and US$18,2 million in settlement of the Mota-Engil debt and Reserve Bank of Zimbabwe (RBZ)/Preferential Trade Area (PTA) Bank loan, respectively.
Mota-Engil has resumed operations and is expected to reach 200 000 tonnes a month in production output by end of next month.
Eng Makore said the company is planning to increase production in the open pit operations, adding management interventions are underway to make the mining equipment more reliable and available for operations so that production will increase to 100 000 tonnes a month by mid-2017.
“In addition, resuscitation of underground mining will contribute to high value coking coal to the production mix by mid-year 2017,” said Eng Makore.
“The continuous miner equipment that had a major breakdown in August 2015 is undergoing major refurbishment and will be complete in three months.”
The coal miner recently signed two 25-year coal supply deals with the ZPC and Independent Power Producer (IPP) Lusulu Power for a combined 400 000 tonnes per month.
In 2015, Government granted the company three new concessions in Western Area, Lubimbi East.
The company also has a thrust to increase export volumes of coking coal from underground operations and industrial coal to Zambia, South Africa and Democratic Republic of the Congo (DRC).
Hwange would need to attain the levels of operational efficiency the company last enjoyed in the early 1990s, when output peaked at 5,5 million tonnes.