Hwange Colliery, European contractor in exploration deal

HARARE  - Tri-listed resources concern, Hwange Colliery Company Limited (HCCL), last week revealed it is finalising funding structure negotiations of its exploration deal with its unnamed preferred partner, which is expected to conduct exploration and drill works at its new concessions.

The Zimbabwe Stock Exchange-listed miner, which also trades its shares on the London and Johannesburg stock exchanges, is now expected to sign an exploration deal with a new partner before the end of this month.

The latest development was revealed last week by HCCL managing director, Thomas Makore.

“We are setting up the funding structure so that the contract can commence. I think after about two weeks we will be done,” Makore told The Daily News on the sidelines of the 2017 State of the Mining Industry survey report launch held in the capital last Thursday.

Makore also disclosed that HCCL, once the largest coal miner in the country until the emergence of Makomo Resources in 2010, which chipped off its market share, has submitted its Environmental Impact Assessment (EIA) report for one of its new concessions, the Western Areas, to the Environmental Management Agency (EMA).

The EIA report for the Western Areas is complete while that for Lubimbi is still in progress.

The contractor is expected to explore new concessions in western areas in Hwange and Lubimbi East and West.

Government granted the concessions to HCCL in 2015 and these are expected to increase the life of the mine by about 70 years.

It is understood that the new mining concessions hold deposits in excess of one billion tonnes of coal consisting of both coking and thermal coal at Western Areas and Lubimbi West, located in Binga District.

The Lubimbi East concession, which is located in Lupane District, has coal-bed methane gas, according to preliminary reports.

Presently, HCCL’s underground operations have a much longer mine life than its opencast concessions, which are on the verge of depletion.

However, the underground mine has not been operating since mid 2015 and about $6,64 million is needed to revive it.

The underground mine is the main source of coke and coking coal. HCCL, however, is working on resuscitating its underground operations after taking delivery of coal extraction equipment recently from South Africa.

The project is part of the company’s turnaround plan anchored on increasing production and sales as it takes advantage of the recently approved scheme of arrangement meant to stagger debt payments.

As part of HCCL’s turnaround strategy, the company recently agreed on an arrangement with its creditors and came up with a plan to liquidate debts.

In a recent statement HCCL’s former board chairman, who was last week appointed the new Minister of Mines and Mining Development said: “I am more gratified to announce that the company is firmly on track in its turnaround journey as a raft of measures that have been put in place to turnaround the organisation continue to bear positive outcomes.

“The legacy debts were threatening to choke Hwange Colliery Company and the support by the major shareholder in the scheme of arrangement modalities is a clear testimony that government recognises that HCCL has a very important part to play in oiling the economic wheels of the nation.”

Government is the major shareholder in HCCL, controlling about 37 percent while British tycoon, Nicholas van Hoogstraten, through his investment vehicle, Messina Investments, owns a 30 percent interest.

The National Social Security Authority has a 5,87 percent shareholding while Mittal Steel Africa Investments controls a 9,76 percent stake.

HCCL employs more about 2 300 workers and supports a town of about 55 000 people. It is, therefore, viewed by government as a strategic operation. 

The company has been making losses for more than a decade and owes millions to tax authorities, employees and the pension fund.