Hwange suffers major setback

Dumisani Ndlela

HWANGE Colliery Company’s turnaround suffered a major setback after the coal miner hit an aquifer, an underground layer of earth, gravel or porous stone that yields water, at its prime 3 Main underground mine, businessdigest established this week.

Clos

e to US$160 million is now required to salvage the situation at the coal miner, whose planned rights issue last year to raise cash equivalent to US$80 million for capital equipment hit a brickwall after one of the major shareholders, British tycoon Nicholas van Hoogstraten, demanded that the company seek funds offshore since the projects required foreign currency.

Hwange’s managing director, Godfrey Dzinomwa, told businessdigest at the group’s analysts briefing recently that Hwange was now engaged in talks with foreign bankers associated with some shareholders to raise enough cash for offshore purchases of equipment and machinery.

There has been speculation that Van Hoogstraten was spearheading the talks between Hwange and the foreign banks.

The production problems at the colliery have cast a pall on the coal supply situation in the country, with sources indicating that industrial operations as well as agricultural processes had already started feeling the pinch from inadequate coal supplies.

Sources indicated that production at the 3 Main mine had been halted, and the company was now pinning its hopes of a new opencast mine called Chaba, hurriedly opened over a month ago to curtail a crisis.

Sources indicated that the situation at the colliery company was dire, with a complete replacement of antiquated equipment required.

The 3 Main mine had been built using old equipment from the closed M Block Mine. Chaba, for which the government had given Hwange the directive to seek foreign partners to raise foreign cash for capital equipment, had also been opened using old, disused equipment from the closed mine after failing to attract reputable foreign investors.

Chaba requires close to US$40 million for the purchase of minimum equipment to start meaningful operations.
As it were, sources indicated, the old equipment did not guarantee efficient mining operations.

Sources said as a result of the closure of the 3 Main Mines, Hwange had moved mining operations over 20 kilometres away from the processing plant. Mining had been taking place within five kilometres of the processing plants.

The situation had been compounded by the fact that only five haulage trucks were operational. Fifteen others had been grounded because of lack of imported spare parts.

In a notice to stakeholders in February, Hwange marketing manager Clifford Nkomo said the company had “experienced unforeseen breakdowns in its haulage equipment, which were aggravated by the heavy rains, during the month of January 2006”.

He said orders for the acquisition of new equipment had been made “which should be received during the second quarter of the current year”.

He said Hwange would open Chaba, an “opencast mining area whose reserves are shallower than current workings, and can be accessed faster and at a more favourable cost”.

“Given the above measures, we would like to assure our valued customers that coal production is not only expected to normalise shortly, but to increase to levels which exceed national demand in the medium term,” Nkomo said.

But industry sources said major industrial firms had already started importing coal from Botswana and South Africa, but indicated the Winter Wheat crop was likely to suffer because of inadequate coal supplies to Zesa.

The 3 Main mine had been built using old equipment from the closed M Block Mine. Chaba, for which the government had given Hwange the directive to seek foreign partners to raise foreign cash for capital equipment, had also been opened using

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