‘HCCL social services should be a business entity’

Hwange Colliery Company Limited (HCCL) should unbundle and commercialise its properties and stop playing the role of both local and central government through subsidising the town’s key social and infrastructure services, a government official has said.

By Fidelity Mhlanga

Currently, HCCL runs the city’s water and sewage works, road infrastructure, schools, health and power generation.
Mines Deputy Minister Fred Moyo said a sizeable percentage that is factored into the unit cost of a tonne of coal is driven by social services.

“In other words, Hwange’s model was always a socially driven company. If you look at the cost ratio, you will realise that the sizeable percentage which enters the unit cost of a tonne of coal is driven by social services.

That has nothing to do with core business. There are very few companies that are surviving without social services.

If you look at the mines, most of them are socially driven,” he said.

In his mid-year fiscal policy recently, Finance minister Patrick Chinamasa said government was considering shedding off some of Hwange Colliery’s non-core operations as the socio-economic burden on the company was compromising its core business of coal mining, resulting in perennial losses.

Non-core operations at Hwange include provision of housing and related amenities, schools, and health facilities.

Moyo said the social services should run as a separate business entity that can feed into the group’s core business, adding allowing employees not to pay for housing and other amenities cripples the company’s income.

“Let it run as a business entity. We are simply saying restructure the company’s balance sheet and we have discussed this with the company’s board. The cost of staying at the mine’s house is built at the cost of the coal company, then electricity tariff builds to Zesa and then to the national costs,” he said.

“Remember we also want to restructure management, skills, competences, technological side and mine planning, operations.”

Moyo is a former managing director of HCCL.

He added that the pricing model of coal should be competitive and affordable to customers.

Chinamasa also announced the need to rationalise the workforce from the current 3 200 to levels that are commensurate with production.

“We don’t have the numbers at the moment. Remember they must look at the production processes. The technologies that fit into that and the competencies. All we have said is that we can broadly say the company with this turnover can be sustained by a particular number of workers,” Moyo said.

Hwange Colliery is producing on a contract basis (MotaAngil) on average only 150 000 tonnes per month, against potential capacity of about 300 000 tonnes, despite government efforts to support the company. The company incurred a loss of US$115 million in 2015 alone.

At its peak, Hwange Colliery developed into an entity supporting all facets of Hwange town’s life, including provision of various services to a population of about 55 000.

The services delivered included those normally associated with local and central government, such as road maintenance, refuse collection, water and sewer reticulation, power generation, schools, health, housing, as well as recreational facilities which are not core to coal mining.

In addition, the company operated its own railway and road transport system, internal security and telephone system.