BUSINESS tycoon Nicholas van Hoogstraten (pictured), who owns 30% shareholding in beleaguered Hwange Colliery Company Limited (HCCL), says he is against the disposal of the firm’s non-core assets to prolong the life of what he describes as a “sinking ship”.
By Fidelity Mhlanga
This comes after Finance minister Patrick Chinamasa, in his mid-year fiscal review policy statement a few weeks ago, said the government was considering shedding off some of HCCL’s non-core operations as the socio-economic burden on the company was compromising its core business of coal mining, resulting in perennial losses.
“Fundamentally, I am against the disposal of assets to prolong the life of a sinking ship! We have, unfortunately, seen too much of this in Zimbabwe. I have previously met with the Honourable (Mines and Mining Development) minister, Mr (Walter) Chidhakwa, and we are in ongoing discussions about these matters,” Van Hoogstraten said.
The tycoon said he tabled an offer, about three years ago, to invest US$50 million on the basis of a management contract and, since then, the position has become materially worse. As it stands, an injection of US$50 million is unlikely to fix the myriad of problems afflicting the company.
“The company has been struggling ever since due to mismanagement, corruption and self-interest. This has been exacerbated more recently by the unfair competition from the freebie so-called ‘miners’ who have been allocated free concessions on former Hwange areas, brought in foreign ‘partners’ who are merely scraping the top seam without making any capital investment or doing any ‘mining’ as such — this is of no benefit whatsoever to the country and is a crazy uncontrolled situation,” Van Hoogstraten said.
He added that Chinamasa was honest and competent, but he has unfortunately inherited a situation where the economy was destroyed by the previous coalition government, particularly the rape of the National Social Security Authority and entities such as the Rainbow Tourism Group and CFI, where Van Hoogstraten is the single largest shareholder.
The businessman recalls how he donated significant shareholding in HCCL to the government.
“At Independence (in 1980), myself and Anglo decided that ‘the people of Zimbabwe’ should share in the success and profits of the then Wankie Colliery and a gift of 40% of the equity was given free of charge to government which did not prejudice small shareholders because new nil-paid shares were issued and the nominal capital cost was ‘paid for’ out of future dividends. This was a win-win situation which worked very well until around 1998/2000 which was the time that Anglo relinquished their management contract,” he said.
Currently, the government is engaging a consultant to get the value of HCCL’s non-core assets.
Deputy Mines minister Fred Moyo recently told this paper that 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.
HCCL 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, HCCL 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 non-core to coal mining.