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Struggling coal miner plans to sell Hwange Town for $300 million

A struggling local mining company has come up with a novel way to pay for its increasing debt and the salaries of employees dating back five years.

Hwange Colliery Company Limited (HCCL) is considering selling the town of Hwange for $300 million, parliament heard earlier this week.

The company’s board revealed the plan when they appeared before a parliamentary portfolio committee on mines on Monday, during which the dire situation in the mining town was laid bare.

“We are experiencing a lot of challenges in terms of maintaining the town’s infrastructure, including water infrastructure and roads,” said Ntombizodwa Masuku, Independent Non-Executive Director, HCCL.

“We run a hospital that is serving the large part of Hwange district and we have other coal players in Hwange who are benefitting from the infrastructure that is being maintained solely by Hwange Colliery.

“We have tried to reason with other players but to no avail and I think that is also burdening Hwange Colliery.”

Going back to focus area

Masuku added, “And instead of concentrating on our core business which is that of coal mining we find ourselves having to attend to these other issues from the little resources that we have while other players are benefiting from it.

Masuku said once the town is sold, this would allow the company to focus on its core business of mining coal

“The major hope for Hwange is there. It’s just that we need capital injection for us to be able to get Hwange to its blue-chip status.

Shareholders will meet the company’s board to discuss possibilities of injecting fresh working capital into the business.

Masuku went on to reveal that the company has an obligation to pay $1.8 million every month to workers who are owed $70 million in salary arrears.

“Not only the workers, we have other creditors that we owe including the government.

“So, these are debts that have been accumulating mainly because of low production that the company has been facing for a couple of years.

“We are not breaking even and also we have been mining low value product and we are failing to go to high value product because of the continuous breakdowns of our mine,” she concluded.

 

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