Hwange, ZPC and Lusulu Power sign 25-year supply deals

By Oliver Kazunga

Hwange Colliery Company Limited (HCCL) has signed two 25-year coal supply agreements with the Zimbabwe Power Company and Lusulu Power, an independent power producer in Matabeleland North.

Hwange Colliery managing director Mr Thomas Makore
Hwange Colliery managing director Mr Thomas Makore

The company’s managing director Engineer Thomas Makore said during a media briefing in Hwange on Wednesday that the agreements were part of initiatives to support and sustain the colliery’s turnaround strategy.

“We have already entered into a 25-year coal supply agreement with the Zimbabwe Power Company (ZPC) so we are in the process of finalising contract with the successful bidder for the exploration and thereafter we then go into the mine development phase,” he said.

He said the company had also signed another coal supply agreement with an Independent Power Producer (IPP) called Lusulu Power, which will be based at Mlibizi.”

Eng Makore said the two initiatives were part of a turnaround strategy that the company had embarked on.

“The agreements require that we supply 200 000 tonnes of coal per month to each of the two companies,” said the HCCL boss.

In 2015, the Government granted the company three new concessions in Western Area, Lubimbi East and West following concerns that HCCL’s present concessions were running out.

The new concessions, which are expected to prolong the lifespan of Hwange by 50-70 years, have an estimated resource of about 750 million tonnes of mainly coking coal and thermal coal.

Of late, HCCL has been on a loss-making position with liabilities increasing to about $300 million from $125 million.

Eng Makore said HCCL’s scheme of arrangement was also anchored on arrangement with its creditors that include the workers and suppliers of various goods and services.

Between 2015 and 2016, the colliery company was faced with a number of litigations.

“These are litigations that emanated from creditors we owed money and we were behind in terms of our payment plans to those creditors.

“The scheme of arrangement is critical because it allows us to have an operating space in which we can implement our turnaround plan,” he said.

In 2014, the colliery’s revenue was at $89 million before going down to $67 million and $39 million in 2015 and last year respectively.

Through the implementation of the turnaround strategy, HCCL targets to improve production volumes from the 40 000 tonnes per month at present to 500 000 tonnes.

“Right now we are producing 40 000 tonnes a month and we want to increase the figure to 100 000 tonnes by the middle of the year. In 2015, Hwange acquired mining equipment worth about $32 million from India and Belarus but the consignment has not yielded any positive results amid reports that the equipment is not suitable for local environment

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