By Shame Makoshori
Troubled Hwange Colliery Company Limited (HCCL), which is battling to extricate itself from huge debts, could sack the bulk of its staff after Treasury said it was overstaffed by at least 2 400 people.
Finance and Economic Development Minister, Patrick Chinamasa, has revealed that the beleaguered coal miner could do with only 800 workers.
The move follows deterioration in the company's financial circumstances, even after Mines and Mining Development Minister Walter Chidhakwa, ordered the rescission of a decision to sack at least half of the 3 200-strong labour force in 2014, saying management and the HCCL board had to find other ways of turning around the company's financial fortunes.
Government, which owns 37 percent shareholding in HCCL, has tried to keep the Zimbabwe Stock Exchange-listed miner afloat through several support mechanisms but has failed.
HCCL has been undermined by a myriad of problems, including mismanagement. The company sustains a city of at least 55 000 people, who largely depend on the business for survival.
In his mid-term fiscal policy review over a fortnight ago, Chinamasa said HCCL should get rid of the majority of workers on its payroll. The workers are owed US$45 million in salary arrears for the past two years.
HCCL posted a US$115 million loss during the year to December 31, 2015, from a loss of US$38 million during the same period in 2014.
The local mining giant, which is currently mining coal on a contract basis, produces about 150 000 tonnes of coal per month, according to the Ministry of Finance.
It has capacity to double output to 300 000 tonnes.
"Institution of reform measures that will address challenges related to mismanagement at Hwange are unavoidable," Chinamasa told lawmakers.
"Government is exploring scope for shedding off some of Hwange Colliery's non-core operations, including rationalisation of its workforce from the current 3 200 to levels that are commensurate with production. This is necessary to ensure that the company operates at optimum capacity, that way allowing coal production to meet both export and local demand. Non-core operations at Hwange include provision of housing and other related amenities, schools, and health facilities. This socio-economic burden on the colliery company is compromising its core business of coal mining, resulting in… perennial losses," Chinamasa said.
HCCL funds projects such as road maintenance, refuse collection, water and sewer reticulation, power generation, running schools and health facilities, housing and recreational facilities.
In addition, the company operates its own railway and road transport system, internal security and telephone system.
These would now be transferred to the Ministry of Local Government, Rural and Urban Development, said Chinamasa.
In June the Financial Gazette's Companies & Markets reported that the HCCL board last year made futile attempts to reopen negotiations for a US$50 million bailout from British tycoon, Nicholas van Hoogstraten, after the beleaguered company turned down his offer in 2013.
This was about the time when the cash-strapped company lur-ched from one crisis to another.
Dramatic events took place at HCCL last year, with the listed firm surprising investors after splashing over US$30 million on second-hand mining equipment, some of which later turned out to be derelict.
A crisis caused by lack of capital and prolonged losses deepened during the year to December 31, 2015, threatening to drag the 91-year old giant into insolvency.
The problems have been amplified by developments on the international commodities markets, where a slowdown in prices has wreaked havoc on mines worldwide.
Van Hoogstraten demanded a raft of reforms that were likely to hand him management control of a company viewed by the State as strategic due to its importance in power generation.
Van Hoogstraten's family interests control about 30 percent shareholding in the firm.
But with debts mounting, and the firm facing industrial unrest from its unpaid workers, amid a working capital strife, the board made a surprise knock on van Hoogstraten's door again, but the tycoon is said to have indicated that the "whole ball game has changed".
"They engaged me nine months ago to see if that offer was still available, but I said the whole ballgame has changed," said van Hoogstraten early this year.