HARARE, June 30 (The Source) – Zimbabwe’s government will issue $52 million worth of Treasury Bills to pay off part of Hwange Colliery Company’s debt, two years after the company spurned a loan that could have significantly improved its performance and capacity to service its borrowings.
Hwange, in which government is a 37 percent shareholder, owes creditors – mostly workers, who have gone for 30 months without pay, banks, Zimra and NSSA – an estimated $200 million.
In 2014, the company rejected a $50 million loan from Nicholas van Hoogstraten, a 30 percent shareholder in Hwange, citing stringent terms and the British tycoon’s insistence on a five-year management contract at the colliery.
Van Hoogstraten has said he intended to hand over management of Hwange Colliery to global commodities giant Glencore.
Hwange managing director Thomas Makore told an annual general meeting in Harare on Thursday that a meeting of creditors would soon be held to approve the debt plan.
“All creditors will be offered part payments in the form of TBs by the Reserve Bank of Zimbabwe (RBZ) and the Minister of Finance and Economic Development Patrick Chinamasa has since approved TBs valued at $52.3 mln for Hwange Colliery Company,” he said.
Makore told shareholders that coal production in the first half of the year has been subdued owing to the underperformance of equipment sourced from India, which was commissioned last year. He added that the company was negotiating with the supplier for possible replacements.
Makore said production volumes were expected to rise in the second half of the year, as the company anticipates a working capital facility from one of its major bankers.
Makore added that total production is seen above 350,000 tonnes per month following the redeployment of new equipment at Chaba pit, where production is expected at 150 000 tonnes per month.
Portuguese contractor Motor Engil is also expected to produce 150 000 tonnes per month while the remaining 50 000 tonnes will come from underground mining.