Govt to refocus Hwange Colliery …engages SA firms over coke coal deal

By Daniel Chigundu

MINES and Mining Development Minister Walter Chidhakwa has revealed that government is working on refocusing Hwange Colliery operating model with a view to returning it to producing coking coal as opposed to thermal.

Despite receiving government support, Hwange made a loss of US$115 million in 2015 and is producing coal on a contract basis averaging about 15 000 tonnes per month against a capacity of 300 000.

Speaking at the official launch of the Interim Poverty Reduction Strategy Paper (I-PRSP) 2016 to 2018, Minister Chidhakwa said they have since engaged South African companies to buy coking coal from Hwange.

“What we have been doing is look at why Hwange Colliery came down from a company making US$40 million a year to now a company making huge, huge loses. And we have consulted people and directors who told us that the origin of Hwange was based not on thermal coal production but on coking coal.

“It used to supply it to ZISCO and because the prices of coking coal are much higher, the returns are also much bigger than those of thermal coal. Hwange would only produce thermal coal to deal with energy security needs of the country.

“We want to get back Hwange to that level and this is what we are doing since there is no ZISCO to supply coking coal to anymore, so we have arrived at agreements with South Africa companies to buy our coking coal and I hope that will bring Hwange back to line,” said Chidhakwa.

Coking coal is an essential ingredient in steel production.  It is different to thermal coal which is used to generate power. Coking coal, also known as metallurgic coal, is heated in a coke oven which forces out impurities to produce coke, which is almost pure carbon.

During its heyday, Hwange Colliery developed itself into an entity supporting all facets of Hwange town, including provision of various services to a population of about 55000.

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 not core to coal mining.

In addition, the company operated its own railway and road transport system, internal security and telephone system.

Presenting his 2016 Mid-year fiscal policy review statement, Finance Minister Patrick Chinamasa said Hwange’s non-core business activities are weighing down the company’s potential and that government is taking corrective measures to bring sanity to the company.

“This socio-economic burden on the colliery company is compromising its core business of coal mining, resulting in incurrence of perennial losses.

“Government is exploring scope for shedding off some of Hwange Colliery’s non-core operations, including rationalization of its workforce from the current 3200 to levels that are commensurate with production,” Chinamasa said.

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