Africa Moyo Property Reporter
The country’s oldest coal mining firm, Hwange Colliery Company Limited (HCCL), is considering selling the town for $300 million as part of efforts to raise funds to off-set its obligations with a number of creditors.
This includes selling part of its 5 000 employee houses to pay their salary arrears.
HCCL owes employees $70 million and the workers would be given the first priority to purchase the houses.
The company’s chairperson of the technical committees on operations, Mrs Ntombizodwa Masuku, yesterday told the Parliamentary Portfolio Committee on Mines and Energy that if the plan to sell both the town and houses is approved, they would be able to retire the bulk of their debt.
HCCL owes several institutions up to $352 million.
“As a company, we have the welfare of workers at heart and we are doing everything to make sure that the workers are given their due benefits,” said Mrs Masuku.
“We are adopting a strategy to retire our debts to the creditors including the Government. We have a plan to sell the town to the tune of $300 million and pay our workers and also sell some of the houses.
“The company is in possession of 5 000 houses, which we may not need for all the workers we have. Some of the houses are being occupied by our ex-workers so we are engaging our shareholders to have the town sold.
“Workers will be given an opportunity to purchase some of those houses and that will go towards reducing what we owe our workers.”
Mrs Masuku said selling the town would allow it focus on its core business of mining coal.
If the proposal is adopted, HCCL would request the Ministry of Local Government, Public Works and National Housing to purchase the houses to enable it to clean its balance sheet.
Mrs Masuku said the current scenario where they have to take care of key infrastructure such as roads, water and hospital in the town, and also investing in mining, is straining their operations. Hwange Hospital takes care of the large part of the district.
She said the situation was compounded by the fact that other coal mining firms such as Makomo Resources, Zambezi Gas and Liberation Mining, among others, which use the infrastructure without contributing to maintenance.
The idea of selling the company’s houses was also captured in a report compiled by HCCL’s consultants titled “HCCL Short-Term Way Forward Due Diligence Report”. The report is dated November 19, 2015.
It says extending free housing to employees has become an albatross on HCCL’s finances.
The consultants recommended that the company should sell the houses to employees, with salary arrears being used as part of the price settlement.
According to the report, HCCL was paying electricity bills averaging $750 000 per month for the houses and selling them would save about $450 000 per month.