Editorial Comment
HWANGE has yet again been dragged back into the red with weak corporate governance, political interference and outright corruption undoing much of the work that had been put in to turn around the coal miner.
The company’s recently-released financial statements show that Hwange racked up US$78,5 million in after-tax losses in the year-ended December 2018, from US$43,8 million in the previous year as the coal miner failed to meet market demand and contain rising input costs.
The company’s monthly production average was 150 000 tonnes, compared to the budgeted monthly production of 300 000 tonnes and as a result, total sales tonnage was 1,5 million tonnes against a budget of 3,5 million tonnes.
As at December 2018, the company’s total liabilities exceeded total assets, with a negative equity position of US$290 million from US$211,5 million in 2017, attributable to recurring losses which continue to erode capital and reserves.
The company is in a precarious position and all the hope that the company could still be saved after creditors agreed to a Scheme of Arrangement in 2017 has since been lost.
The company is under reconstruction and has since been suspended from trading on the Zimbabwe Stock Exchange.
A number of high-profile individuals, including parliamentarians, Mines minister Winston Chitando, who has previously served as chair of the Hwange board, Vice-President Kembo Mohadi as well as President Emmerson Mnangagwa have all been fingered in the ongoing mess at the company, but in typical Zanu PF fashion, none of them has thought it necessary to exonerate themselves.
If the government is sincere about changing the business environment, heads are supposed to roll. Such a culture of impunity should never go unpunished.
The strategic importance of Hwange to industry and the country at large does not require overstating.
Hwange is too big an institution to be allowed to fail at the hands of a few well-connected individuals.
Given previous failed efforts to try to resuscitate the company, which saw government pumping in a $111 million loan, it will not be easy for Hwange to convince any banks or shareholders to invest any additional funding, but Hwange still has a valuable resource which, if extracted profitably, will go a long way in turning around the fortunes of the
country.
