(Bloomberg) -- Hwange Colliery Company Ltd. plans to reduce its workforce by as much as half and will restart underground operations in the third quarter as the Zimbabwean miner seeks to reduce costs and return to profitability.
HCCL began a voluntary severance program in March and about 200 staff have already taken the option, Managing Director Thomas Makore said in an interview Tuesday. The company, which employs 2,400 people, probably needs to slim down to about 1,200 to 1,400 to produce competitively, he said.
The miner is in talks with potential customers for offtake agreements from underground operations, which are expected to resume by the end of September and will boost production of more valuable coking coal, Makore said. Production from the open-pit operations has rebounded after heavy rains in the first quarter slowed activity, he said. Output rose to 170,000 metric tons in May from 52,000 tons in April and is expected to top 200,000 tons this month.
HCCL hasn't reported an annual profit since 2012, according to data compiled by Bloomberg and said in March it faced significant liquidity problems last year that constrained output, as it struggled to find money for spare parts and other production needs. Creditors last month approved a plan to convert its short-term debts to medium and long-term borrowings.
Zimbabwe's government owns 43 percent of the coal miner -- 37 percent directly and 6 percent through the state-owned pension fund, while 26 percent is owned by businessman Nicholas Van Hoogstraten, Makore said.
HCCL reported a loss of $89.9 million in the 12 months through December, compared with a $115.1 million loss a year earlier.
To contact the reporter on this story: Godfrey Marawanyika in Harare at gmarawanyika@bloomberg.net.
To contact the editors responsible for this story: Lynn Thomasson at lthomasson@bloomberg.net, Liezel Hill, Michael Gunn
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