Hwange Colliery Company Suspended From The Zimbabwe Stock Exchange
The Zimbabwe Stock Exchange (ZSE) Limited has suspended Hwange Colliery Company from trading following its placement under administration. The decision to suspend Hwange Colliery Company Limited was made with effect from November 2, 2018.
The suspension is ment to last for the duration of the administration period. Hwange Colliery Company has secondary listings on the London and Johannesburg stock exchanges. Zimbabwean Government (which owns 38% of Hwange) published a Government Gazette notice last week, placing the mine under administration.
Matanda said before reaching the decision, the ZSE sought and was granted permission to suspend trading in Hwange Colliery Company Limited’s shares by the Securities and Exchange Commission of Zimbabwe pursuant to the provisions of section 64(a) of the Securities and Exchange
ZSE acting chief executive, Martin Matanda, said in a statement
The Zimbabwe Stock Exchange Limited hereby notifies the investing public of the suspension from trading of Hwange Colliery Company Limited with effect from November 2, 2018 following its placement under administration in terms of the Reconstruction of State Indebted Insolvency Companies Act.
“The Reconstruction Act has, among other provisions, the following; clause 6(d). Every disposition of the property rights of action of the company and every transfer of shares or alteration in the status of its members, made after the commencement of the reconstruction shall, unless the administrator otherwise orders, be void.”
Matanda said that the ZSE was not informed about the management changes at the company and the decision to place it under administration.
Thursday (1 Novermber 2018) last week the Zimbabwean Parliament made for interesting listening. Board members of Hwange Colliery Company, led by acting chairperson Juliana Muskwe appeared before the Parliamentary Committee on Mines to talk about the goings-on at the struggling miner.
Muskwe and her colleagues testified that some $6,4 million which government had pumped into Hwange Colliery Company for exploration, allegedly disappeared. She wet on to say that any effort to deal with the culprits or follow the money was landing members of the board in trouble from some shadowy characters who invoked President Emmerson Mnangagwa’s name, office and power.
Two years ago, the same company was involved in an irregular purchase of Turbo Mining, a contractor, at $2,8 million, when the mining contractor was valued at $800 000.
The Colliery’s obligation to Turbo rose to $5 million, including the legacy debt of mining operations rendered to the former, according to the memorandum of understanding signed between the two companies.
The disappearance of the $6,4 million, and the irregular purchase of Turbo Mining took place under the stewardship of former managing director, Thomas Makore.
Minister Chitando said Hwange had made successive losses over the years.
That is why fundamentally there is no business in this world which can ever succeed if it is costing you more than your revenue. Who is paying you for that cost? In January to December 2017.
Hwange for the first time made a profit of $1,3 million, but posted a net loss because that time there were a number of intervention measures.“January to June 2018 things went berserk; it was now losses, we had a fundamental problem.”
The problems faced by the company gave Government warning shots as a shareholder. Hwange Colliery, like other parastatals is a feeding trough for the bigwigs and their cronies. In Hwange’s case, the cronies were bold enough to kidnap members of the board for not toeing the line, and were assisted in this shocking episode by the police! What recourse did the board members have?
Winston Chitando’s response was to place the Colliery under administration, stripping the board of any powers.This one Shepherd Tundiya had enough authority to order the board to meet with an unnamed director in the President’s Office and the Mines minister.
What we learn from the Hwange Colliery is that government has many questions to answer on its stewardship of State-owned enterprises and that it is the biggest culprit in their underperformance. Hwange’s problems are symptomatic of the deeper problems at parastatals and other State-owned companies that require external audits to shed light on the goings-on.
He said in terms of the board’s projection, Hwa-nge would make a profit of $269 000 in 2018, $39 million in 2019, $54 million in 2020, $59 million in 2021 and $70 million in 2022.