Minister taken to task over the supply of faulty equipment to Hwange Colliery

The Deputy Minister of Mines, Fred Moyo,  was taken to task over the supply of faulty equipment to Hwange Colliery by an Indian company in a $31 million deal, with several senators seeking clarification on what was being done and whether the company would be compensated for loss of production.

The issue was raised by Senator Thokozile Mathuthu who asked for a full report on how the company ended up buying faulty equipment which necessitated the supplier having to replace some of the equipment at commissioning stage.

Senator Shadreck Chipanga asked the minister to explain whether the equipment that had been supplied was new or second hand because there had been reports that the company was sold used equipment, while Senator Misheck Marava wanted to know whether the company would be compensated for any loss of production.

Below is the full debate:

SENATOR MATHUTHU: My question is directed to the Minister of Mines and Mining Development. I asked a question last week on the heavy duty equipment at Hwange Colliery Company and you promised to bring an elaborate report. Do you have it?

THE DEPUTY MINISTER OF MINES AND MINING DEVELOPMENT (MR. MOYO): Thank you Madam President. I confirm, I brought a report from the company which I am going to read to the hon. senators.

All the 34 machines were received and commissioned. The latest delivery was three drills from Revathi Equipment which were received on the mine first week of July 2015. The three drills are now fully assembled and tested and ready for final clearance by ZIMRA. Lifting ZIMRA embargo should be done by end of this week and machines will be fully deployed at the Dragline JKL Pit.

The Belaz machines: 10×130 tonnes Dump trucks, five Front end loaders and two wheel dozers have now been deployed and machines are in full operation. Two service men and two trainers from Belarus are on the mine. Training is on-going on both operations and maintenance whilst minor operational snags are being addressed. Spares to support these machines have been received and at least four months cover is on the mine.

BEML EQUIPMENT

Three executives from BEML Equipment are on the mine supervising the repairs on the problem machines. These are:

• Chief General Manager – Manufacturing
•  Chief General Manager – R and D
•  Deputy General Manager – Quality Engineering

The first two batches of spares were airlifted from India and received on the mine on 14th July, 2015. Replacement of the faulty hydraulic components commences in earnest and three machines were rectified successfully and availed on 16th July, 2015. These include: one track dozer, one front end loader and one wheel dozer.

Work is on-going on the following machines: two front end loaders and one wheel dozer and rectification work should be completed by Friday 17th July, 2015. It is important to note that the problems on the front end loader and wheel dozers were a result of modifications on the hydraulic circuit where a check valve had been designed out to improve the operating cycle times of the machines. This modification however, resulted in high operating pressures leading to seal and oil cooler failures. The same problems were experienced by another customer who procured the same machines in India.

HCCL will monitor the performance of all the machines with specific emphasis on the problem machines. All the other BEML machines are available and working satisfactorily. Four service engineers from BEML and one commissioning Engineer from Revathi India are on the mine assisting HCCL with commissioning and services. The high level team from BEML India will issue a formal statement through their Indian Embassy once all work has been completed by 17 July, 2015.

SENATOR CHIPANGA: My question is directed to the Minister of Mines and Mining Development. There has been talk regarding the equipment in question that it was second hand. Are you in a position to tell the Senate whether this is just newspaper talk? Thank you.

MR. MOYO: Thank you Madam President and I thank the hon. senator for the question. I think the two companies, the supplier company from India and Hwange Colliery Company itself have given statements that were published in the national press confirming that the equipment was in fact new and was in fact fully warranted. The company has confirmed the same in the statement that I have just given to the secretariat. So, on that basis we have to believe that the company is new and that the challenges that are being met as per the explanation I got, are temporary design challenges that I believe are being rectified. We will follow up because the problems have not been fully resolved and we continue to monitor the situation and as necessary, will update the Senate.

SENATOR MARAVA: Thank you Madam President. My question is directed to the Minister of Mines and Mining Development. Hon. Minister, since the purchase of this faulty mining equipment was through tender, did we have a clause in the agreement as to who is responsible for losses of production as regards the non-functioning of the equipment from the date of delivery to the date of the equipment being functioning at Hwange; that time in-between.

MR. MOYO: I think the question being raised by the hon. senator is very pertinent in that when you buy equipment and the equipment does not work immediately and does not climb the commissioning curve to reach maximum performance in the design time, then you lose production and you lose revenue, it must be commissioned according to plan.

This morning, I asked our Principle Director in the Ministry who sits on the Hwange Colliery Board to avail the Ministry with the contract so that we can also look at it for future lessons if there are any lessons to be learnt. Unfortunately, as I talk now I have not seen the contract, neither has the Minister looked at it, but we will be looking at that, paying attention to the points that the hon. senator is raising and drawing lessons from that. From experience, the period that we are talking about within which the equipment has been exhibiting problems would probably be within the normal commissioning phase of the equipment, but hopefully it does not continue to elongate itself to the point where the company’s plan would be affected, where production is now being lost. Thank you.

SENATOR MARAVA: So, in other words the Minister is confirming that we do not have a fallback position on this issue or do we have a fallback position with regards to loss of production?

MR. MOYO: Thank you Madam President. I cannot confirm whether in fact we are in production loss phase and secondly, I cannot also confirm whether there are protective clauses or not. The clause that I confirmed was in place is one of warranty and I can confirm that the faulty hydraulic components are confirmed that they have been removed and new ones with the correct design have replaced those. As for the other details, as I have said, we have asked for the contract so that we look at it and as a Ministry, we do not always see the details of these transactional contracts because this is a private company, but we have people on the board and we also ensure that general principles of contracting are observed. As I said last time, the equipment was bought through a tender process. Thank you.

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