Coal miner, Hwange Colliery Company has terminated its contract with Portuguese firm, Mota-Engil, signed in 2013.
The US$260 million mining contract was signed with the hope of doubling coal production.
The contract included drilling works, detonation, load and transportation of coal at the Colliery’s Chaba opencast mine.
The state-owned coal miner has been struggling to maximise operations and pay workers.
The company is heavily indebted and owes government in excess of US$150 million with its liabilities outstripping the value of its assets.
Government, which owns 52 percent stake in the company, therefore, had to put the coal miner under reconstruction under the stewardship of DBF Capital Partners in a bid to set it on profitability course.
Contacted for comment, company administrator Bekithemba Moyo confirmed the termination of the contract.
“Their contract has lapsed and parties have mutually agreed not to renew it,” said Moyo.
On the US$50 million debt owed to Mota Engil, Moyo said: “To the best of my knowledge, MEL account is under control.”
Mota-Engil operates in 20 countries in Europe, Africa and Latin America and apart from mining, it is also involved in areas such as engineering and construction, hydro power stations, dams, roads, ports, railway as well as underground tunnels.
In Africa, it has operations in Malawi, Mozambique, Angola, Zambia, South Africa, Cape Verde and Ghana.
Hwange’s reconstruction bid however this week flopped after the High Court dismissed Justice and Parliamentary Affairs Minister Ziyambi Ziyambi’s bid to put Hwange Colliery under reconstruction.
Justice David Mangota ruled that Ziyambi failed to justify his move given that a scheme of arrangement, which was ratified by the government and other shareholders with a view to salvage the coal mining firm from collapse, was still operational.
Ziyambi approached the High Court with the application without consulting other shareholders, saying the problems afflicting the company needed swift action to avert possible liquidation.
He then said Ziyambi, as Justice Minister, the law empowered him to put any company under reconstruction without consulting other shareholders if necessary.
But his move was opposed by a trustee of the debenture holders of Hwange and chairman of the court-sanctioned scheme of arrangement, Andrew Lawson and a legal entity called Messina Investments.
Lawson and Messina submitted before Justice Mangota that the reconstruction order sought by Ziyambi was nothing, but a weapon which Mines and Mining Development Minister Winston Chitando, had hatched to remove them from Hwange’s board after they had proposed to conduct a forensic audit of its operations.