The new 25 year mine has a significant quantity of low-phosphorous coal and it was hoped it could help turnaround the loss-making coal producer.

WCC chairman Munacho Mutezo said the company had appointed the Merchant Bank of Central Africa (MBCA) to raise the required cash following the failure to raise the money offshore.

Mutezo added that the decision to appoint MBCA had been taken following the realisation that raising the money offshore was becoming problematic.

"We are confident that we are going to raise the money and kick-start the new underground mine," Mutezo said.

The underground mine has the capacity to produce 150,000 tonnes of coal a month as opposed to the 50,000t currently being produced by WCC, the country's sole coal producer. The Zimbabwean market has been undersupplied for some time, resulting in some companies importing coal from South Africa using scarce foreign currency.

The country had been pinning its hopes of resuming normal coal supplies on the development of the new underground mine, which covers a surface area of 2 250 hectares and is located south of the opencast mine.

The Financial Gazette reported that WCC has already spent about US$82 million in sourcing mining equipment for the underground mine. Mutezo said Joy Mining Machinery South Africa had been tasked to supply the equipment, which includes a 12HM31 continuous miner and three D-shuttle car with a planned output of 120,000t per month.

WCC, which has been operating on a life support system, was thrown a US$5.3 million lifeline last year by the African Export and Import Bank (Afrexim) through the Commercial Bank of Zimbabwe (CBZ), now trading as the Jewel Bank.

In its 2003 annual report, WCC said the Afrexim loan, which was used to repair and service production equipment, had not yet been repaid.

"No loan repayments were made during the year in respect of offshore loans because of foreign currency shortages," WCC said.

Despite being saddled with a US$15 billion debt as at the end of the 2003 financial year, Mutezo said prospects of raising the required money were still high.

"There is no company which has no debts and considering that WCC is such a big operation, it does not come as a surprise that we have these debts," Mutezo said.

WCC, which recorded a US$5.6 billion loss last year, recorded a fall in production to below 40% last year. Total coal mined amounted to 3Mt against the 3.9Mt produced in the prior year.

The government owns 40% of WCC's issued share capital, which is listed on the Zimbabwe Stock Exchange, the Johannesburg Securities and the London Stock Exchange.

Analysts have however long pointed out that government should scale down its exposure in the company and pave way for the injection of fresh capital in the coal miner, which has largely failed to live up to its immense potential.