Hwange profitability remains subdued
Coal miner Hwange Colliery Company profitability for the half year to June 30, 2021 remained depressed compared to the same period last year although the company recorded a general improvement in production.
Figures from the coal miner show that a net loss of $160 million was recorded for the half year from a profit position of $1,19 billion during the same comparable prior year period. The net loss is a result of $258,05 million exchange loss on foreign legacy debts and deferred tax of $441,15 million during the period under review.
A basic loss per share of 0,87 cents was recorded from earnings per share of 6,49 cents. Revenue for the period increased by 38 percent to $3,03 billion largely due to a combination of an increase in high value coking coal sales and regular product price adjustments in line with market value.
In terms of operational review, Hwange’s production increased by 51 percent during the period under review, with the main challenges having been foreign currency to import spares and consumables.
The sales volumes, however, increased by only 23,7 percent compared to 2020 mainly as a result of the influence of Covid-19 on the market and logistics, as well as the reduced thermal coal offtake.
“Going forward, the company has targeted to increase coking coal production and sales which will in turn increase capacity to discharge obligations to creditors as well as create a positive balance sheet in the medium term,” said Hwange.
During the period under review, focus was on increasing production and sales of high value coking coal.
As a result, coking coal sales increased by 28,6 percent to 52 793 tonnes. The coking coal sales volumes were, however, limited by washing capacity constraints.
According to Hwange, the plant was completed and commissioned in April 2021. Total coal mined by opencast operations was 806 404 tonnes, which was 55 percent ahead of same period last year.
A total of 305 679 tonnes of coal was delivered to Hwange Power Station during the course of the year, which was 14 percent increase from previous year although deliveries into the power station were, however, negatively affected by plant challenges in the power station and limited stock holding space.
Main underground mine coal production was 19 percent higher than the previous year mainly because of improved operational funding and credit facility availed by the major original equipment manufacturer, which has been working well.
During the period under review, significant investment was made in repairs and maintenance of the existing plant and equipment.
Bidders were also invited to tender for the full rebuild of the original coke oven battery which was shut down in mid-2014.
The tender is for the rebuild of the by-products plant and ancillary plants and also for the supply of a completely new coke oven battery together with the by-products and ancillary plant.
Hwange bemoaned limited working capital and long term financing for its business. But, it is not all doom and gloom for the coal producer.
“It is however, pleasing to note that as the company’s performance continues to improve, funding support in the form of lines of credit to the business from local banks and regional financiers has likewise been established.
“As a result, the operations are expected to stabilise within the next 6 to 12 months. The immediate target is to consistently produce at least 200 000 tonnes a month,” said Hwange.
The company is currently in its third year under reconstruction, which was done to rescue it from difficulties and among the initiatives by the Administrator to improve the company are tight cost control measures.
This is in addition to implementation of a plan to fully capacitate the open cast mine as well as increase the haulage capacity, the washing capacity and replacement of the continuous miner and shuttle car.- The Herald
