HCCL seeks to capitalise on rising fossil energy demand

HWANGE Colliery Company Limited (HCCL) says the spike in global coal price on the back of rising demand for fossil energy necessitated by the ongoing Russia-Ukraine conflict presents a lucrative opportunity for the company to position itself for increased earnings.

In order to derive full benefit, the giant coal mining factory plans to focus on coal beneficiation and improving the quality of its coal grade.

The coal miner is targeting to ramp up production to more than 150 000 tons per month by end of 2023 from 50 000 tons.

This comes as global coal prices have shot back towards record highs as the Russia-Ukraine conflict continues to raise expectations that European buyers will start loading up on fossil fuel for fear that a standoff between the two nations will cut off gas supplies.

Recently, several European countries announced that they will be reactivating their coal plants to generate electricity. Europe is battling gas supply challenges occasioned by the Russia-Ukraine conflict.

To that end, the coal miner seeks to capitalise on the global demand.

“Global coal prices continue to rise amid ongoing Russia-Ukraine conflict and the company intends to position itself to benefit from the increase in global demand for fossil energy.

“In this regard, the company will be focusing on coal beneficiation and improving the quality of its coal,” said the company in its interim consolidated financial results for the year ended 30 June 2022.

The company said it plans to build a coke battery by 2025.

“The company is set to receive a washing plant that will be located near mining areas. This equipment will be commissioned during the first quarter of 2023. The company has plans to build a coke battery by 2025,” it said.

Hwange, the oldest coal mining firm exports coke to copper smelters mainly in Zambia and the Democratic Republic of Congo.

Zimbabwe is witnessing huge investments in the coking coal sector as investors seek to take advantage of surging demand in China, the world’s largest consumer of the commodity used for steel production.

Locally, demand is expected to increase on the back of investments in ferrochrome smelting facilities after the Government imposed a ban on raw chrome exports to encourage value addition and beneficiation.

According to the financials, opencast operations produced 1 288 521 tons, which is a 55,59 percent increase in production from the previous year. It attributed the steady production rise to its contract mining model.

HWANGE Colliery Company Limited

“A total of 676 387 tons of coal was produced for Hwange Power Station and Zimbabwe Zhongxin Electrical Energy for electricity generation during the course of the year, which was 124 percent increase from previous year,” said the company.

“Deliveries into the power station were, however, negatively affected by limited stock holding space in the power station.”

However, despite the increase in revenue, the company posted losses for the period of $3,97 billion in inflation-adjusted terms. The net loss is a result of $8 billion exchange loss on foreign legacy debts during the period under review.

Its gross profit increased by 74 percent to $4,54 billion in inflation-adjusted terms compared to the same period last year. This was largely due to a combination of an increase in sales volume and regular product price adjustments in line with market value.

On production levels, a 52 percent increase was achieved during the period under review. The sales volumes, however, increased by only 74 percent compared to 2021.

The company has noted that limited availability of spares and the general increase in prices of maintenance spares and consumables affected the operations negatively.

Meanwhile, the coal firm is still under suspension from the Zimbabwe Stock Exchange following its adoption of an interim administration strategy.-ebusinessweekly