Reconstruction model saves HCCL

HWANGE Colliery Company Limited (HCCL) is emerging from the woods after the Government placed the firm under administration last year to facilitate recovery.

Although the move resulted in suspension of the company from the Zimbabwe Stock Exchange in 2019, HCCL’s interim financial results for the six months ended June 30, 2020, show that the business is now on a rebound.

“It is interesting to note that prior to the company being placed under administration, it was making losses for a sustained period.

“The company however, had a net loss position of ZWL$992 million for the period under review compared to the net profit of ZWL$3,5 million for the same period in 2019 due to an exchange loss of ZWL$1 billion on legacy foreign creditors,” the company’s administrator, Mr Bekithemba Moyo, said in a statement accompanying the results.

“Revenue increased by 28 percent from ZWL$827 million in 2019 to ZWL$1 billion for the six months under review on an inflation adjusted basis and on historical basis it increased by 916 percent from ZWL$70 million to ZWL$709 million.

“This was largely due to a combination of an increase in high value coking coal sales as well as frequent adjustments to product prices in line with changes to the interbank rates.”

HCCL’s total output rose by 84 percent to 596 876 tonnes due to increased production by the contractor from 325 114 tonnes last year. Mr Moyo said their focus was now on increasing output based on own mining activities as that would not be only cheaper but reliable.

“Total production increased by 84 percent from 325 114 tonnes in 2019 to 596 876 tonnes for the period under review. This was largely due to an increase in production by the contractor.

“Our target going forward is to ensure that production is skewed to own mining as it is not only cheaper but more reliable particularly given cash flow challenges that dogged the company in the recent past,” he said.

A recapitalisation programme for the company has been embarked on, which, if successful, would result in production improving by at least 50 percent next year. The colliery needs to consistently produce 200 000 tonnes to have a sustainable business.

During the period under review, total coal from HCCL’s open cast was 518 303 tonnes, a 143 percent increase in production from 2019 including 331 296 tonnes mined by the contractor, Zhong Jian who started in February 2020.

“Total coal mined by Opencast JKL operations totalled 187 007 tonnes, a 13 percent decline in production from the previous year.

“This was largely due to continuous breakdown of equipment, which is a challenge as the equipment is now antiquated,” said Mr Moyo.

“Most of these problems are currently being addressed and we are cautiously optimistic that there will be resolved by the end of first quarter next year.”

A total of 321 290 tonnes were delivered to Hwange Power Station during the period under review including contractor deliveries.

The mine continued to be constrained by low working capital inflows and the shortage of adequate forex for critical spares and consumables.

“The Covid-19 pandemic also impacted negatively on the movement of spares across borders and also locally. This resulted in long lead times in acquiring critical spares.”

Underground mining output at 3Main Underground Mine stood at 78 573 tonnes and this was 32 percent below budget during the first half of 2020. A total of 217 557 tonnes were processed against a target of 480 000 tonnes.

“Plans were put in place to improve monthly production by increasing haulage capacity and also availing spares and service kits for the plants and mobile equipment.

“The coal preparation plant managed to produce 75 093 tonnes against a target of 240 000 tonnes. The production was also affected by low coal supply, fuel, outages and engineering breakdowns.
“Haulage capacity was improved and spares were availed as means to increase the plant utilisation and product,” said Mr Moyo.

He said HCCL plans to resume coke production from January 2023 as plans are already underway to acquire a new coke oven battery and by-products recovery plant.

“This will see an increase in revenue and sales for the company. Plans are also underway to acquire a new modular washing plant that will be located close to the mine. –-chronicle.co.zw