eBusiness Weekly
Business Writer
Despite an 84 percent growth in production, Zimbabwe Stock Exchange listed Hwange Colliery, still reported a significant loss for the half year ended June 30, 2020.
Hwange, which is under administration and suspended from ZSE trading, recorded a net loss of $992 million for the period under review compared to a net profit of $3,5 million for the same period in 2019.
The loss is due to an exchange loss of $1 billion on legacy foreign creditors amounting to US$20 million.
“This problem (exchange losses) will persist until these (debts) have been fully settled,” company administrator Bekithemba Moyo said in a statement accompanying the results.
However, an increase in production by contractor Zhong Jian, resulted in overall production increasing by 84 percent to 596 876 tonnes up from 325 114 prior year.
Of the coal output, open cast pits contributed 518,303 up 143 percent from the prior year.
This included 331 296 tonnes mined by contractor Zhong Jian, while the balance of 187 007 tonnes was mined by Opencast JKL which was, however, at a 13 percent decline.
While increased production output was due to Zhong Jian, Hwange said the target going forward is to ensure that production is skewed to own mining, which is not only cheaper but reliable.
To achieve increased own mining, Hwange says it has embarked on a recapitalisation programme, which will result in production increasing by at least 50 percent in the coming year.
“We need to consistently produce 200 000 tonnes a month to have a sustainable business,” said the company.
Hwange says its production is being largely affected by the continuous breakdown of its equipment, which is now antiquated.
“Most of these problems are currently being addressed and we are cautiously optimistic that they will be resolved by the end of the first quarter next year.”
In addition to equipment challenges, Hwange says operations are also being constrained by low working capital inflows and the shortage of adequate foreign currency to acquire critical spares and consumables.
The situation has also been exacerbated by the Covid-19 pandemic, which has impacted negatively on the movement of spares across the borders and also locally within the borders resulting in long lead times in acquiring critical spares.
Turning to underground mining, Hwange said coal production at 3Main Underground Mine at 78, 573 was 32 percent below budget during the first half of 2020.
Plans are in place to adequately optimise the underground mine by introducing a third shuttle car.
Going forward, to diversify income streams, Hwange plans to resume coke production from January 2023.
Plans are already underway to acquire a new coke oven battery and a 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.
“It will result in a reduction in haulage costs and overall production costs.”
