Hwange Colliery Company has narrowed its loss for the six months ended June 30 to $23-million, compared with a loss of $24.5-million reported for the six months to June 30, 2017.

Despite the loss position, the financial results indicate signs of recovery.

Production improved by 45% to 819 859 t, but was 22% below the targeted 1.05-million tonnes, owing to working capital constraints.

The company’s revenue increased by 62% to $30.5-million from $18.8-million for the comparable period last year, attributable to a 51% increase in sales volumes and increased prime grades in the sales mix.

Coal sales reached 682 152 t, up from 450 452 t for the same period last year but again lower than the targeted 1.24-million tonnes.

Sales to the Hwange power station increased by 70%, from 221 646 t to 376 695 t and HCC/HIC coal sales increased by 54%, from 174 201 t to 268 570 t.

Export sales contributed only 5%, compared with the targeted 20% contribution, with Zambia as the largest export market. Trial orders of industrial coal to new blue-chip customers in Zambia and South Africa were also undertaken, and these new customers are expected to be a source of market share growth.

OUTLOOK

The company on Friday said its half-year performance demonstrated that increased production can be achieved.

This increase will be complemented by some targeted efficiency interventions that are expected to impact positively on the cost of sales.

Through to year-end, the company will focus on a sustainable monthly production of 300 000 t a month, inclusive of mining contractors’ contribution.

Further, it will focus on mining high-value coking coal, owing to the resuscitation of the underground mine operations, producing about 15 000 t a month since January, with a target now set at 50 000 t a month to increase bottom line and exports.

The company has engaged the National Railways of Zimbabwe as a solution to its external logistics, but challenges still remain and are being resolved.  

The company’s intended takeover project of the Hwange Coal Gasification Company (HCGC) coke oven battery pursuant to a build, own, operate and transfer agreement with its Chinese partners was delayed, as it focused more on resuscitating its own coke oven battery. Options for the takeover continue.

An ongoing low-cost high-productivity strategy has been adopted.

An exploration agreement with Fugro Earth Resources to undertake exploration and drilling of the Western Areas Concession has been agreed, with exploration expected to start in the last quarter of the financial year.

The company will also look to improve efficiencies and competitiveness. However, increased production requires that the company allocate more funding to its operations, focusing on its core business of mining and reducing nonmining costs in line with industry best practices.

No fatality was recorded during the period.