Hwange Colliery improves performance but posts int...

Hwange Colliery improves performance but posts interim ZWL3.97bn loss on back of foreign legacy debt

Hwange Colliery saw a 52% increase in production and a 74% increase in sales for the six months to June 30, but faced a ZWL3.97-billion loss in inflation-adjusted terms translating to a 356% increase year-on-year.

The JSE-, ZSE- and LSE-listed coal miner made a loss of ZWL870 715 in the period.

The company’s gross profit increased by 74% year-on-year to ZWL4.54-billion in inflation-adjusted terms, largely as a result of a combination of an increase in sales volume and regular product price adjustments in line with market value.

The company’s report shows that net loss is a result of an ZWL8-billion exchange loss on foreign legacy debts during the period under review. Revenue in the period was ZWL16.49-million, up 87% from the ZWL8.83-million of the interim period of the 2021 financial year.

Basic earnings a share totalled ZWL7.20 and basic headline earnings a share totalled ZWL7.30.

Total coal mined by opencast operations amounted to 1.29-million tonnes – a 55.59% increase in production year-on-year. The steady production is mainly attributed to the successful contract mining model the company has employed.

A total of 676 387 t of coal was produced for Hwange Power Station and Zimbabwe Zhongxin Electrical Energy for electricity generation during the course of the period – a 124% increase year-on-year.

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

In terms of underground mining production, Hwange produced 19.49% less year-on-year, mainly owing to ageing underground mining equipment.

In this regard, the miner’s strategic plan is to have two new continuous miners within the next 18 months, resulting in the company’s underground mine reaching its nameplate production capacity. The first continuous miner is expected to be commissioned before the end of this year.

Looking ahead, Hwange Colliery expects global coal prices to continue to rise amid the 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, Hwange Colliery will focus on coal beneficiation and improving the quality of its coal.

In this vein, 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.

Hwange Colliery has been under administration since October 2018.

Prior to the order, the national coal miner was facing gross losses, persistent losses over a long period, negative cash flow, obsolete and antiquated plant and equipment, technical insolvency with liabilities significantly exceeding assets, non-payment of creditors as they fell due, and non-payment of employees over a long period of time