ZIMBABWE’S oldest coal miner, Hwange Colliery Company Limited (HCCL) is to deploy millions in capital expenditure (capex) to rebuild the business after suffering first half write downs on ageing technologies.
Hwange said it was held back by avoidable costs due to drastic downtimes after elevated breakdowns during the half year ended June 30 2022.
This exerted pressures on working capital.
Current assets ended at ZW$8 billion (about US$13 million) during the period, against ZW$7,8 billion (about US$12,5 million) in current liabilities, leaving the firm with about ZW$200 million (about US$320 000) working capital.
Hwange has been working towards recovery since slipping into administration about five years ago.
The crisis was compounded by steep surges in global inflation and prices after supply chain gridlocks continued as Eastern Europe slipped into conflict.
Hwange posted a ZW$4 billion (about US$6,5 million) inflation adjusted post-tax loss during the period, a significant deterioration from ZW$870 million (about US$1,4 million) during the same period in 2021.
Revenue doubled to ZW$16,4 billion (about US$26,4 million), from ZW$8,8 billion (about US$14 million) during the comparable period in 2021.
Overally, output took a positive trajectory after the firm deployed contractors to complement its own production.
Administrator, Munashe Shava said Hwange would be importing two continuous miners to boost output.
He was not at liberty to disclose his budget.
But continuous miners were trading at between US$2,1 million and US$3 million on the Chinese markets this week.
It means the firm would spend at least US$4,2 million on the acquisitions.
Hwange’s underground operation, 3Main Mine, came into production in 2006.
“3Main underground mine coal production was 19,49% lower than the previous year,” Shava said.
“This was mainly due to ageing underground mining equipment. The strategic plan is to have two new continuous miners within the next 18 months. This will result in the company’s underground mine reaching optimum production capacity. The first continuous miner is expected to be commissioned before the end of this year,” he added.
“The company needs to improve its current washing capacity, as both the HMS plant and the Jig and Floatation plant are outdated and need constant maintenance and repair. This has put pressure on the company’s limited working capital. The company intends to have modular plants and washing plants located near the mining areas within the next 24 months,” Shava said.
Shava said while foreign legacy debts affected operations, output rose by 52% during the period.
“Despite the increase in revenue, the company posted losses for the period of ZW$3,97 billion in inflation-adjusted terms.
The net loss is a result of ZW$8 billion exchange loss on foreign legacy debts during the period under review,” Shava said.
Total coal mined by opencast operations was 1 288 521 tonnes, a 55,59% increase in production compared to the previous year attributable to the successful contract mining model the company has employed.
A total of 676 387 tonnes of coal was produced for Hwange Power Station and Zimbabwe Zhongxin Electrical Energy for electricity generation during the course of the year, which was a 124% increase from previous year. – (The Independent)