Martin Kadzere Senior Business Reporter
HWANGE Colliery returned to profitability after posting a US$500 000 net profit for six months to June this year, from a loss of US$1,4 million, due to improved sales mix and decline in administrative costs. Administrative costs were down 31,5 percent to US$10 million from US$16 million a year
earlier, the company said in its financial statement released yesterday.
Revenue rose 7 percent to US$51,8 million compared with US$48,8 million in the previous year. The company sold 918 491 tonnes of coal, 22 percent lower than the 1,1 million tonnes it pushed last year.
This was due to reduced supplies to Hwange Power Station. HPS reduced coal intake to the power station by 46 percent to 373 126 tonnes because it had accumulated a five-month stockpile cover.
The reduction was from a contractual 180 000 tonnes per month to 40 000 tonnes.
Coking coal sales declined from 364 688 tonnes in last year’s comparative period to 270 276 tonnes this year.
But coke products sales improved on strong regional demand. Coal fines and breeze rose 91 percent from 108 476 tonnes to 206 753 000 tonnes. Coke sales went up 261 percent from 18 943 tonnes in last year’s corresponding period to 68 336 tonnes.
Hwange’s major regional export markets include Zambia, DR Congo and Tanzania.
Cash flows improved, with net cash flows from operations turning positive. In the future, Hwange expects local demand to improve as the economy continues to recover.
The reopening of New ZimSteel (formerly Ziscosteel) can potentially increase local demand.
The company will continue to market its products into the regional markets where there are better margins, with demand for coke products expected to remain firm.
The awarding of the tenders for the supply of mining equipment worth US$40 million is expected to be concluded in the fourth quarter of 2012.
Meanwhile, the commissioning of equipment worth about US$6,3 million, acquired under a pre-purchase financing structure with a major customer, was underway.
The management said last year a full recapitalisation of at least US$170 million was required.
Hwange has an estimated installed production capacity of five million tonnes per year. Analysts say the anticipated regional shortage of power in the next year, as well as growing local demand, should see strong demand for coal and related output escalating.