Hwange banks on rising global coal prices

05 Oct, 2022 - 00:10 0 Views
Hwange banks on rising global coal prices HCCL’s revenue doubled to $16 billion in the half year period to June 2022, but this did not translate into profits (File Picture).

The Herald

Nelson Gahadza-Senior Business Reporter

Hwange Colliery Company Limited (HCCL) says it will focus on coal beneficiation and improving quality of its coal in the wake of rising global coal prices.

The company’s administrator, Mr Munashe Shava, in a statement of financials for the half year period to June 30, 2022 said global coal prices continued to rise amidst the on-going Russia-Ukraine conflict and the company intends to position itself to benefit from the increase in global demand for fossil energy.

“In this regard, the company will be focusing on coal beneficiation and improving the quality of its coal,” he said.

He added that the company was set to receive a washing plant that will be located near mining areas and this equipment will be commissioned during the first quarter of 2023.

“The company has plans to build a coke battery by 2025,” said Mr Shava. HCCL explores, mines, processes and markets coal, coke and associated by-products and the mining operations are predominantly open pit.

The company’s revenue for the half year period grew to $16 billion compared to $8 billion during the same period last year, at the same time cost of sales increased to $11 billion from $6 billion.

“Despite the increase in revenue, the company posted losses for the period of $3,97 billion in inflation adjusted terms and the net loss is a result of $8 billion exchange loss on foreign legacy debts during the period under review,” said Mr Shava.

He added that the company’s gross profit increased by 74 percent to $4,54 billion in inflation adjusted terms compared to the same period last year and this was largely due to a combination of an increase in sales volume and regular product price adjustments in line with market value.

During the period under review, the company’s production increased by 52 percent while the sales volumes increased by only 74 percent compared to 2021.

Mr Shava said that limited availability of spares and the general increase in prices of maintenance spares and consumables affected the operations negatively.

He said that the company’s strategic priorities for the half year included  open cast mining where  total coal mined by opencast operations was 1 288 521 tonnes, a 55,59 percent increase in production from the previous year.

Mr Shava said that the steady production is mainly attributed 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 124 percent increase from previous year.

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

He noted that HCCL also focused on underground Mining and 3Main Underground Mine coal production was 19,49 percent lower than the previous year mainly due to ageing underground mining equipment.

Mr Shava said that the strategic plan is to have two new continuous miners within the next 18 months and 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 said.

On the fixed and mobile plant, Mr Shava said that the average feed recoveries for HCCL dry screening and wet screening plants were 98 percent and 90 percent respectively.

He said that coking coal recovery from Jig & Floatation and HMS plants was 70 percent of plant feed.

“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,” said Mr Shava.

He added that this has put pressure on the company’s limited working capital hence the company intends to have modular plants and washing plants located near the mining areas within the next 24 months.

During the period under review, HCCL also prioritised safety, health, environment and quality. Mr Shava said that the company experienced a fatality free shift record as at June 30, 2022 and the lost shift injury frequency rate improved due to initiatives like people focus, systems implementation and technology embracing.

“HCCL embraced a risk/opportunity- based approach to operations aimed at zero harm. Top risks included acid mine drainage, for which an environmental management plan (EMP) to manage its effects is now in place,” he said.

He indicated that likewise, robust measures aimed at reducing similar incidents related to non-communicable diseases were established through a Wellness policy.

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