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Business Reporter

HWANGE Colliery Company Limited (HCCL), which is under reconstruction, recorded a profit before tax of US$10,2 million for the third quarter ended September 30, 2023.

The Government, which controls about 42 percent shareholding in HCCL, in 2022 placed the company under reconstruction for the second time in about two years to revive the Matabeleland North-based colliery company that for years has been limping along financially.

Its placement under reconstruction means the firm remains suspended from the Zimbabwe Stock Exchange where it was suspended in 2018. 

The company has been facing financial issues over the last few years, resulting in profitability and production challenges.

In a trading update for the quarter under review, the company’s administrator Mr Munashe Shava said sales prices for coal dropped slightly while input costs remained relatively constant thereby affecting the profits for the company.

“However, the company performed fairly well during this quarter as unaudited profit before tax amounted to US$10,2 million better than the previous years.

“The company’s performance during this quarter was fairly better as both production of 989 503 tonnes and sales of 911 245 tonnes were almost double from last year’s performance mainly due to efficient and effective machinery, which was acquired during the first quarter of 2023,” he said.

Of the 911 245 tonnes realised in sales during the period under review, Hwange Power Station (HPS) coal accounted for 48 percent, raw coal (39 percent), Hwange Coking Coal (1 percent) and Hwange Industrial Coal (12 percent) of the total sales.

During the same period in 2022, the company sold 388 487 tonnes, comprising HPS (7 percent), raw coal (55 percent), Hwange Coking Coal (6 percent) and Hwange Industrial Coal (32 percent).

“The contaminated coal sales accounted for 8 143 tonnes (2022-25 309 tonnes) in the same period. 

“For the 9 months to September 30, 2023 the company realised 2 795 303 tonnes (2022-1 060 976 tonnes) in sales with HPS accounting for 43 percent,  raw coal 39 percent, Hwange Industrial Coal 17 percent, Hwange Coking Coal 1 percent (2022-HPS 9 percent, raw coal 48 percent, Hwange Coking Coal 8 percent and Hwange Industrial Coal 35 percent of 1 060 976 tonnes).

“Contaminated coal also amounted to 30 229 tonnes (2022-71 933 tonnes).

“The sales improved from 1 060 976 tonnes for the same period last year to 2 795 303 tonnes achieving a positive change of 163 percent,” said Mr Shava.

He said the positive change was attributable to the doubling of production as well as the increase in marketing efforts to sell off the mined coal.

Of HCCL’s three segments which include estate and medical, the mining division was the most performing segment during the period under review contributing 96 percent of the company’s revenues improving from 91 percent achieved in 2022 in the corresponding period.

The improved performance of the mining division, he said, could be attributed to new mechanisation of the segment in the first quarter of last year. 

The estates division had 3 percent, dropping down from 8 percent during the corresponding period in 2022 while the medical division remained stagnant at 1 percent.

In the outlook, HCCL aims to stop underground mine production for the next six months to avoid losing mined coal through spontaneous combustion as production is way more than sales.