Hwange Colliery Company Limited loss for six months to June this year grew to $7,8 million from $3,1 million reported in the same period last year, the company has said. Revenue dropped to $33 million from $40 million after coal sales declined to 765 000 tonnes from 913 000 tones during the first half of 2013, Hwange chairman Mr Farai Mutamangira said. Coal and coke prices also declined by an average 12 percent.
“The period under review was challenging and characterised by significant liquidity constraints,” said Mr Mutamangira.
“This culminated in further deterioration in capacity utilisation in industry and hence subdued demand for coal and coke.”
Coal deliveries to Hwange Power Station, the colliery’s biggest customer dropped to 394 000 tonnes from 581 000 tonnes a year ago.
Makomo Resources, another coal mining company operating in Hwange is now the major supplier of coal to HPS.
Coal fines sales rose by 55 percent to 155 000 tonnes. Coke sales decreased from 26 000 tonnes during the first half of last year to 18 000 tonnes after Hwange switched off its coke oven battery due to recurrent breakdowns.
The company recently entered into a toll coking agreement with South Mining Company while it evaluates options of either refurbishing the existing plant or building a new battery.
Mr Mutamangira said Hwange would by end of this month commission equipment worth $18,4 million acquired from Europe.
The company is also expected to receive equipment worth US$15 million acquired through a line of credit arranged by Import and Export Bank of India and would be commissioned by end of November.
Hwange has also secured $6 million working capital facility structured through a prepayment arrangement with one of its major customers.
“This injection coupled with the recapitalisation initiatives will result in improved production performance expected to be at least 400 000 tonnes per month by November,” said Mr Mutamangira.
Mota Engil, a mining contractor commenced operations at the beginning of August 2014 and the contribution to coal production will be averaging 200 000 tonnes per month.
Mr Mutamangira said the company “will intensify its cost containment strategies to maintain the margins to yield profitability at the end of the year against the backdrop of declining commodity prices.”
In the meantime, Hwange is planning to acquire additional concessions and the focus is on securing Western Areas, which is critical and strategic for future expansion.