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Tapiwanashe Mangwiro

Senior Business Reporter

HWANGE Colliery Limited says strong demand for both thermal and coking coal positively impacted sales in the quarter to March 2022 despite challenges of price discovery, which drove input costs and weighed down profitability.

Company secretary Chrispen Ncube, said in a trading update, “The operating economic environment for the quarter under review was fairly stable, with some price discovery challenges affecting the company’s input costs and profitability. 

“Despite these challenges, the market was buoyed by a strong demand for both thermal and coking coal that positively pushed sales.”

Volume of sales to Hwange Power Station (HPS) increased to 360 698 tonnes compared to 148 957 tonnes in the same period in 2021 while sales to Hwange Coking Coal (HCC) and Hwange Industrial Coal increased to 295 755 tonnes compared to 204 816 for the same period in 2021.

Total coal mined for the year-to-date increased by 74 percent compared to the same period last year.

Production volumes for HPS coal increased to 412 528 tonnes in comparison to 112 207 tonnes recorded in the same quarter last year.

However, production volumes to HCC and HIC decreased to 236 041 tonnes in comparison to 260 677 tonnes in the same period in 2021.

Total sales sold for the three months increased from 354 888 to 683 896 tonnes during the quarter under review.

Earlier in the year, HCCL said it entered into a capital financing deal from which it will receive equipment valued at US$15 million in the next two years.

However, the coal mining company did not disclose the identity of the partner in the deal.

Hwange said: “The company has entered into an equipment mobilisation agreement for the Underground Mine, that will result in the company getting new underground mining equipment valued in excess of US$15 million in the next two years.”

The recapitalisation programme will increase production to 50 000 tonnes per month in the second half of 2022, 100 000 tonnes per month in the first half of 2023 and a further 150 000 tonnes per month in the last quarter of year 2023.

Such increase in production would be a welcome development to the company, which currently produces a total of 15 000 tonnes per month.

The company is currently on an export drive to improve export earnings. The company is increasing in-roads in regional markets such as Zambia, DRC, Malawi, Mozambique, Botswana and South Africa which is however negatively affected by poor logistics.

“Engagements with key logistical partners such as BBR, NRZ and ZRL are on-going to ensure the whole value chain is smoothened and that HCCL coal remains competitive on the export market,” the company said.

The miner is also investing in coking coal as it looks to increase the quantity and quality of its coking coal in order to export.

“In addition, open cast operations at the JKL pit will continue to be capacitated in order to increase high value coking coal in the product mix, the target being to increase production to 90 000 tonnes per month by end of 2022,” Hwange said.

The company said it had also engaged a new mining contractor to increase high value coking coal with a target production of 20 000 tonnes per month.

“The main thrust of Hwange in 2022 is to ensure that we fully capacitate our opencast and underground mine by addressing all bottlenecks currently affecting the mining process.”

The equipment mobilisation contract includes a washing plant that will be located near the mining areas, with the equipment to be commissioned during the second quarter of 2022. 

The company believes this will reduce hauling and processing costs.

“The organisation will also go on a vigorous proactive maintenance drive to continue to stabilise the current washing capacity at both the HMS (heavy media separation) plant and the Jig and floatation plant,” the statement read.

The company has engaged a contractor to resuscitate beehive coke ovens to produce high value foundry coke with high demand in the export market. 

Production is targeted to commence during the first quarter of 2022, and will generate about US$3,4 million in 2022. The company, which is under administration, has a legacy debt of $904 million.