Despite a 52% increase in production and a 74% increase in sales for the six months to June 30, JSE-, ZSE- and LSE-listed Zimbabwe-based coal miner Hwange Colliery made a Z$3.97-billion loss in inflation-adjusted terms in the period – a 356% increase year-on-year.
For the six months to June 30, 2021, the miner made a loss of Z$870 715.
The net loss is a result of an Z$8-billion exchange loss on foreign legacy debts during the period under review.
The company’s gross profit increased by 74% year-on-year to Z$4.54-billion in inflation-adjusted terms, largely as a result of a combination of an increase in sales volume and regular product price adjustments in line with market value.
Revenue in the period totalled Z$16.49-million, up 87% from the Z$8.83-million of the interim period of the 2021 financial year.
Basic earnings a share totalled Z$7.20, while basic headline earnings a share totalled Z$7.30.
Hwange Colliery was placed under administration by a reconstruction order made by Zimbabwe’s Justice, Legal and Parliamentary Affairs Minister in terms of the reconstruction of State-Indebted Companies Act on or about October 26, 2018.
The reasons for this include gross losses, persistent losses over a long period, negative cash flow, obsolete and antiquated plant and equipment, technical insolvency with liabilities significantly exceeding assets, non-payment of creditors as they fell due, and non-payment of employees over a long period of time.
Total coal mined by opencast operations amounted to 1.29-million tonnes – a 55.59% increase in production year-on-year. The steady production is mainly attributed to the successful contract mining model the company has employed.
A total of 676 387 t of coal was produced for Hwange Power Station and Zimbabwe Zhongxin Electrical Energy for electricity generation during the course of the period – a 124% increase year-on-year.
Deliveries into the power station were, however, negatively affected by limited stock holding space in the power station.
In terms of underground mining production, Hwange produced 19.49% less year-on-year, mainly owing to ageing underground mining equipment.
In this regard, the miner’s strategic plan is to have two new continuous miners within the next 18 months, resulting in the company’s underground mine reaching its nameplate production capacity. The first continuous miner is expected to be commissioned before the end of this year.
Looking ahead, Hwange Colliery expects global coal prices to continue to rise amid the ongoing Russia-Ukraine conflict, and the company intends to position itself to benefit from the increase in global demand for fossil energy.
In this regard, Hwange Colliery will focus on coal beneficiation and improving the quality of its coal.
In this vein, the company is set to receive a washing plant that will be located near mining areas. This equipment will be commissioned during the first quarter of 2023.
The company has plans to build a coke battery by 2025.