JSE-listed Hwange Colliery Company has reported a gross profit of ZWL182-million for the year ended December 31, 2019, compared with a loss of ZWL3.3-million the year before.
Its net loss, however, widened from ZWL78-million to ZWL91-million, owing to an exchange loss of ZWL322-million on legacy foreign creditors.
The coal producer in April 2019 resumed operations after a court had lifted an order to put it under administration in August 2018.
Own production increased by 27% year-on-year, but overall production decreased by 43% as a result of a 75% year-on-year decrease in contractor production.
Over time, less reliance should be placed on contractors, with own mining being a priority as it is cheaper and generally more reliable. However the major challenge for this is largely a lack of both financial and human capital, aspects which the company will continue to prioritise going forward.
The company's focus during 2019 was on increasing production and sales of high-value coking coal. Sales increased by 20% to 244 314 t.
Sales volumes were, however, limited by washing capacity constraints as the plant is antiquated and needs retooling, which is currently under way.
Considerable investment has been made in new equipment, as well as repairs and maintenance of existing plant and equipment.
Repairs on the HMS washing plant are at an advanced stage but have been delayed by foreign currency constraints and are expected to be commissioned in the second quarter of this year.
The intended takeover of Hwange Coal Gasification Company Coke Oven Battery pursuant to a build–own–operate–transfer agreement with its Chinese partners is still pending.
The company is now also considering building its own battery to tap into the coke market.
Hwange is undertaking a strategic plan to unearth its potential. This includes the development of a second underground mining section in the medium term, so that coking coal production will double.