HWANGE Colliery Company Limited (HCCL) reported a $23 million loss in the half year period ended June 30, 2018 compared to $24,5 million in the same period last year, as the giant coal miner battles working capital constraints, debts and a depleting asset base.
Although production inched 819 859 tonnes from 565 298 tonnes achieved in the same period in 2017, production performance was 22 percent short of the budgetary target of 1 047 026 tonnes. Total sales tonnage for the period was 682 152t from 450 452t for the same period last year against a budget of 1 242 880 tonnes.
The company remains in the red zone with its asset base value retreating to $182 million compared to $216 million in the prior comparable period. This compares negatively with liabilities valued at over $300 million. The colliery, however, hopes to turnaround fortunes in the second half of the year riding on a raft of strategic measures pitched by the board and management.
In a statement accompanying the company’s interim financial results for the period issued on Friday, the board said HCCL was showing signs of recovery after its revenue grew to $30,5 million by June 30, 2018 from $18 million in the comparable period. This was attributed to an increase in sales volumes of 51 percent and increased prime grades in the sale mix.
“Improved production has seen the company regaining its market share lost in prior years. The board remains confident that the turnaround efforts shall yield the desired results,” said the board. It deferred dividend in the wake of a loss making position and stressed the need to fill casual vacancies within the board and management following the resignation of former managing director, Engineer Thomas Makore. The board also does not have a substantive chair.
It noted the company’s scheme of arrangement with creditors has afforded moratorium while building financial resources to meet outstanding obligations. According to the board, the operating plan for the second half of the year will be focused on increasing production and improving efficiencies.
“However, increased production requires that the company allocates more funding to its operations focusing on its core business of mining and reducing non-mining costs in line with industry best practices,” said the board.
“Innovative ways to deal with the scheme obligations will be explored while production of high-margin and value coking coal will be increased.”
The board has since proposed targeted efficiency interventions that are expected to impact positively on the cost of sales. Among the strategic priorities is increasing production to a sustainable 300 000 tonnes per month inclusive of the mining contractors’ contribution.
The company has already resuscitated underground mining that is producing 15 000 tonnes monthly since January 2018 with the aim of producing 50 000 to improve bottom line and enhance high value coal exports.
There are plans to also scale up open cast mining and coke oven battery operations as well as reducing costs.
Furthermore, HCCL has concluded an exploration agreement with Fugro Earth Resources to undertake exploration and drilling of the Western Areas Concession. “Commencement of works is expected in the last quarter of the current financial year,” said the board.
“As the company increases the thrust of the core business of mining, it will also look at ways of weaning non-core activities such as road maintenance, electrical power distribution and sewerage treatment.
“The adoption of enterprise resource planning systems to automate the administration of the business will also improve efficiencies and lower the cost per ton of coal produced.”