Hwange Colliery losses top ZW$3,97 billion despite increased production – NewZimbabwe.com

By Alois Vinga

DESPITE a significant increase in productivity, Hwange Colliery Company Limited’s (HCCL) losses have hit ZW$3,97 billion in a development hinting on the need for robust strategies to salvage the coal miner.

The developments come at a time when the company has been placed under reconstruction order –  an initiative carried out to avoid bankruptcy when a firm is unable to fulfil its financial obligation, that is, to pay its suppliers, salaries, taxes.

The government which currently enjoys 42% stake in the coal miner contends that HCCL was heavily indebted to the state to the tune of US$220 million and the company was unlikely to repay the debt owing to gross mismanagement.

However, the company’s directors have since criticised the order, arguing it is a plot by Mines minister Winston Chitando to remove them from the board after they had ordered a forensic audit, covering the period from May 2016 to December 2017 when Chitando was the company’s board chairman.

Currently the Hwange claims to have ramped up production by 52% during the period with sales volumes recording a 74% hike.

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Nevertheless, the poor performance trend has persisted, this time posting a significant loss.

“Despite the increase in revenue, the company posted losses for the period of ZWL 3.97 billion in inflation adjusted terms. The net loss is a result of ZWL 8 billion exchange loss on foreign legacy debts during the period under review,” said the HCCL administrator, Munashe Shava.

For the six months to June 30, 2021, the miner made a loss of ZW$870 715.

Revenue in the period totalled ZW$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 ZW$7.20, while basic headline earnings a share totalled ZW$7.30.

During the period, total coal mined by opencast operations amounted to 1,29-million tons – 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.

“In the outlook, 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,” added Shava.