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Prosper Ndlovu Business Editor
TROUBLED Hwange Colliery Company Limited (HCCL) extended a $7.9 million loss in the first half of this year from $3.1 million in the same period last year as it struggles to remain afloat with litigations of up to $25 million on its back.The company is treading in the danger zone, according to its unaudited financials issued yesterday, with current liabilities jumping to $173 million from $126 million in June last year against declining total assets value of $87.9 million from $101 million.

Sales revenue for the six months under review dropped to $33.05 million from $40.4 million.

Operating losses meanwhile grew by 68 percent to $7.6 million from $4.5 million.

For the six months period under review the company sold 764,813 tonnes of coal compared to 913,440 in the same period last year.

Its coal deliveries to Hwange Power Station resultantly dropped to 349,451 tonnes from 580,818 tonnes.

The company’s investment entities, namely Zimchem Refiners, Hwange Coal Gassification Company and Clay Products, also performed below budget resulting in a share loss of $77,558.

However, a 55 percent increase in sales of coal fines and breeze was recorded from 99,641 tonnes to 154,657 tonnes.

HCCL board chair Farai Mutamangira attributed the company’s waning fortunes to lack of working capital and limited domestic lines of credit coupled with declining regional and global market prices for coal and coke commodities.

“Coke sales volume decreased from 25,839 tonnes achieved in the first half of 2013 to 18,363 tonnes for the period under review. This is attributed to low production performance of the aged coke battery that had to be decommissioned after it started uncontrolled cooling,” said Mutamangira in a statement accompanying the financials.

“The servicing of the legacy debts continued and this further strained the company cashflows and retarded production operations.
“Total assets and investments remained unchanged at $250 million. Capital reserves decreased from $103,6 million to $67,2 million because of the accumulated loss from last year.”

Mutamangira said the bulk of the $25,3 million litigation cases against the company were related to matters pending in courts.

He, however, said the company was poised for growth as it was undertaking several turnaround strategies such as a toll coking agreement with a South African company.

“In the short term the company plans to acquire additional concessions that will avail additional coal reserves. The focus now is on securing the western areas concession, which is critical and strategic to the future growth plans of the business,” said Mutamangira.

He said the new reserves would augment Hwange Colliery’s capacity to supply the expansion of Hwange Power Station (stage three), private thermal power stations, coke demand from iron and steel furnaces and chrome smelting plants.

Mutamangira insisted the future for the government controlled firm was bright after it had finalised a $18,2 million facility with the PTA Bank for the importation of mining equipment from Eastern Europe.

He said the delivery of the equipment and its commissioning would be done before end of October.

Mutamangira said the acquisition of additional mining equipment worth $15 million through a line of credit from the Export and Import Bank of India was in progress with delivery and commissioning set for end of November.

He said the company had also secured a $6 million working capital facility structured through a prepayment arrangement with one of its major customers.

“This injection, coupled with the recapitalisation initiatives mentioned above, will result in improved production performance expected to be at least 400,000 tonnes per month in the second half,” said Mutamangira.

A few months ago, HCCL clinched a $206 million contract deal with a Portuguese Company, Mota-Engil, which commenced operations at the beginning of August.

Under the agreement the company will be in charge of drilling works, detonation, load and transportation of coal for the next five years.

In May this year, HCCL nearly retrenched half of its 3,200 workers but the government blocked the move and ordered management to find ways of resuscitating the firm.

The company owes nearly $19 million to its serving and retrenched workforce of more 300 people.