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Farai Mutamangira

Business Editor
HWANGE Colliery Company Limited says it is implementing a number of measures to revitalise its operations after widening losses to $16 million in the first six months to June 2015 compared to $7,9 million in the same period last year.

Board chairman Farai Mutamangira is confident the situation will change for the better in the second half to December following the acquisition of new equipment under the $32 million recapitalisation facility in June.

Total sales revenue for the period stood at $35,4 million from $39 million in the prior year while operating loss jumped to $19 million from $7,6 million.

“The company incurred a loss after tax of $15,6 million compared to $7,9 million loss recorded in the same period in 2014,” Mutamangira said yesterday in a statement accompanying the firm’s interim financial results for the period.

Despite a decrease in administrative costs, he admitted the company remains saddled with the burden of servicing legacy debts, which continue to constrain cash inflows and working capital.

Mutamangira said coal and coke sales for the period dropped 10 percent to 685,759 tonnes compared to 764,813 tonnes.

However, coal deliveries to Hwange Power Station rose by four percent to 409,843 tonnes from 394,451 tonnes.

Low production performance of the toll coking arrangement induced a decrease in coke sales volume from 18,000 tonnes in the first half of 2014 to 5,475 tonnes.

The giant is in the process of implementing its turnaround strategy that is anchored on recapitalisation of mining operations, contract mining, and conversion of close to $80 million government debt to equity, divisionalisation, customer diversification and acquisition of new coal concessions.

The equipment worth $32 million was delivered in June and commissioned by Vice-President Phelekezela Mphoko. Belaz of Belarus provided machinery worth $18,2 million and another consignment worth $13 million came from BEML of India.

The equipment was sourced through a PTA bank facility and a credit line from Export and Import Bank of India. The government facilitated the deals.

The equipment has been successfully commissioned.

The government has since awarded the company new concessions in the western area of Lubimbi.

The new concessions will increase the lifespan of the mine by at least 50 years with focus now on commencement of field exploration work.

The company has set a target of producing up to 450,000 tonnes of coal per month with its South African contractor Mota Engil, producing up to 200,000 tonnes.

With such support HCCL is geared to fully support power generation projects including the expansion of the Hwange Power Station units 7 and 8.

Mutamangira said the company was working on sourcing more working capital from local finance institutions to achieve maximum utilisation of the newly acquired equipment.

He said the divisionalisation strategy has started bearing fruits with focus on improved management efficiencies.

HCCL is targeting increasing its market share at both local and regional level with growth opportunities in supplying South Africa, Zambia and DRC.