COAL miner Hwange Colliery Company’s (Hwange) inflation adjusted profit was down by 74 percent to $1,6 billion during the year to December 31, 2020, weighed down by an exchange loss of $1,4 billion on legacy foreign creditors.
The company’s revenue, however, increased by 13 percent to $4,47 billion.
“This was due to a combination of an increase in high value coking coke sales and regular product price adjustments in line with market value,” Hwange administrator Dale Sibanda said in a statement accompanying the company’s results.
Production increased by 22 percent during the period under review despite shortages of diesel and foreign currency to import spares and consumables as well as the negative impacts of the Covid-19 pandemic.
Sales volumes increased by 10 percent compared to 2019 mainly as a result of Covid-19 on the market and logistics, as well as the reduced thermal coal offtake, the company said.
“Going forward the company has targeted to increase production and sales. For this, some significant capital is required,” Sibanda said.
“Increased production and sales will in turn increase capacity to discharge obligations to creditors as well as create a positive balance sheet in the medium term”.
During the year under review, Sibanda said focus was on increasing production and sales of high value coking coal which increased by 6,5 percent from 224 000 tonnes in 2019 to 238 000 tonnes in 2020.
“The coking coal sales volumes were however limited by washing capacity as the HMS plant was antiquated and needed retooling. The plant was completed and commissioned in April 2021,” Sibanda said.
Apart from the current underground mining operations, which are producing an average of 30 000 tonnes per month, plans are underway to develop a second underground mining section in the medium term, so that coking coal production will double when the new section is fully operational, the administrator said.
“The main thrust as we move into 2021 is to ensure that we fully capacitate our open cast mine by addressing all bottlenecks in the mining process. Efforts to facilitate procurement of equipment due for replacement have commenced,” he said.
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