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Colliery eyes 10 000t coking coal exports

Hwange Colliery Company Limited

Hwange Colliery Company Limited

Oliver Kazunga/Fairness Moyana, Business Reporters
HWANGE Colliery Company Limited (HCCL) will soon start exporting coking coal to regional markets with about 10 000 tonnes of the product set to be shipped to South Africa per month.

South Africa has a huge appetite for coking coal as it is expanding its energy sector especially in Limpopo province.

Following the privatisation of its coal mines, South Africa has found itself in dire need of thermal coal as it is facing an increase in power usage due to its growing population and industry.

In an interview, HCCL managing director Engineer Thomas Makore said they were also in discussions over coking coal exports to Zambia.

“Our thrust is also to export coking coal to South Africa and Zambia and we are looking at exporting about 10 000 tonnes of coking coal to South Africa in the near future,” he said.

“We are negotiating with markets in South Africa and Zambia over coking coal exports but I cannot divulge the names of those that we are negotiating with because of professional reasons.”

HCCL is in the process of restructuring to turn around its fortunes.

As part of the restructuring exercise, the colliery company is set to retrench about 1 000 workers.

Last year, the Government announced that it was looking at the possibility of trimming part of the workforce at HCCL including the rationalisation of workers to levels that are commensurate with production.

The colliery’s revenue for the year ended December 31, 2016 fell 41 percent to $39,9 million on the back of low sales and capital constraints.

Losses attributable to shareholders narrowed $89 million from $115 million while basic loss per share stood at 0,49 cents.

During the period under review, cost of sales declined 23 percent to $77 million on low coal sales volumes.

HCCL chairman Mr Winston Chitando said the major elements that constituted cost of sales were contractor costs, depreciation, electricity, fuels, oils and lubricants.

The colliery is, however, anticipated to improve its earnings leveraging on, among others, the anticipated increase in production from the open pit and underground mining operations.

Meanwhile, Portuguese contractor, Mota Engil has resumed mining operations at its JKL Opencast mine after Hwange Colliery Company Limited settled its outstanding payment obligations.

The company suspended its operations in December last year after the failure by HCCL to pay the contractor. The withdrawal dealt a blow to the ailing miner, which had been struggling to increase its coal production following its acquisition of new equipment worth $32 million from Belarus and India.

The latest development saw the Colliery’s production levels slightly improving from 36 000t per month to between 40 000t and 50 000t. At its peak the mining giant used to produce 150 000t per month and was working towards doubling its production.

It was hoped that the Government facilitated bailout loan equipment would transform Hwange fortunes. However, the company failed to increase production volumes as some of the equipment was faulty or failed to adjust to the environment leaving their contractor to carry the burden.

Engineer Makore confirmed the contractor had resumed work.

“Mota Engil resumed operations last month and we expect to start producing coal this month. Meanwhile, on our capability side we have been mining and doing between 40-50 000t per month while Mota Engil’s contract is for 200 000t per month. However, with some of the actions we are taking to turnaround and access working capital, we should be able to improve our production so that in three months time we should have much better volumes,” said Eng Makore.

He said volumes were likely to increase as they were set to resuscitate underground mining, which was expected to start churning out high quality coal for coking purposes.

“We are also in the process of resuscitating our underground operations and all things being equal we expect to achieve this by mid-year to July and this will add to our production levels as we improve,” Eng Makore said.

Last year the company was left stranded after its contractor suspended operations citing failure by Hwange Colliery to pay for its services. This saw production dropping from 280 000t per month to 36 000t. Mota Engil produced 200 000t at the time while the Colliery was hovering between 80-90 000t.

Management attributed the decline in output to faulty equipment, lack of working capital to buy consumables such as oils and fuels and harsh economic environment.

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