Senior Business Journalist
HWANGE Colliery Limited says strong demand for thermal coal and coking coal had a positive impact on sales in the quarter to March 2022 despite price discovery challenges, which resulted in input costs and weighed on profitability.
Company Secretary Chrispen Ncube said in a business update: “The economic operating environment for the quarter under review was fairly stable, with some price discovery challenges affecting input costs and profitability. of the society.
“Despite these challenges, the market was supported by strong demand for thermal coal and coking coal which boosted sales.”
Sales volume at Hwange Power Station (HPS) increased to 360,698 tons from 148,957 tons in the same period of 2021 while sales at Hwange Coking Coal (HCC) and Hwange Industrial Coal increased to 295,755 tons compared to 204,816 for the same period in 2021.
Total coal mined since the beginning of the year increased by 74% compared to the same period last year.
HPS coal production volumes increased to 412,528 tonnes from 112,207 tonnes recorded in the same quarter last year.
However, HCC and HIC production volumes decreased to 236,041 tonnes from 260,677 tonnes in the same period of 2021.
Total sales for the three months increased from 354,888 to 683,896 tons during the quarter under review.
Earlier this year, HCCL announced that it had entered into a capital financing agreement from which it would receive equipment worth US$15 million over the next two years.
However, the mining company did not reveal the identity of the partner in the deal.
Hwange said, “The company has entered into an equipment mobilization agreement for the underground mine, which will see the company obtain new underground mining equipment worth more than US$15 million over the next two months. years.”
The recapitalization program will increase production to 50,000 tonnes per month in the second half of 2022, 100,000 tonnes per month in the first half of 2023 and an additional 150,000 tonnes per month in the last quarter of 2023.
Such an increase in production would be a welcome development for the company, which currently produces a total of 15,000 tonnes per month.
The company is currently in an export campaign to improve its export earnings. The company is making inroads into regional markets such as Zambia, DRC, Malawi, Mozambique, Botswana and South Africa, which are however negatively affected by poor logistics.
“Engagements with key logistics partners such as BBR, NRZ and ZRL are ongoing to ensure the entire value chain is smoothed and HCCL coal remains competitive in the export market,” the company said.
The miner also invests in coking coal as he seeks to increase the quantity and quality of his coking coal in order to export.
“In addition, JKL open pit operations will continue to be strengthened to increase the value of coking coal in the product line, with the goal of increasing production to 90,000 tonnes per month by ‘by the end of 2022,” Hwange said.
The company said it has also hired a new mining contractor to increase the value of coking coal with a production target of 20,000 tonnes per month.
“Hwange’s primary focus in 2022 is to ensure that we fully staff our surface and underground mine by addressing all bottlenecks currently affecting the mining process.”
The equipment mobilization contract includes a washing plant which will be located near the mining areas, with the equipment to be commissioned during the second quarter of 2022.
The company believes this will reduce transportation and processing costs.
“The organization will also undertake a vigorous proactive maintenance campaign to continue to stabilize current wash capacity at both the HMS (heavy media separation) plant and the jig and flotation plant,” the statement said.
The company hired a contractor to resurrect beehive coke ovens to produce high-value foundry coke with high demand in the export market.
Production is expected to begin in the first quarter of 2022 and will generate approximately US$3.4 million in 2022. The company, which is under administration, has inherited debt of $904 million.