Embattled coal miner, Hwange Colliery Company Limited (HCCL) announced a profit after tax of ZWL$ 577 million in the first six months of 2020, reflecting a strong rebound from a loss position of ZWL$ 2.3 billion in its 2019 Half year perfomance.
Gross profit during the period leapfrogged to ZWL$ 560 million from ZWL$ 354 million last year on the back of an 84 percent increase in production to 596,876 tonnes for the period under review.
“This was largely due to an increase in production by the contractor. Our target going forward is to ensure that production is skewed to own mining as it is not only cheaper but more reliable particularly given cash flow challenges that have dogged the Company in the recent past,” said the company administrator, Bekithemba Moyo.
Revenue increased by 28 percent from ZWL$ 827 million in 2019 to ZWL 1 billion during the period under review due to a combination of an increase in high value coking coal sales as well as frequent adjustments to product prices in line with changes to the Interbank rates.
HCCL has been posting a string of losses in recent years prompting government intervention and the placement of the company under administration in 2018.
This led to its suspension from the Zimbabwe Stock Exchange.
Perhaps strict government monitoring and guidance of the coal miner is gradually bringing life into the firm that was tittering on the verge of collapse due to massive misappropriation of funds.
However, HCCL has not stepped out of the woods as yet.
The company is saddled in foreign debts amounting to US$ 20 million and this has been the biggest contributing factor to the weakening of investor appetite into the company for several years.
But things are about to get better for the company, the administration says.
“It is however pleasing to note that as the Company’s fortunes continue to improve a lot of funders are now interested in extending lines of credit to the business. As a result we are confident that the operations will stabilize within the next 6 to 12 months,” said Moyo.
The company has set a 50 percent production increase next year as current recapitalization efforts continue to gain traction.
“Owing to the above a recapitalization programme has been embarked on, which if successful will result in production increasing by at least 50% in the coming year. We need to consistently produce 200,000 tonnes a month to have a sustainable business,” the company said.
Coke production is set to commence from January 2023, as plans are underway to acquire a new coke oven battery and by-products recovery plan.
