Hwange HY-21 fortunes improve, administrative blues continue

Author Name
Rugare Mukanganga
Markets 1 month ago

In the six months to June 2021, Hwange Colliery’s revenue grew by an inflation adjusted 38%, rising from ZWL 2.19 billion to ZWL 3.03 billion.

Revenue growth in the period was attributed to high value coal sales as well as regular price adjustments in line with market value changes. In historical terms, gross profit rose 139% to ZWL 851.6m, but declined by 17% in inflation-adjusted terms on account of a higher cost of sales in the period.

Net loss in the period under review decreased 84% to ZWL 538.76m down from ZWL 991.75m recorded in the prior year.

HY-21 Production Highlights 

The Company’s production grew 51% in the period, the main challenge faced being access to forex needed for spares and consumables. Sales improved 23.7% in the period owing to Covid-19 related logistical challenges as well as lower coal offtake in the period.

Coking coal sales rose 28.6% to 52,793t up from 41,053t in the previous half-year period. Opencast coal volumes grew to 305,404t, a 55.59% improvement from the previous year.

Coal deliveries were 14% ahead of the prior year, while underground coal mining rose 19.41%.

Hwange's Operation Highlights

  • Repair and maintenance investments were made for Company plant and equipment and an HMS washing plant was commissioned in the period under review.
  • A Wellness policy has been established to manage non-communicable diseases, while an Environmental Management Plan is now in place to address Acid Mine Drainage risks. L
  • Target coal output has been set at 200k tonnes/month, with a goal of also increasing sales to pay creditors and improve the Company’s balance sheet in the medium term.

Looking ahead

Long-run external credit is likely to dwindle in line with narrowing global carbon emission frameworks. But as a result of transitional bottlenecks from carbon-heavy energy fuels like coal to environmentally friendly sources such as solar and wind, coal still has a market need, particularly in low and middle-income economies, extending the Company’s opportunity to service its debt backlog.

But despite the positive outlook on the production front, the Company remains under administration and inactive on the ZSE pending internal reconstruction and the containment of creditor debt. 

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