BY TATIRA ZWINOIRA
COAL miner Hwange Colliery Company (HCC) returned to the black with a profit after tax of $577,43 million in the six months to June 30 in financial results adjusted for inflation.
The miner was placed under administration two years ago and recorded a loss of $2,32 billion last year.
“On an inflation-adjusted basis, the performance improved from a gross profit of $354 million and a net loss of $2,3 billion to a gross profit of $560 million and after-tax profit of $577 million, which is pleasing,” said Hwange administrator Bekitemba Moyo in the financial report for the half-year.
“On a historic cost basis, the company’s performance improved from a gross profit of $34 million for the same period in 2019 to a gross profit of $357 million for the half-year under review. It is interesting to note that prior to the company being placed under administration, it was making gross losses for a sustained period.”
Total output rose by 84% to 596 876 tonnes from 325 114 tonnes last year after a contractor increased production.
“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,” Moyo said.
“Owing to the above a recapitalisation 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.”
Total coal from open cast mining operations was 518 303 tonnes, a 143% increase from 2019 including 331 296 tonnes mined by contractor Zhong Jian who started in February 2020.
“Total coal mined by Opencast JKL operations totalled 187 007 tonnes, a 13% decline in production from the previous year,” Moyo added.
“This was largely due to continuous breakdown of equipment, which is a challenge as the equipment is now antiquated. Most of these problems are currently being addressed and we are cautiously optimistic that they will be resolved by the end of first quarter next year.”
Output at Hwange’s 3Main Underground Mine was 78 573 tonnes, 32% below budget.
Marketing and administrative costs were up 18,49% and 9,04%, to $5,13 million and $279,64 million respectively. Finance costs fell to $16,67 million from $155,53 million last year.
Total assets rose 181,44% to $7,72 billion from $2,74 billion last year.
In terms of liquidity, HCCL had a current ratio of 2,49 showing the company was adequately capitalised to take care of any liabilities should they come due while its net profit margin of 54,46% at the end of showed that it was in a highly profitable position.
“A lot of work has gone into stabilisation of the operations of the business.
“However, due to the current status of the company, it has been challenging to obtain both working capital and long-term financing for the business.
“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,” Moyo said.
“As a result we are confident that the operations will stabilise within the next 6 to 12 months.
“Our immediate target is to consistently produce at least 200 000 tonnes a month by the end of first quarter next year.”