Hwange Colliery’s US$15m recapitalisation kicks off
DUAL listed coal miner, Hwange Colliery Company, says it has entered into an equipment financing deal in which it will receive equipment worth US$15 million in the next two years.
However, the coking coal exporter did not disclose the other party in the deal.
In a statement accompanying results the company administrator, Munashe Shava noted; “As a part of efforts to increase production, the company entered into an equipment mobilisation and coal offtake agreement through which it will receive new underground mining equipment valued at US$15 million over a period of two years.”
In the period to December 31, 2022, a consignment of the equipment worth US$6 million was received and commissioned into operation and this is expected to increase underground production to 50,000 tonnes by mid-2023.
“The company has also engaged new mining contractors to open three new opencast pits to guarantee coking coal annual production of 772,000 tonnes per year,” Shava added.
On the coal processing front, Hwange acquired two new washing plants that will be commissioned during the second half of 2023 and the washing plants will be located near the mining areas to reduce hauling and processing costs.
According to the administrator, “The development of the Option Area has started with the boxcut and mining of a portal that will lead to the underground mine and this new mine will augment the production of coking coal from the current three main underground mines.”
With the projections of the project saying that coal production from the Option Area will begin in 2024.
In the financial year ending December 31, 2022, Hwange saw its revenue improve by 139,76 percent from $32,42 billion in 2021 to $77,73 billion and it was largely driven by the increase in sales tonnes.
Gross profit increased by 226,20 percent from $7,10 billion prior year to $23,16 billion but the company posted a loss of $8,6 billion for the year. The loss was mostly attributed to exchange rate impact on legacy debts.
Legacy debts contributed $30,70 billion of unrealised losses in inflation adjusted terms.
Coal production increased by 63 percent while sales volumes increased by 45 percent compared to the prior year.
“The focus during the period under review was on increasing production and sales of high value coking coal,” said Shava.
Raw coking coal and clean coking coal sales increased by 36 percent, from 594,482 tonnes in 2021 to 808,315 tonnes in 2022 with the total coal produced by opencast operations being three million tonnes, a 73 percent increase in production from the previous year.
A total of 1,2 million tonnes of coal were delivered to Hwange Power Station during the course of the year, which was an increase of 63 percent from the previous year.
The administrator added that, “Deliveries into the power station were, however, negatively affected by challenges at the power station and limited stock holding space at the same.
“Underground mine coal production declined by 24 percent compared to the previous year. This was mainly due to delays in commissioning the new underground mining equipment due to Covid-19 restrictions that affected the movement of the engineers from the Original Equipment Manufacturers.”
Hwange believes it has a thrust in 2023 to grow its market share of coking coal sales in neighbouring countries and advanced plans to develop dedicated solutions for the delivery of coking coal and coke products in the region are underway.