Colliery bounces back to profitability

HWANGE Colliery Company Limited (HCCL) is on the rebound after posting a profit of $3,5 million in the first half of 2019, recovering from a loss of $23 million recorded in 2018.

The troubled firm had been in the red for successive years as it struggled with viability and corporate governance issues despite constant changes in management that failed to bear fruit.

It was then placed under administration in October last year as Government, the major shareholder in the firm, sought to protect it from potential liquidation.

Company administrator, Mr Bekithemba Moyo, yesterday said financial performance for the period under review improved significantly when compared to the same period last year.

“The company’s revenue increased by 128 percent from $30,5 million for the six months ended 30 June 29 to $69,8 million for the period under review. The company posted a profit of $3,5 million against a loss of $23 million recorded in 2018,” he said in a statement accompanying the company’s condensed interim financial results.

Before being placed under reconstruction, the mining firm had initially been put under a High Court sanctioned revival scheme, which sought to return it to profitability to be able to pay off its creditors, but the arrangement also failed to achieve positive results.

Coal production at HCCL alone marginally increased to 394 704 tonnes from 344 694 tonnes in the comparable period. It however declined 52 percent to 394 704 tonnes at Mota Engil, a firm contracted by HCCL to assist with production. Working capital constraints and antiquated equipment impacted production, Mr Moyo said.

In the second half, the firm is targeting to produce about 250 000 tonnes per month, and also up production of the lucrative coking coal.

“Going forward, the plan is to invest in a coke oven battery with beneficiation in mind and this should result in a significant increase in revenues,” said Mr Moyo.

While the operating environment remained tough, he said he was satisfied with progress made so far and remain confident that the various interventions made, will result in a turnaround of the company.