Zimbabwe Stock Exchange-listed paramount coal mining concern, Hwange Colliery Company is set to boost production volumes in the second half of 2019 more through increased funding to core mining business.
Dwindling production in the first three months of the second half was reportedly attributed to antiquated equipment and capital constraints as non-mining costs gobbled significant amounts. Non-core activities include road maintenance, electrical power distribution and sewage treatment.
But going forward a “low cost high productivity” strategy will be employed to effect revenue growth.
“The operating plan for the second half of the year (H2, 2019) will continue to focus on increased production and improved efficiencies,” said the company’s acting managing director Charles Zinyemba in a statement accompanying half-year financials to June 30, 2019.
“However, increased production requires that the Company allocates more funding to its operations which means that it will have to focus on its core business of mining and reduce non-mining costs in line with industry best practices,” said Mr Zinyemba.
Production capacity is expected to reach 250 000 tonnes per month “inclusive of contractors’ contribution. Pillar mining presently under exploration is envisaged to boost volumes to 300 000 tonnes per month.
There are also considerations to stabilise open cast mining to maintain a consistent monthly capacity of 120 000 tonnes in the second quarter. Underground mining operations are expected to boost from 21 000 tonnes to 50 000 tonnes per month to enhance exports.
According to the administrator, Mr Bekitemba Moyo, plans are further underway to mine JKL Pit to produce “high value coking coal”, the ultimate goal being to “invest in a coke oven battery with beneficiation in mind” for revenue growth.
Attention to an own coke oven battery is resultant to delays in the BOOT Agreement with Chinese partners in the Hwange Coal Gasification Company.
Meanwhile, the company recovered from a gross loss of $23 million in 2018 to post a profit of $3,5 million in the half year to June 30, 2019.
This was attributable to a 128 percent growth in revenue to $69,8 million from $30,5 million recorded in the prior year comparative. Cost of sales went up 16 percent to $35,7 million from $30,6 million in 2018.
Positive movement in cost of sales resulted in a boost in gross profit to $34 million against prior gross loss of $144 000.
The positives were posted notwithstanding a 52 percent drop in production from 819 859 tonnes in 2018 to 394 704 tonnes on the back of halted operations;
“The contract miner stopped mining on or about December 15, 2018, and only resumed mining in August 2019.
“In addition, the company only resumed open cast mining in March 2019. Owing to the above, production declined by 52 percent from 819 859 to 394 704 tonnes for the period under review,” said Mr Moyo.