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Hwange Halts Underground Mining To Curb Excess Coal Losses

Struggling coal miner, Hwange Colliery Company Limited (HCCL) says it will temporarily stop its underground mining operations for the next six months to minimize losses from spontaneous combustion of excess coal.

Spontaneous combustion refers to a bursting of material into flame from the heat produced within itself by chemical action.

The company -still under administration and remain suspended on the Zimbabwe Stock Exchange -has undergone a major transformation with production doubling due to efficient and effective machinery which was acquired during the first quarter of 2023.

“The company aims to stop underground mine production for the next 6 months to stop losing mined coal through spontaneous combustion as production is way more than sales,” the company Administrator, Munashe Shava said in the latest trading update for quarter ended September, 2023.

 “The quantity of mined coal is deemed sufficient to meet the operating needs of the company.”

Both production of 989 503 tonnes and sales of 911 245 tonnes were almost double from last years’ performance mainly due to efficient and effective machinery which was acquired during the first quarter of 2023.

The company realized 911 245 tonnes in sales in the third quarter with Hwange Power Station coal (“HPS”) accounting for 48 percent , raw coal 39 percent, Hwange Coking Coal (“HCC”) 1 percent and Hwange Industrial Coal (“HIC”) 12 percent of the total sales.

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During the same period last year, the company sold 388 487 tonnes consisting of HPS 7percent, raw coal 55 percent, HCC 6 percent and HIC 32 percent. The contaminated coal sales accounted for 8 143 tonnes (2022:25 309 tonnes) in the same period.

The sales improved from 1 060 976 tonnes for the same period last year to 2 795 303 tonnes achieving a positive change of 163 percent. The positive change is attributed to doubling of production as well as increase in marketing effort to sell off the mined coal.

Hwange Colliery was placed under administration by a reconstruction order in terms of the reconstruction of State-Indebted Companies Act in October 2018.

The company had legacy debts amounting to US$352 million and subsequently entered into a Scheme of Arrangement with creditors.

HCCL posted a full year loss of ZW$8.6 billion for the year ended December 31, 2022 due to exchange rate volatilities which affected the business’ historical obligations.

“The loss was mostly attributed to exchange rate impact on legacy debts. Legacy debts contributed $30,70 billion of unrealized losses in inflation adjusted terms,” the company said at the time.

A consignment of the equipment worth US$6 million was received and commissioned into operation last year which has led to doubling of production.

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It is not yet clear when the company will be able to operate independently and relist on the ZSE.

“The Administrator of the Company wishes to advise that the Company remains under administration in terms of the Reconstruction of State-Indebted Insolvent Companies Act [Chapter 24:27] of Zimbabwe. The Company’s listing on the Zimbabwe Stock Exchange also remains suspended,” said Shava..

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