Struggling coal producer, Hwange Colliery Company Limited (HCCL) increased its production by 51 percent during the half year ended June 2021 despite facing foreign currency challenges to further enhance capacity.
The company is still under administration as it is heavily saddled with debt.
HCCL has targeted to increase coking coal production and sales which will in turn increase capacity to 200 000 tonnes per month in order to discharge obligations to creditors as well as create a positive balance sheet in the medium term.
“The Company’s production increased by 51 percent during the period under review, with the main challenges having been foreign currency to import spares and consumables,” said HCCL.
“The sales volumes however increased by only 23.7 percent compared to 2020 mainly as a result of the influence of Covid-19 on the market and logistics, as well as the reduced thermal coal off take.”
Revenue increased by 38 percent from ZWL 2.19 billion in 2020 to ZWL 3.03 billion in 2021 on an inflation adjusted basis. This was largely due to a combination of an increase in high value coking coal sales and regular product price adjustments in line with market value.
The Company’s gross profit increased by 139 percent to ZWL 851.60 million in historical terms compared to same period last year.
Net loss for the period under review decreased from ZWL 991.75 million to ZWL 538.76 million in historical terms.
“The net loss is a result of ZWL 258.05 million exchange loss on foreign legacy debts and deferred tax of ZWL 441.15 million during the period under review,” said HCCL.
With the Company being under reconstruction, it has been challenging to obtain both working capital and long term financing for the business.
During the period under review, focus was on increasing production and sales of high value coking Coal. Coking coal sales increased by 28.6 percent from 41 053 tonnes in 2020 to 52 793 tonnes in 2021. The coking coal sales volumes were however limited by washing capacity constraints.