Zimbabwe’s oldest coal miner Hwange Colliery Company, which has slipped into second place in terms of production, says it will embark on an aggressive drive to grow its market in the region and expects to return to profitability in the third quarter.
Hwange has been struggling due to debt — which stood at $136 million in December last year after paying $60 million in the past two years — that has seen it struggle for operating capital.
Its full-year to December 2014 performance was punctuated by a $37 million loss with non-recurring items costing the company $13 million.
“Our expectation is that our production and sales will go up from open cast alone to 250 000 tonnes on our own and complemented by 200 000 from the mining contractor (Mota Engil) to about 450 000 tonnes in total,” Hwange chief executive Thomas Makore said.
The Export and Import and Bank India and PTA Bank loaned Hwange $31 million for the purchase for the open cast mine equipment from Belarus and India which will see production increasing to 500 000 tonnes per month from the current 300 000 tonnes
“With an increased production and sales and employment of higher capacity machines, our cost per tonne will reduce. When our cost per tonne reduces, profitability improves. We are expecting therefore our sales to go up, our cost per tonne to go down and our cash position to also improve,” said Makore.
“The challenges will remain in logistics and new markets because we obviously have an aggressive thrust in the export market, which is Zambia, DRC and South Africa. We should see (profitability) in the third quarter to September and then going forward.”-The Source