The Sunday Mail
HWANGE Colliery Company Limited (HCCL) expects to increase throughput to 400 000 tonnes from 300 000 tonnes by mid-2015 as the last batch of US$32 million worth of equipment for this purpose will be delivered by April.
The mining equipment was sourced from India and Eastern Europe as part of HCCL’s restructuring of operations.
Successive losses have dogged the coal miner of late.
In September last year, the company reported a US$7,8 million half-year loss weighed by falling revenues.
Government, through the Reserve Bank of Zimbabwe, has arranged a US$18 million facility for HCCL’s equipment needs.
Part of the produce from Hwange is used to generate power at Hwange Thermal Power Station.
The mining equipment from Eastern Europe, transacted through an US$18,2 million facility from the PTA Bank, was supposed to be commissioned by October 31 last year but that was stalled because of HCCL’s unattractive balance sheet.
Further negotiations mean the equipment is now expected in the first week of March 2015.
An additional US$15 million equipment deal through a line of credit from the Export and Import Bank of India is almost complete.
HCCL board chair Mr Farai Mutamangira told The Sunday Mail Business, “The equipment is now on the high seas and in the first week of March it will be at the mine.
“It is massive equipment that we are talking about.
“Again (the Indian equipment deal) was slightly delayed but we eventually sealed the transaction. We are just perfecting the security issues.
“I actually went to India (two weeks ago) and we saw the equipment and it is ready for shipment. We expect it in April.
“The equipment will enable us to sustain the production capacity and steadily raise it to about 400 000 tonnes per month. This will be happening simultaneously with the restructuring exercise at the company; we are divisionalising and doing many other things,” said Mr Mutamangira.
Coal miners are smarting from low international prices, which declined by between 17 percent and 25 percent last year, though the impact on HCCL is likely to be minimal as it mainly supplies locally.
It is forecast that additional coal supplies will be needed to feed into Hwange Thermal Power Station once its expansion is complete.
HCCL is pondering whether to replace or repair its over 50 years old coke oven battery to meet market demands.
“We are aware that prices have come down but we are not affected.
“The effect of global prices depends on your product mix; our sales are largely domestic market oriented and we are therefore insulated from those shocks.
“Almost 80 percent of our products are being sold locally.
“Coke might be slightly affected but it is less than 10 percent of our turnover and we are not too worried.
“We have no current arrangements with Glencore but we were talking to them and other big commodity companies.
“The other issue is that Zimbabwe rarely succumbs to what is happening on the international market; it (the country) has its own dynamics, the same thing that is happening with the fuel price, which despite falling on international markets, we are still paying about US$1,50 per litre (of petrol),” said Mr Mutamangira.
Thermal coal, used for generating energy in power stations, has traded below the marginal cost of production for the past three years, but only now are producers cutting production or mothballing mines.
Prices have remained under pressure in the opening weeks of 2015, with South African thermal coal recently trading below US$60 per tonne.
Analysts say global prospects for coal remain bleak, and Glencore – one of the world’s largest exporters – is mulling a partial shutdown of a coal unit in South Africa, shedding about 1 070 jobs.
