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Oliver Kazunga, Senior Business Reporter
HWANGE Colliery Company Limited (HCCL) has narrowed losses after taxation to $22,7 million from $44,2 million in the six months ended June 30, 2016, due to cost containment measures the company has adopted.
HCCL chairman Mr Winston Chitando indicated in a statement accompanying the firm’s interim financial results that the giant remains in the red despite receiving the $32 million recapitalisation equipment through a Government guaranteed loan facility last year.
“The company incurred a loss after taxation of $22,7 million compared to the $44,1 million loss recorded for the same period in 2015.
“There was notable decrease in administrative costs resultant from cost containment measures adopted by the company,” said Mr Chitando.
“Total non-current assets decreased by five percent from $172,5 million to $163,2 million.”
Sales revenue for the six months under review was $24,5 million lower than $35,3 million recorded in the comparable period last year.
Mr Chitando indicated that HCCL’s operating loss for the period under review was $25,9 million lower than $48 million recorded during the same period last year.
The colliery, which is saddled with a debt of about $300 million, is set to come up with a scheme of arrangement with its creditors to present a structured plan of liquidating amounts owed.
Recently, the colliery was granted leave by the High Court to convene scheme meetings with its creditors.
The workers have been pushing that the company be placed under judicial management to protect its assets and allow recovery.
“The scheme is due to be finalised with the company’s creditors in the last quarter of this financial year. It is predicted that the scheme will ensure that there is a structured plan for paying the company’s debts,” the board chair said.
Management believes that once the scheme of arrangement is achieved, the company’s future would be anchored on open cast productivity, resuscitation of underground mine operations, coke production, the Zimbabwe Power Company’s stage three expansion and coal-bed methane gas opportunities.
Mr Chitando said HCCL’s performance over the past six months fell short of budgetary targets due to low production levels that were attributable to working capital constraints.
“Monthly production average was 113 862 tonnes compared to the budgeted monthly production of 340 000 tonnes. Consequently, the company could not meet the market demand occasioned by product stock-outs. Total sales tonnage was 585 689 against a budget of 1,8 million and an actual of 842 871 for the same period last year,” he said.
Through the process to implement cost reduction initiatives aimed at ensuring the company returns to profitability in 2017, HCCL has also stepped up recovery efforts from its debtors and disposal of coal fines to increase open cast production.
“The resuscitation of this operation requires approximately $6,3 million for the refurbishment of a continuous miner and supply of new supporting equipment . . .
“Once the scheme of arrangement is put in place and the balance sheet restructuring is completed, it will make it easier for the company to raise funding to resuscitate its coke oven battery. Apart from producing coke, the coke oven battery will also supply gas to Hwange Power Station,” he said.
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