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COAL miner, Hwange Colliery Company Limited’s revenue for the year to December 31, 2016 fell 41 percent to $39,9 million on low sales volumes and capital constraints.
Loss attributable to shareholders narrowed to $89 million from $$115 million while basic loss per share stood at 0,49 cents.
Cost of sales declined 23 percent to $77 million on low coal sales volumes.
Hwange Colliery chairman Mr Winston Chitando said the major elements that constituted cost of sales were contractor costs, depreciation, electricity, fuels, oils and lubricants.
During the year in review, Hwange’s production capacity was compromised due to liquidity challenges and low access to credit lines.
“The company during the year faced serious liquidity challenges with financial institutions and creditors unwilling to extend lines of credit.
“As a result, the company’s capacity utilisation was constrained due to serious working capital challenges for purchase of spare parts and production inputs,” he said.
Total production volumes decreased 38 percent for the period under review as the mining contractor’s contribution to production volumes suffered a 58 percent decrease.
Raw coal mined during the year amounted to 9 69 153 tonnes compared to 1 557 567 tonnes achieved in 2015.
Mr Chitando said the company had started implementation of its low cost strategy to enhance efficiencies while increasing production volumes.
Among the initiatives implemented were reductions of managerial staff by 30 percent coupled with a voluntary retrenchment programme.
Between October 2016 and March 2017, salaries for management were reduced by 50 percent while non-managerial employees were on were on short time work reducing the wage bill by 50 percent.
“Human resources policies have been reviewed to be in line with current market conditions and business activity with a resultant reduction in the total cost of employment,” said Mr Chitando.
Hwange is, however, anticipated to improve its earnings leveraging on, among others, the anticipated increased production from both the open pit and underground mining. — BH24
Online Reporter