Hwange Colliery to increase underground coal production

THE country's giant coal miner, Hwange Colliery Company Limited, has said it is expecting to increase underground production to 50 000 tonnes by mid-2023, following the commissioning of equipment valued at  US$6 million.

As  part of efforts to increase production, the company last year entered into an equipment mobilisation and coal offtake agreement through which it will receive new underground mining equipment valued at US$15 million over a period of two years. The coal mining company, however, did not reveal the identity of the partner in the deal.

In a trading update for the year ended 31 December 2022, Hwange Colliery Company Limited administrator Mr Munashe Shava said they have also engaged new mining contractors to open three new opencast pits.

"A consignment of the equipment worth US$6 million has since been received and commissioned into operation. This is expected to increase underground production to 50 000 tonnes by mid-2023. The company has also engaged new mining contractors to open three new opencast pits to guarantee coking coal annual production of 772 000 tonnes per year. On the coal processing front, the company acquired two new washing plants that will be commissioned during the second half of 2023. The washing plants will be located near the mining areas to reduce hauling and processing costs."

He said the development of the Option Area has started with the box-cut and mining of a portal that will lead to the underground mine, which Mr Shava said will augment the production of coking coal from the current three main underground mines

"The company has a thrust in 2023 to grow its market share of coking coal sales in neighbouring countries. Advanced plans to develop dedicated solutions for the delivery of coking coal and coke products in the region are underway."

During the period under review, a total of 1 198 539 tonnes of coal were delivered to Hwange Power Station during the course of the year, which was an increase of 63 percent from the previous year. In terms of underground mine coal production, he said it declined by 24 percent compared to the previous year.

"This was mainly due to delays in commissioning the new underground mining equipment due to Covid-19 restrictions that affected the movement of the engineers from the original equipment manufacturers," said Mr Shava.

He said the focus during the period under review was on increasing production and sales of high value coking coal, while raw coking coal and clean coking coal sales increased by 36 percent, from 594 482 tonnes in 2021 to 808 315 tonnes last year. Mr Shava said the total coal produced by opencast operations was 3 128 884 tonnes, a 73 percent increase in production from the previous year. In terms of coal production, Mr Shava said it increased by 63 percent while sales volumes increased by 45 percent compared to the prior year.

"Going forward, the company intends to continue increasing coking coal production and sales, which will in turn increase capacity to discharge obligations to creditors as well as create a positive balance sheet in the medium term. The company continues to place emphasis on a low-cost, high-productivity strategy," he added.

Hwange Colliery revenue improved by 139,76 percent from ZWL$32,42 billion in 2021 to ZWL$77,73 billion in 2022 on an inflation- adjusted basis, largely driven by the increase in sales tonnes.

Gross profit increased by 226,20 percent from ZWL$7.10 billion prior year to ZWL$23,16 billion in inflation adjusted terms this year. The company posted a loss of ZWL$8,6 billion for the year, mostly attributed to exchange rate impact on legacy debts as the legacy debts contributed ZWL$30,70 billion of unrealised losses in inflation adjusted terms.