News Column

Hwange Doubles Production

July 31, 2014



HWANGE Colliery Company Ltd is looking at doubling production capacity this year as it chases growth in revenue of about 30 percent, managing director Mr Thomas Makore has said. The coal miner expects output to reach three million tonnes by the end of 2014 from 1,6 million tonnes produced last year.

Sales revenues are expected to reach $100 million, Mr Makore said.

Mota-Engil, which was contracted to mine for Hwange has commenced operations and is set to produce about 200 000 tonnes of power and industrial coal per month by September.

"We are also expecting to double our own capacity from 150 000 tonnes of coal to 300 000 tonnes upon the delivery of new equipment from Belarus and India by September," said Mr Makore. "This will place us in a position of achieving three million tonnes at the end of the year.

"We are close to securing working capital to procure spares for the existing equipment."

Hwange has finalised the acquisition of loading and drilling equipment worth $15 million from BEML of India, which will be financed through a loan structure from Export and Import Bank of India.

Acquisition of additional equipment has also been finalised with BELAZ of Belarus, the world's third largest dump truck manufacture.

The equipment, worth $18 million, will be financed through a loan from PTA Bank and the delivery is expected soon.

Hwange, which produces a diversified range of coal products, is currently producing power and industrial coal after it shut down its coke oven processing plant last month due to high running costs. Mr Makore said the company was looking at options to rebuild the plant.

"At the moment, we have engaged a mining company that is producing coke for us under toll arrangement."

Hwange's production was severely constrained due to subdued capacity due to shortage working capital.

The company also came under increased competition from other new mining firms and this has eaten into its market share.

Makomo Resources is now the major supplier of coal to Hwange Thermal Power Station, previously one of the Colliery's biggest customer.

The diminishing capacity of the industry has also reduced demand for industrial coal as most companies which uses coal fired boilers have significantly scaled down while other have closed.

Addressing middle managers and worker representatives recently, Mr Makore said his main priority was to come up with a salary payment plan that will be effected in the third quarter.

"However, all this hinges on securing working capital that is planned to procure new spares and equipment so that production volumes are increased significantly.

"This will enable us to come up with a sustainable payment plan as we seek to restore the company's viability and this calls for collective effort from top to bottom," said Mr Makore.

The working capital will be channelled towards repair of opencast, underground and coal processing equipment.

Some of the strategic issues which he said needed to be tackled included balance sheet restructuring, management of liabilities, growth of domestic market share, penetration of offshore markets and employee performance management through the balanced score card system.

Engagements with Government for additional coal concessions through the relevant ministry will also be intensified and prioritised as the company continues to turn around its fortunes.


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Source: AllAfrica


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