By Alois Vinga
THE Hwange Colliery Company Limited (HCCL) has recorded 79% increase in losses which jumped to US$78 million at the close of the financial year ending December 31 2018.
Hwange’s losses come despite officials revealing the State owned coal miner had seen an increase in sales volumes.
HCCL administrator, Bekithemba Moyo said that the financial performance had worsened when compared to the previous financial term.
“The company’s performance worsened in 2018, in comparison to the previous financial year as the loss for the period increased by 79% from US$44 million to US$78 million. Revenue increased by 27 percent attributable to increased sales volumes,” he said.
Hwange’s financial performance was poor despite increased production and sales volumes mainly as a result of impairment of some assets and subdued coal prices against input costs and the results fell short of budgetary targets according to Moyo.
“This was due to low production levels attributable to working capital constraints, as monthly production average levels averaged 150 000 tonnes compared to a target of 300 000 hence the failure to meet market demand,” he said.
In terms of sales, 1.5 million tonnes were sold against a projected target of four million tones, while the cost of sales increased by 36% as a result of increased input cost driven by the parallel market exchange rate that was used by most suppliers to charge their products in RTGS.
The company’s own open cast operation contributed 400 thousand tones, which represents 20% of the total year end production while underground mining operations registered an increase of 50 000 tonnes per month.
During the period under review, the company adopted a cost reduction mechanism, while focus on increasing the trust on the core business of mining was adopted.
HCCL is saddled by a US$160 million legacy debt, which includes what is owed to; employees in unpaid salaries (US$50 million), the Mining Pension Fund (US$25 million) and the Zimbabwe Revenue Authority (Zimra) (US$69, 1 million) among other liabilities.
The company has since been placed under reconstruction, in terms of Section 4 of the Reconstruction of State Indebted Insolvent Companies Act, a measure which allows state related companies affairs to be taken over by government in order to avoid closure due to mismanagement.