Hwange’s machinery in the ruins as forex shortages bite

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  • The Company is currently on an export drive to improve export earnings, albeit logistical challenges
  • Production volumes for Q1 2020 increased by 50% compared to same period in 2019
  • The sales volumes however decreased by 33% for the same period

Harare – Hwange Colliery Company Limited (HCCL) is struggling to replace its machinery due to the ongoing foreign currency shortages as the company goes through a recovery process following years of subdued operational performance.

HCCL was placed under administration by Government in 2018 as the below standard operational performance culminated into gross and persistent losses as well as technical insolvency with liabilities exceeding assets among others. As a result, companies are forced to scale down output, while others are forced to close operations at the worst-case scenario.

Meanwhile, Zimbabwe is gripped by foreign currency shortages which has made it difficult for most businesses to recapitalize as well as access raw materials and inputs required for their operations.

In a trading update for the first quarter ended 31 March 2020, HCCL administrator Mr Bekhitemba Moyo said, “The company has obsolete and redundant machinery due to insufficient foreign currency as a result of low retention and low export volumes as well as poor interbank forex availability”.

He added that the Company is currently on an export drive to improve export earnings, albeit logistical challenges.

“The company is targeting regional markets such as Zambia, DRC, Malawi, Mozambique, Botswana and South Africa and must overcome poor logistics to benefit from these markets,” he said.

“Engagements with key logistical partners such as BBR, NRZ and ZRL are on-going to ensure the whole value chain is smoothened and that HCCL coal remains competitive on the export market”.

During the period under review, HCCL recorded increase in production volumes by 50% to 175 849 tonnes compared to 117 165 tonnes in the corresponding period in 2019.

Revenue for the period in historical terms increased by 860% to ZWL219.2 million compared to ZWL22.8 million recorded in the same period in 2019.

Gross profit increased by 22% while net loss decreased by 65% to ZWL0.64 million during the period under review compared to ZWL0.181 million in same period in 2019.

The sales volumes however decreased by 33% for the same period.

During the full year ended 31 December, the Company reported a 27% increase in own coal output, but the overall production decreased by 43% as a result of contractor production which decreased by 75%.

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