Debt-laden coal miner Hwange, whose shares are suspended on the JSE, says it is looking to resuscitate itself by servicing the global coal boom that has arisen as a result of Russia’s invasion of Ukraine.
European countries have been scrambling to secure coal sources after Russian coal imports were banned in the EU as part of wide-ranging sanctions on Moscow.
In a statement on Tuesday, the group said it “intends to position itself to benefit from the increase in global demand for fossil energy”, as global coal prices continue to rise. It added that it will be “focusing on coal beneficiation and improving the quality of coal”.
Total coal mined by its opencast operations rose 55.59% to 1,288,521 tonnes in the half-year to the end of June, while the company said it is set to receive a washing plant that will be located near where it mines. This equipment is used to wash desirable grains off gravel and rocks, and then to wash down the grains to acquire black sand and heavy mineral bits.
The company, which is listed in Harare, Johannesburg and London, said this equipment would be commissioned during the first quarter of 2023, adding it has plans to build a coke battery by 2025.
In its underground mining operations, where production was 19% lower than the previous year mainly due to ageing underground mining equipment, the group said it was working on a strategic plan to ramp up production within the next 18 months.
This would result in the company’s underground mine reaching optimum production capacity.
Hwange reported production increased 52% while sales volumes rose 74% compared with 2021 due to a successful contract mining model it has employed.
Additionally, 676,387 tonnes of coal was produced for Hwange Power Station and Zimbabwe Zhongxin Electrical Energy for electricity generation. This was reflective of a 124% increase from the previous year, it said.
Despite a rise in revenue and gross profit increases, the company posted losses for the period.
The limited availability of spares and the general increase in prices of maintenance spares and consumables had affected the operations negatively, while deliveries into the power station were limited by the available space there.
The group also had to contend with the the general increase in commodity prices and raw materials including diesel, explosives and equipment spares.
In a bid to revive its ailing operations, Zimbabwe’s oldest coal mine was placed under administration for a second time in August by the Zimbabwean government, which holds a 40% stake in the group.
At the time of suspension in November 2018, shortly after the company was first placed in the care of administrators, it was listed at 51c, near the 12-month low of 50c. Hwange had a market capitalisation of R51.7m at the time of its suspension.
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