HWANGE Colliery Company Limited (HCCL) recorded a $30,9 million loss for the year ended December 31 2013 compared to a profit of $3,1 million in 2012 due to low production volumes and the reduction in the coke price locally and abroad.
BY VICTORIA MTOMBA BUSINESS REPORTER
HCCL chairman Farai Mutamangira said during the period under review, turnover was down to $71,5 million compared to $104,2 million in 2012.
“The production volumes were low consequent to the old equipment, the reduction in coal and coke prices both local and export, the increase in high fixed overheads costs, the rising input costs, the impact of legacy debts on current cash flows and the absence of facilities for working capital,” Mutamangira said.
HCCL recorded a reduction in the gross margin of 38% for the same period last year compared to the current gross loss situation.
Mutamangira said the severe shortages of liquidity in the market did not only suppress demand, but also limited sources of working capital for the company. He said during the period under review, the company procured mining equipment worth $12 million and was concluding a transaction of $29 million for two lines of credit.
“Mining equipment acquisition was in progress from India and Belarus through lines of credit being finalised with pan-African developmental financial institutions,” he said.
Mutamangira said coal demand on the domestic market significantly decreased giving rise to increased competition among the coal and coke producers.
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During the full-year period overall sales volumes decreased by 16% to 1 602 187 metric tonnes due to low production throughput.
Export sales of coke and breeze decreased by 57% because of the shutdown of some of the operations of coke customers in the Democratic Republic of Congo and the invasion of cheaper coke imports from China.
Mutamangira said sales of coal fines amounted to 201 610 tonnes compared to 233 453 tonnes sold in 2012.
“There has been increased demand for coal fines necessitating the company to reclassify the commodity as a byproduct. This required that the company revalue the coal fine stockpile and recognise it into inventory,” he said.
