HWANGE Colliery Company Limited (HCCL) expects monthly output to reach 500 000 tonnes by year end on the back of delivery of new equipment and output by a contractor.
CHIEF BUSINESS REPORTER
HCCL’s current monthly output is 150 000 tonnes and was expected to double after the company receives additional mining equipment worth $33 million.
A Portuguese mining and construction company, Mota-Engil, was contracted to mine coal for HCCL and is expected to start mining by the end of the month.
The company will produce 200 000 tonnes per month.
“Total aggregate production will be 500 000 tonnes per month by the end of the year,” HCCL managing director Thomas Makore said.
He said HCCL was doing paperwork on the delivery of new equipment.
HCCL is set to get loading and drilling equipment worth $15 million from BEML of India.
The deal would be financed through a loan from Export and Import Bank and supported by Zimbabwean government.
Disbursement of the facility was expected mid last month.
HCCL wants to procure additional mining equipment from BELAZ of Belarus worth $18,3 million. The equipment was supposed to be on site this month or September at the latest.
“We expect paperwork to be finished by the end of the month,” Makore said.
HCCL believes the recapitalisation through new equipment coupled with the resolution of the $150 million legacy debts would return back to profitability.
In a May 7 2014 letter to shareholders, HCCL board chairman Farai Mutamangira said the company was targeting to produce at least 450 000 tonnes of coal per month.
“This will assure HCCL of a monthly turnover of not less than $18 million. At this level, and assuming costs are contained below $9 million a month, HCCL will have sufficient turnover and gross margin to not only grow the business but also, to service its legacy debt which currently stands at about $150 million,” Mutamangira said.
All has not been well at the coalminer. In the full year ended December 31, HCCL posted a $30,9 million loss attributed to low production volumes and reduction in the coke price locally and abroad.
During the same period in 2012, HCCL had posted a profit of $3,1 million.
HCCL was recently dislodged as the biggest coal miner by Makomo Resources.
But Mutamangira told shareholders that with achievement of normal production capacity, “HCCL will be able to regain its market dominance and also aggressively venture into new export markets”.