Hwange Colliery Company Limited (HCCL.zw) HY2019 Interim Report

We have extracted the Managing Director Statement from the 2019 half year interim report of Hwange Colliery Company Limited (HCCL.zw), listed on the Zimbabwe Stock Exchange:

OPERATIONAL REVIEW

I have pleasure in submitting my report on the Company’s operations for the half year ended 30 June 2019.

Overview

An operating plan for the half year was adopted from the strategic guidelines and initiations adopted from the engagements that are done with the administration team.

Coal Production and Sales

Mining – Open pit mining averaged 32,073 metric tonnes per month whilst underground mining averaged 21,000 metric per month during the period under review.

Local Sales – Sales for the half year ended 30 June 2019 were 0.57 million metric tonnes which represented a 15.97% decrease compared to the same period last year. Thermal coal contributed 40.5% of sales while industrial coal sales to the industrial customers and the tobacco sector contributed 59.5%. Coking coal sales will be a major area of focus and growth as the production from 3 Main underground and JKL increases. The ultimate strategy will be coke production which is hinged on the Company’s establishment of its own coke oven battery.

Export Sales – The Company’s largest export market was Zambia. Export of industrial coal to this market contributed to the export revenue. Trial orders of industrial coal to new blue chip customers in Zambia and South Africa were also undertaken. These new customers will be a source of market share growth for the export business. Export sales contributed only 4% compared to the target of 20% contribution. Estates Division Performance Revenue grew by 22% to $6.1 million compared to the previous year. The revenue was generated from the following segments: real estate (54%), retail (34%), hospitality (6%) and education (6%).

Medical Services Division Performance

The Medical Services Division generated revenue of $1.3 million in the period under review. Service provision has improved significantly due to improved cash flows after the introduction of an externally managed medical aid.

Safety, Health, Environment And Quality

The Company’s objective is zero harm to the environment, people and equipment. During the period under review, no fatality was recorded. The company is pursuing recertification on IBMS (ISO 9001:2015, ISO 14001:2015 and ISO 45001:2018) by the end of the year.

Outlook

The operating plan for the second half of the year (H2, 2019) will continue to focus on increased production and improved efficiencies. However, increased production requires that the Company allocates more funding to its operations which means that it will have to focus on its core business of mining and reduce non-mining costs in line with industry best practices. Innovative ways to deal with the legacy debt will be explored while production of high margin and value coking coal will be increased.

Appreciation

Management and staff showed resilience and remained focused on its turnaround plan implementation. I would like to thank the Administrator, Mr. B. Moyo and his team, management and staff for their support, dedication and relentless commitment during the period under review and look forward to their support through to year end.

Dr. C. Zinyemba
Managing Director (Acting)