Tancoal
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The contract miner at Hwange Colliery stopped mining on or about 15 December 2018 and only resumed mining in August 2019.

In addition, the company only resumed open cast mining in March 2019. Owing to the above, production declined by 52% from 819,859 to 394,704 for the period under review.

It is interesting to note that HCCL production increased marginally from 344,694 tonnes to 394,704 tonnes and it has continued to increase for the first three month of the second half from 158 981 tonnes to 224 191 tonnes.

Poor financial showing stymies Hwange turnaround

Total sales tonnage declined by 16% from 682 152 in 2018 to 573 238 during the period under review. The sales mix however improved with HCC/HIC coal sales increasing by 4.2% from 268 570 tonnes to 279 790 tonnes.

HPS sales to Hwange Power Station decreased by 38.% from 376,695 tonnes to 232,222 tonnes.

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The cost of sales increased by 16% to $35.7 million from $30.6 million for the prior year comparative period.

As a result, the company posted a gross profit of ZWL$34 million compared to a gross loss of ZWL$144,000 in prior year which is pleasing.

Outlook

There was very little production in the first three months of the year due to a combination of working capital constraints and antiquated equipment.

The last three months have shown some notable improvements as a result of targeted interventions.

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The second half has started reasonably well and the strategic thrust for the second half of the year (H2 2019) will be the following.

Increased production

The company should be able to comfortably produce 250,000 tonnes per month inclusive of the mining contractors’ contribution.

Further, the company has deliberately decided to mine the JKL Pit and underground which will result in the production of high value coking coal.

Going forward, the plan is to invest in a coke oven battery with beneficiation in mind and this should result in a significant increase in
revenues.

The company continues to explore pillar mining which if successful, should result in production volumes being north of 300,000 tonnes per month.

Open cast mining

The Company’s open cast operation contributed 195,173 tonnes for the half year which represents 60% of the total half year production. There are still constraints in the internal logistics and processing section of the value chain.

Efforts continue to be made to stabilize the operation for it to be able to consistently produce 120 000 tonnes per month in the 2nd half of the year.

Underground mine operations

The company is working on stabilizing the underground mine operation which averaged 21,000 tonnes per month for the period under review.

The target is to bring the operation to 50,000 tonnes per month, which
will contribute significantly to the Company’s bottom line and enhance exports.

Processing plants

The company made some significant efforts to stabilize the Jig and Floatation plant during the first half of the year.

The plan for the 2nd half is to resuscitate the HMS plant so as to increase the washing capacity.

Coke production

The Company’s intended takeover project of the Hwange Coal Gasification Company (HCGC) Coke oven battery pursuant to a BOOT Agreement with its Chinese partners in HCGC was delayed.

The Company has placed more emphasis and attention on coming up with its own coke oven battery while it continues takeover discussions with HCGC.

Cost reduction

The Company adopted a low cost high productivity strategy. This has remained an on-going strategy and shall be monitored through to year end.

M Block Underground Pillar Mining

The Company is engaging contractors to do pillar mining on old M block underground mine workings.

Coal production is expected in the last quarter of the current financial year.

Improve efficiencies and competitiveness

As the Company increases the thrust on the core business of mining, it will also look at ways of weaning non-core activities such as road maintenance, electrical power distribution and sewage treatment.

The adoption of enterprise resource planning systems to automate the administration of the business will also improve efficiencies and lower the cost per ton of coal produced.