HARARE – British tycoon Nicholas van Hoogstraten says Hwange Colliery Company Limited (Hwange) shareholders have begun discussions to turn around the coal producer’s fortunes.
In a brief interview on Monday, van Hoogstraten said he was concerned about developments at Hwange in the past few years.
“I have certainly been in discussions with the Hwange board, and other interested parties, concerning the way forward after years of disastrous mismanagement,” he said without elaborating nature of the talks.
Hwange’s problems include a backlog on workers’ salaries as well as outstanding debts that the firm as presented a plan to pay off.
The latest development comes after the coal miner reduced its loss by 51 percent to $43,8 million in the year to December 31, 2017, from $89,9 million recorded in the previous year on improved coal output during the period under review.
Revenue increased by 37 percent to $54,5 million from $39,9 million, which management attributed to increased sales volumes.
Hwange’s sales volumes rose to 1,2 million tonnes in 2017 from 921 000 tonnes in the prior comparable period.
The group’s acting chairperson Juliana Muskwe said the firm’s scheme of arrangement had given the struggling miner breathing space to return to profitability in the near future.
“Although better than the comparable period in 2016, the company’s performance for the period under review fell short of budgetary targets. This was due to low production levels attributable to working capital constraints,” she said.
In the period under review Hwange’s total sales tonnage was 1,2 million tonnes against a budget of 3,6 million tonnes.
Cost of sales during the year under review went down by 32 percent mainly driven by cost containment measures.
The company’s cost also improved on account of a nonrecurring cost of $19 million in 2016 relating to a stock adjustment.
Going forward, Hwange said it is focused on production increase, saying this is reflected by the jump in output to 1,2 million tonnes last year.
The listed coal producer managed to resuscitate its underground mine, beginning in the fourth quarter of 2017, and this should push production further in the new financial year.
“While the resuscitation of the underground operation was delayed, its resuscitation is clearly a sign towards recovery as production of high value products is set. Further, the company’s capacity to generate export sales from coking coal and coke is enhanced.
“While foreign currency remained a challenge during the year, support received from the Reserve Bank of Zimbabwe in availing foreign currency needed to import key pieces of equipment for the underground mine is appreciated,” Muskwe added.