Hwange Colliery Company Limited (HCCL) administrator Bekithemba Moyo is focusing more on underground mining to turn around the fortunes of the miner throwing into doubt a deal which could have seen a Dutch firm carry out exploration works, it emerged this week.
Negotiations with Dutch firm, Fugro Earth Resources—which was awarded the exploration contract in 2017 and was yet to start geological investigations at the new concessions in Western areas in Hwange and Lubimbi East and West—had been suspended after HCCL was put under receivership last year. Hwange was granted the new concessions by
government in 2015.
Well-placed sources at the tri-listed miner told Business Times that the deal has stalled. The administrator, impeccable sources said, was focusing on production, in an attempt to turn the company’s fortunes around.
HCCL is listed on Zimbabwe Stock Exchange, London and Johannesburg stock exchanges.
“The administrator is focusing on production and new projects including the exploration of new concessions have been frozen out,” one source said.
Another source said: “We are focusing on production at the moment as we try to turn around the company.”
Contacted for comment Hwange’s assistant administrator, Munashe Shava, referred all questions to Moyo who could not be reached for comment.
Hwange used to enjoy a monopoly in coal production in the country until the emergence of other players such as Makomo Resources, Coal Brick and Chilota Colliery in 2010, which chipped off its market share.
Mining experts said the revival of the troubled miner depended on the exploration of the three concessions namely Western Areas, Lubimbi East and West, because the current resources at its open cast concessions are on the verge of depletion.
The new concessions are expected to increase the life of the mine by about 70 years. It is understood that the new mining concessions hold deposits in excess of one billion tonnes of coal consisting of both coking and thermal coal at the Western Areas and Lubimbi West.
According to a preliminary report, Lubimbi East concession has coal-bed methane gas. Hwange’s underground operations have, however, a much longer mine life than its open cast concessions.
Hwange’s financial performance for the year to December 2018 worsened, with losses widening to ZWL$78,4 million from ZWL$43,8 million
reported in the previous year.
This was largely as a result of the impairment of some assets, as well as subdued coal prices against increased input costs.
Revenue, however, increased by 27% to ZWL$69,1 million during the period under review from ZWL$54,5m in 2017, attributable to an increase in sales volume to 1,5 million tonnes in 2018, up from 1,2 million tonnes sold in the previous year.