Hwange draws down $6m BancABC loan

HARARE - Listed Hwange Colliery Company Limited (Hwange) has drawn down $1,8 million from a $6 million BancABC loan.

Its managing director, Thomas Makore, said the drawdown period for the funds, earmarked as working capital for the hard pressed coal producer, is three months.

“So far we have drawn 30 percent of the $6 million,” he told businessdaily.

The Zimbabwe Power Company (ZPC), a subsidiary of power utility Zesa Holdings, guaranteed the loan from BancABC — a unit of regional banking group ABC Holdings Limited.

“It’s a prepayment loan. We have to supply product (coal) first to ZPC for at least one year,” Makore said. ZPC, which runs thermal power stations, is Hwange’s major local clients.

This comes as the miner — targeting to boost production from around 200 000 tonnes monthly to about 500 000 tonnes — has secured an $18,5 million credit line from the PTA Bank.

Meanwhile, Hwange seeks new concessions to boost its coal reserves.

The group — whose losses widened by 154 percent to $7,9 million in the half year to June 2014 from $3,1 million incurred in prior comparable period — said the additional concessions are “critical and strategic to the future of the growth plans of the business”.

Farai Mutamangira, Hwange chairman, said they targeted to secure the claims in the short term and “focus now is on securing the Western Area concession”.

“The new reserves will augment Hwange’s capacity to supply the expansion of Hwange Power Station, private thermal power stations, coke demand from iron and steel furnaces and chrome smelting plants,” he said in the group’s financials for the half year to June 2014.

Hwange is targeting local and regional markets for its coke and coal products.

In the six months under review, Mutamangira said the group’s investment entities — Zimchem Refiners, Hwange Coal Gasification

Company and Clay products — all performed below budget, resulting in a share of loss of $77 558. He said sales revenue was depressed during the period under review, dropping to $33 million from $40,4 million recorded in the six months to June 2013.

HCCL sold a total 764 813 tonnes of coal compared to 913 440 tonnes were sold during the same period last year.

“The servicing of the legacy debts continued and this further strained the company’s cash flows and retarded production operations although this trend will change in the second half,” he said.

“Finance costs for the period amounted to $1 million and was comparable to $1,1 million for the same period last year,” Mutamangira said.

“Total assets and investments remained unchanged at $250 million. Capital and reserves decreased from $103,6 million to $67,2 million because of the accumulated loss from last year,” he added.

Mutamangira said coal deliveries to Hwange Power Station in the half year were 394 451 tonnes against 580 818 tonnes in the comparable period.

“Coke sales volume decreased from 25 839 tonnes achieved in the first half of 2013 to 18 363 tonnes for the period under review.

This is attributable to low production performance of the aged coke oven battery that had to be decommissioned after it started uncontrolled cooling.

“To mitigate the impact of the outage of the battery on our turnover, the company entered into a toll coking agreement with South Mining Company,” he said In an effort to bring HCCL back to profitability, Mutamangira has said the company would intensify its cost containment strategies to maintain the margins to yield profitability at the end of the year against the backdrop of declining commodity prices.

Comments (1)

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