Message Mer 30 Sep 2009 18:54

Lower demand, weaker output hit Hwange Colliery's coal sales

JOHANNESBURG (miningweekly.com) - Zimbabwe-based and JSE-listed Hwange Colliery's coal sales halved in the six months ended June 30, on the back of lower output and weak local demand, it reported on Wednesday.

Hwange Colliery said that while the business climate in Zimbabwe had improved, the dollarisation of that country's economy had resulted in liquidity challenges for most industries, "adversely affecting" the demand for coal and coke.

"There were many company closures around the country, thereby negating coal demand," the company noted.

Further, Hwange Colliery's output was negatively impacted on by frequent breakdowns as a result of aged mining and processing equipment, and the outage of the dragline pending major repairs and service.

Total coal sales for the interim period dropped to 401 114 t, from 862 392 t in the first half of 2008.

Total exports amounted to 4 270 t, the bulk of which were coal fines for the cement industry.

Coal deliveries to the Hwange power station were 60% lower at 218 683 t in the six-month period.

Coke sales fell to 15 114 t, from 72 494 t in the same period last year, after the coke oven battery failed. Hwange Colliery exported the bulk of the coke output, because local customers were on production stoppage.

The company said that it was expecting the demand for coal and coke products to improve as the local and regional industries, which had been affected by the global economic crisis, were expected to increase capacity utilisation.

It also expects to improve production, following the servicing of the dragline and the refurbishment of the coke oven battery.

The company posted net profit of $1,66-million and revenue of $23,6-million in the six month period. (There was no comparative, as this was the first time that the company was reporting in US dollars, following the introduction of the multicurrency system in February this year.)