18 May 2014

Zimbabwe: Hwange Coal Reserves Dwindle

HWANGE Colliery Company Limited (HCCL) wants to be allocated new concessions as its reserves are running out.

In a May 7 letter to shareholders, HCCL board chairman Farai Mutamangira said coal reserves were critically low.

"The coal reserves of HCCL are critically low with most of the open cast resource that is commercially viable to mine now below five (5) years from completely running out," Mutamangira said.

"The JKL Pit, where the Dragline is stationed, is the most affected."

Mutamangira said without government support in the form of additional coal reserves, the life of the mine remained critical and urged shareholders to engage and save the company.

The government is the largest shareholder in HCCL with 37% shareholding.

Government and British business magnate, Nick Van Hoogstraten have over 50% and determine the appointment of board of directors.

Mutamangira said the views of government regarding the future of the triple listed mining concern were to be carefully considered and common positions found.

HCCL has a primary listing on the Zimbabwe Stock Exchange and is also listed on the JSE and London Stock Exchange.

Mutamangira told shareholders that balance sheet restructuring would be carried out to convert US$100 million of short-term debt to long-term debt and enable the company to meet its current obligations.

This would free the company from expensive finance charges on short-term borrowings.

Post the balance sheet restructuring, HCCL was considering a joint venture to develop a 300MW coal -fired power station.

The company is also considering developing a coal bed methane project at Lubimbi.

It also wants to produce petrochemicals from coal to generate additional revenue.

"The technology has been proven by Sasol and the company will carry out feasibility to explore the company's capability of producing petrochemicals," Mutamangira said.

It would also enter the export markets for thermal and coking coal.

In the full year ended December 31, HCCL posted a US$30,9 million loss attributed to low production volumes and reduction in the coke price locally and abroad.

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