HCC Records Profits But Debts Rise To US$88million
Bulawayo, 31 March - Zimbabweâ€™s main coal mining company, Hwange Colliery Company (HCC) has recorded an operating profit about US$10 million compared to US$5.7 million registered in 2009 despite the companyâ€™s debts increasing to US$88 million.
The operating profit registered by the HCC shows a near 65% increase.
The company attributes the rise of its operating profits for 2010 to
increased coal and coke production at its plants as sales reached 2 510 943 tonnes compared to the 2009 figure of 1 709 951 tonnes.
The country’s main coal mining company recorded an operating profit of US$9.4 million compared to US$5.7 million registered in 2009, according to HCC financial statements released on Thursday for the year ended December 2010,
“The company recorded an operating profit of US$9.4 million compared to US$5.7 million achieved in 2009. The share of profit from equity accounted investments accounted to US$.2.8 million compared to a share loss of US$0.5 million incurred last year,” read in part the HCC financial statements.
But the HCC financial statements note that the company’s debts increased to US$88.2 million as borrowing costs had been significant since there was limited availability of foreign lines of credit.
“The current liabilities also increased from US$58.3 million to US$88.2 million and comprised mainly of trade cre4ditors and borrowings.
“The company was financing the recapitalization initiatives through short term facilities as there were no long term structures in the market,” the HCC statements added.
The HCC financial statements show a marked recovery process of the coal mining company that nearly faced closure during the hyper-inflationary environment when the country’s economy was on its knees.
At the time, production at HCC reached rock bottom at a time when its old machines were facing constant breakdown due to lack of foreign currency to acquire spare parts.
However, HCC said it had “secured a medium term financing facility for the acquisition of additional equipment and delivery will be between March and June” and added that ‘this is expected to further boost productivity.”
Coal is seen as key to many industries and – if available- is seen as driving the country’s economic recovery process.
Zimbabwe has estimated reserves of 30,000 million tons of coal, according to geological studies. The deposits are the biggest in quality coal in southern Africa.