The Sunday News
HWANGE Colliery Company Limited has set its sights on aggressively exploring the Asian and European markets upon attaining its targeted coal output of 450 000 tonnes before the end of the year.
HCCL managing director Mr Thomas Makore said the company was working on fortifying its footprint on its traditional regional markets as well as seeking new ones outside the continent.
He said this in an interview with Sunday Business at the company’s pavilion at the Zimbabwe International Trade Fair exhibition centre on Thursday.
“With the increased production that we are planning by end of the quarter up to the end of the year going forward we want to increase our percentage of exports to Zambia and the Democratic Republic of Congo as well as to South Africa and also to overseas markets and of course the Indian market is one of the markets and the other market is Europe,” Mr Makore said.
The coal-mining giant has seen its production increasing from about 150 000 tonnes to 300 000 tonnes with the contracting of the Portuguese firm, Mota Engil to extract coal at its opencast mine late last year.
HCCL is targeting to produce 450 000 tonnes of coal upon the arrival of all its machinery from Belarus and India purchased through the company’s vendor finance initiative with a total value of $31,2 million. Part of the equipment is already in the country with the last expected in the country in June.
“Mota Engil was selected through an open tender process. They effectively came into the mine in the second quarter of last year and started mining in August. By end of last year they were already producing the contractual tonnage which is 200 000 per month and are able to do that every month so we are very satisfied with their performance,” Mr Makore said.
Five years ago HCCL failed to clinch lucrative export deals with a Belarus firm and Indian steel maker, Jindal Steel and a year later another one with Tata Steel of India flopped again as the foreign companies disapproved the country’s biggest coal miner’s high pricing model which was necessitated by high freight charges.
For the 10 months Belarus export deal, HCCL had received an order to ship 50 000 tonnes of coal fines but only managed to run a few liner trains via Chicualacuala into Maputo, Mozambique, where it was transported by sea to Europe.
The deal was worth $750 000. The Jindal Steel deal collapsed while HCCL had already prepared to make an export trial consignment of 10 000 tonnes of coking coal via the Maputo, Mozambique rail.
The Tata Steel coke export deal, which was going to see the coal mining giant raking in $4 million also suffered the same fate.
However, Mr Makore said HCCL was in the process of engaging the National Railways of Zimbabwe (NRZ), CFM of Mozambique and Transnet Freight Rail of South Africa to accord the coal mining company affordable rates for the movement of its export products.
“I think the key question that we are still trying to answer is logistics in other words the cost of moving the coal from Hwange to the ports. That’s a question that we haven’t fully answered because we need to talk to our rail transport partners, NRZ, CFM and Transet of South Africa and see what price point we can meet so that we can take advantage of this opportunity.
“So it’s an area that we are still studying and we are very interested in as I said with the volumes we are planning going forward we really think we have to balance domestic, regional and overseas exports,” Mr Makore said.
He said the company was expecting Government to grant it a new mining concession soon as reserves at its opencast are about to be depleted.
HCCL has over the past decade appealed to Government to grant it new coal mining concessions to no avail but over the years a number of new entrants into the sector have been given rights to exploit the resources in Hwange District and surrounding areas.
“We have applied for additional concessions because our life of mine for open cast operations is now very, very short in fact it’s dangerously short. So we have applied for concessions so that we have a health life of mine.
“It’s healthy for the business and for investors. I think the delays are really procedural so we really expect a formal announcement very soon, I would say within the next three months,” Mr Makore said.
He said the life-span of the mine was of paramount importance in attracting investment.
“In mining business the reason why people invest is that there is a resource that has a long-time to be mined so that when you put your money there is sufficient time to recoup your investment.
“Normally investors don’t want to put money in a mine which has short life of reserves so it’s important for our shareholders that we get additional concessions so that we can attract investment,” Mr Makore said.
