• Hwange Colliery plans to halt underground mine production for 6 months to address coal oversupply and prevent spontaneous combustion
  • Spontaneous combustion poses a significant risk to the company, as it can lead to fires and damage when coal ignites without an external ignition source
  • The company's increased coal production has resulted in a glut, exceeding sales capacity and increasing the risk of storing coal for extended periods, thus heightening the risk of spontaneous combustion

Harare- Hwange Colliery Limited, a coal mining company currently under administration, has witnessed a surge in its quarterly coal output, nearly doubling its production during the third quarter of 2023.

However, this substantial increase has resulted in an oversupply of coal and the need for heightened marketing endeavors to sell the surplus. To address this issue and prevent the loss of mined coal due to spontaneous combustion, the company has announced plans to temporarily halt underground mine production for the next six months.

Spontaneous combustion refers to the phenomenon where coal ignites without an external ignition source, posing a significant risk when coal is stored in large quantities. Spontaneous combustion poses a significant risk to Hwange Colliery.

When coal undergoes spontaneous combustion, it ignites without an external source of ignition, leading to fires that can cause substantial damage. This phenomenon occurs when certain conditions, such as heat, oxygen, and the presence of reactive substances in the coal, combine to initiate combustion.

In the context of Hwange, the excess production of coal has created a glut in the mineral, surpassing the company's sales capacity. As a result, there is a higher risk of coal being stored in large quantities for extended periods, increasing the likelihood of spontaneous combustion.

If coal stored in stockpiles or within the underground mine spontaneously combusts, it can lead to fires that are challenging to control and extinguish. These fires not only cause significant financial losses for the company but also pose risks to the safety of personnel working in the mine.

To mitigate the risk of spontaneous combustion and prevent the loss of mined coal, Hwange has taken the decision to temporarily halt underground mine production for the next six months.

This pause in production will allow the company to manage the existing stockpile of coal and take appropriate measures to prevent spontaneous combustion incidents.

By implementing this temporary production halt, Hwange aims to ensure the safe storage and management of coal, minimizing the risk of fires and preserving the valuable resource.

Hwange Colliery comprises three divisions: Mining, Estate, and Medical. The Mining division is the primary revenue generator, contributing over 90% of the company's earnings.

In the latest trading update, Hwange recorded an impressive production of 989,503 tonnes of coal, with sales reaching 911,245 tonnes, marking a substantial increase compared to the previous year's performance. This boost can largely be attributed to the acquisition of efficient machinery earlier in 2023.

The breakdown of sales for the third quarter reveals that coal sales to Hwange Power Station (HPS), the country's leading electricity generator, accounted for 48% of total sales, while raw coal constituted 39%, Hwange Coking Coal (HCC) 1%, and Hwange Industrial Coal (HIC) 12%.

Due to the adverse impact of the El Niño-induced drought on the water levels of the Kariba Dam, HPS plays a crucial role in electricity generation in the country.

In the same period of the previous year, the company sold 388,487 tonnes of coal, with HPS comprising 7%, raw coal 55%, HCC 6%, and HIC 32%. Sales of contaminated coal during this period amounted to 8,143 tonnes, significantly lower than the previous year's figure of 25,309 tonnes.

Hwange Power Station continues to be the primary customer for the struggling company.

Regarding revenue generation, the Mining division witnessed significant improvement, accounting for 96% of the company's revenue compared to 91% in the previous year.

On the other hand, the Estates Division saw a decline from 8% to 3% during the same period, while the Medical division remained stagnant at 1%.

The company attributes the Mining division's revenue improvement to the implementation of new mechanization during the first quarter of 2023.

For the nine-month performance ending on September 30, 2023, Hwange achieved sales of 2,795,303 tonnes, marking a considerable increase compared to 1,060,976 tonnes in 2022.

HPS accounted for 43% of total sales, followed by raw coal at 39%, HIC at 17%, and HCC at 1%. This represents a shift from the previous year's breakdown, which saw HPS at 9%, raw coal at 48%, HCC at 8%, and HIC at 35% of the total sales figure of 1,060,976 tonnes.

Additionally, sales of contaminated coal amounted to 30,229 tonnes, a decrease from the previous year's figure of 71,933 tonnes.

The remarkable increase in sales from 1,060,976 tonnes to 2,795,303 tonnes reflects a significant positive change of 163%. This positive shift can be attributed to the doubling of production as well as intensified marketing efforts to sell the mined coal.

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