Page 28 - Integrated Annual Report

OPERATIONAL OVERVIEW(CONTINUED)
HCI COAL PROPRIETARY LIMITED (“HCI COAL”)
www.hcicoal.co.za
This year has been a challenging year headlined by the impact of the COVID-19 pandemic. Given the extraordinary circumstances and volatility caused by the pandemic, our focus was to keep our people safe and well, maintain safe and reliable operations and support host communities all of which are critical to protecting the future of our business.
Our collieries developed and implemented critical controls designed to minimise the risk of exposure to COVID-19, including screening and testing, additional cleaning and hygiene measures, and adjustments to work routines to enable appropriate social distancing. However, we are saddened to report that during the year two people employed by our subcontractors succumbed to COVID-19. The company’s excellent safety record was interrupted with only one Lost Time Injury which occurred in February 2021 after more than a year without any incident. The LTIFR (Lost Time Injury Frequency Rate) on a cumulative basis ended on 0.01 (FY 2020: 0.082).
Whilst coal production was identified as an essential service throughout COVID-19-related restrictions the company’s overall performance was satisfactory. HCI Coal’s revenue for the year decreased by R247 million to R1.38 billion and underlying EBITDA decreased by 18% to R209 million (2019: R248 million) for the year as a result of the curtailment of coal quantities accepted by Eskom to below contractually agreed levels as well as the sale of Mbali Colliery
which was effectively completed on 1 March 2021.
Mbali Colliery which is situated in the Mpumalanga Province and almost at the end of its useful life was sold to Kunolwazi Resources for R37 million. For the reportable 11 months Mbali Colliery supplied coal to both the export and local markets achieving an EBITDA of R35 million (2020 : - R22 million) supported by solid cost control and a strengthening price for export coal particularly during the latter part of the year.
Palesa Colliery which supplies all its coal to Eskom, had limited opportunity to increase coal deliveries as Eskom restricted the loads and tons per day for the most part of the year, with Eskom citing a significant reduction in power demand due to the impact the lockdown has had on economic activities. Palesa Colliery sold 2 309 693 tons compared with the 2 727 276 tons in the previous year which represents a decrease of 15%. The colliery is close to concluding discussions with Eskom to possibly increase the supply of coal to Eskom.
Palesa Colliery Tons
Recognising the vital role we play in the remote communities surrounding our operations, we engaged with host communities, local traditional authorities, municipalities and civil society organizations to make sure we could provide a range of essential services such
Mineral reserve: proven
Mineral reserve: probable
57 009 242
17 551 309
74 560 551
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INTEGRATED ANNUAL REPORT 2021
HOSKEN CONSOLIDATED INVESTMENTS LIMITED
Palesa Colliery