TANCOAL Energy Limited posted a net loss of Australian dollars 17,186,000 last year because of competition from small miners, a backlog of taxes owed to Tanzania Revenue Authority and loyalty to the Ministry of Minerals.
In its 2020 annual report, Intra Energy Corporation which is Tancoal holding company, Chairman of the Board, Graeme Robertson said the loss included A$15,484,000 for the assessment by the Ministry of Minerals of U$10.4 million being U$6.93m royalty and inspection fee and U$3.47m penalty, for past charges for royalty on transport to customers’ business premises from 2011 to 2019 to be paid over four years.
“As Tancoal does not transport any coal as it is sold and taken by customers at the Tancoal stockpile using their own trucking contractors, this can only be a mechanism to receive royalties from mining companies,” Robertson lamented.
He however stated that discussions continue with Ministry of Minerals for a moratorium on the assessment until cash flow improves as Tancoal is currently struggling. “The remaining loss for the 2020 year of A$368,000 reflects the difficult operating conditions during the year and includes U$1,783,000) for the cost of royalty and clearance fees which were paid on behalf of customers for their cost of transportation during the year,”
Operating cash flow was very tight during the year with final three payments to the former contractor, Caspian still under discussion to extend the payment plan due to the tight cash flow.
IEC which also closed Malawi operations during the year said its assets were put on sale but there were no serious buyers and when the mining licence was up for renewal it was relinquished with the companies holding these assets expected to be wound up.
During the year under review, Tancoal’s sales revenue down to A$37.770 million from A$52.277 million last year with local customers dominating by 69 percent while Kenya got 19 percent with Rwanda and Uganda accounting for 12 percent.
“51 percent of sales were made to the cement industry, 36 percent to the ceramic industry and 13 percent to textile manufacturers and other industries. Tancoal’s 2020production was 496,393 tonnes compared to 748,874 tonnes in 2019.
Stocks were maintained sufficiently for the demand during the year,” the IEC Board Chairman noted.
IEC owns 70 percent of Tancoal which operates the Ngaka coal mine in Ruvuma Region while National Development Corporation has 30 percent.
The mine is the largest operational coal mine in Tanzania and East Africa, and is manned exclusively by Tanzanians. Tancoal’s sales were down by 34 percent in 2020 due to the effect of Covid-19 on the business of both domestic and export customers and competition from small miners.