The IEC which is Tancoal Energy Limited holding company, said in its 2016 annual report and audited accounts that its 10 percent sales reduction compared to 2015, were largely caused by the imports which the government has since banned.
The company’s board Chairman, Graeme Robertson said the IEC remains a major producer and supplier of thermal coal in East Africa through its 70 percent ownership of Tancoal Energy Limited which operates the Ngaka coal mine in south west Tanzania.
“The full year production was 248,468 tonnes and sales were 246,197 tonnes, approximately 10 percent less than sales in the previous year. Sales revenue for 2016 was A$14,408 million.
This was due to the import of coal at below market price from South Africa which has had an adverse impact on both sales, price and consequently financial results,” Robertson said.
He said approximately 150,000 tonnes were imported into the country between December 2015 and April 2016, causing a decrease in sales in the first half of the year from 137,055 tonnes to 109,142 tonnes in the second half instead of an anticipated increase.
“This resulted in the profit in Tancoal of A$432,000 at 31 December 2015 turning into a loss of A$2,120,000 for the second half of the year. Management raised this matter with the Ministry of Energy and Mines and a decision was taken in August 2016 to ban the import of coal into Tanzania as long as domestic coal can fulfil the requirements of local industries,” Robertson noted.
Tancoal is a joint venture between IEC and National Development Corporation (NDC). Frustrated by the poor performance of the local company, Prime Minister, Kassim Majaliwa has ordered Controller and Auditor General to conduct a special audit of Tancoal’s accounts while the Attorney General has been ordered to see how the NDC/IEC contract signed in 2011, can be reviewed to benefit the country.
Apart from the domestic market, Tancoal also exports its commodity to Rwanda (9%), Kenya (2.8%) and Malawi (1.5%).
“During 2016, expansions of two cement producers and one new large cement plant were completed and which had used imported coal. This has now changed and sales tonnages from Tancoal will increase as imported coal stockpiles are depleted over the first quarter of the 2017 year,” the IEC Chairman noted.
It is estimated that at full capacity, the cement industry will require up to 500,000 tonnes per year and Tancoal is in an excellent position to supply this tonnage.