South32 reports fall in SA coal volumes as Eskom demand drops
Diversified miner South32, which is in the process of exiting its SA coal assets, said on Thursday its domestic coal volumes declined in its half-year to end-December amid a lack of demand from power utility Eskom.
A strengthening of the rand has also pushed up operating costs, the group said in a trading update, while export sales were also lower following the suspension of activity from loss-making pits in response to market conditions.
SA energy coal production decreased by 5% to 11.2-million tonnes in the group's December 2020 half-year, with domestic sales declining in the quarter ending December due to reduced demand from Eskom.
The deal to divest the SA Energy Coal (SAEC) business to Seriti was announced in November 2019 and would result in Seriti becoming a major supplier of coal to Eskom.
South32 is still awaiting approval from Eskom and aims to finalise the transaction by the end of March.
Other operations fared better, with South32 saying it achieved record production at its 86%-owned Worsley Alumina mine in Western Australia, where production increased 4% to 2.01-million tonnes.
South32’s Brazil alumina operation, and its Australia Manganese business, also set production records for the group.
“This was another period of strong operating performance across our business, with three of our operations setting production records for the half-year,” said CEO Graham Kerr.
“The ongoing transformation of our portfolio continues to gain momentum as we focus on exiting lower returning businesses and work towards increasing our base metals exposure,” Kerr said.
In morning trade on the JSE, South32’s share was unchanged at R30.50, having risen 6.35% over the past 12 months.
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