Exxaro expects full-year production to fall

Resources group Exxaro says thermal coal production is expected to be 6% lower than the previous financial year, mainly due to lower Eskom demand in the Waterberg region and lower offtake at Leeuwpan in Mpumalanga.

This is partially offset by improved production at Belfast realising value through alternative ports. The increase in metallurgical coal production was demand driven, finance director Riaan Koppeschaar said in a pre-close update on Tuesday.

The group forecasts thermal coal production at 37.42-million tonnes from 39.82-million tonnes in 2023.

Thermal sales are expected to decrease by 7%, mainly due a to a 2% decline in Eskom demand. The expected decrease in the domestic market was due to more product being channelled to the export market, mainly from Belfast, as well as logistical constraints on the uptake of coal from Leeuwpan, the group said.

The forecast 34% increase in export volumes is driven by optimal logistical resource scheduling and using alternative distribution channels.

Metallurgical sales are expected to increase by 3% compared with the 2023 financial year, driven by increased demand by domestic end users.

Thermal sales at Matla mine are expected to decline as Exxaro ceased mining at the Mine 2 shortwall, in line with the mine plan.

The API4 Richards Bay Coal Terminal (RBCT) export price is expected to average $105 a tonne, free on board, 12.5% lower than the previous year’s. The iron ore fines price for this year is expected to average $107 a dry metric tonne, cost, and freight (CFR) China, an 11.6% reduction since the previous year.

Total coal product, including buy-ins, is expected to decrease by 6%, and sales volumes are expected to decrease by 2% compared with the 2023 financial year.

Exxaro expects capital expenditure for the coal business to be about 11% lower than a year ago, due to lower sustaining capital spend at Grootegeluk.

“Our coal business performance continues to be impacted by logistical challenges, and low commodity prices. However, through our optimisation programme, which focuses on improving efficiencies across the value chain, combined with the utilisation of insights from advanced analytics, we continue to alleviate the impact of external factors on our business ... thus ensuring that our business remains resilient and continues to deliver stakeholder value,” he said.

The group said Transnet Freight Rail railed 42.1-million tonnes to the Richards Bay Coal terminal from January to October, equivalent to a tempo of 50.51-million tonnes a year.

The performance from Grootegeluk averaged three trains per week due to the effect of security issues, vandalism and locomotive shortages. The Mpumalanga export rail performance averaged eight trains per week for the same period.

With the support of the coal industry through the Corridor Recovery Team and the identified initiatives, the rail performance improved during the year from an annualised tempo of 47-million tonnes to 50.5-million tonnes, Exxaro said.

Going into 2025, global economic activity remained well positioned for a further gradual moderation of consumer price inflation, more accommodative financial conditions and steady global real GDP growth rates, Exxaro said.

Various global developments could affect economic activity, such as potential post-election policy shifts in the US and the escalation or de-escalation of geopolitical tension.

The group will release its annual financial results on March 13.

mackenziej@arena.africa