Diversified miner and renewable-energy company Exxaro Resources expects to report lower coal and iron-ore prices, as well as lower production, for the first six months of this year.
With respect to the company’s key commodities, the average benchmark API4 Richards Bay Coal Terminal (RBCT) export price for the first six months of the year is expected to average $101/t, compared with $112/t in the second half of 2023, free-on-board (FOB), a decline from the previous six months.
Additionally, the iron-ore fines price for the first half of the year is expected to average $117 per dry metric tonne (DMT), including the cost and shipping to China, down from $121/DMT in the previous six months.
Total coal production, including buy-ins, and sales volume for the first six months of the year are expected to decrease by 14% and 12%, respectively, mainly owing to reduced demand from Eskom for coal produced at the Grootegeluk mine, based on the utility’s latest internal plan.
“In terms of our capital allocation programme, we expect the capital expenditure for the first half of the year in our coal business to be about 33% lower, owing to lower sustaining capital expenditure spend at the Grootegeluk complex,” the company reported on June 25.
As at May 31, the group had net cash of R15.3-billion, excluding energy’s net debt of R4.2-billion.
Despite the soft start to the year, Exxaro FD Riaan Koppeschaar said global economic growth prospects had improved, mainly led by an upward revision to the anticipated economic performances of the US, Europe, the UK and India.
Following a higher-for-longer headline consumer price index in the US, the initial policy rate reductions were postponed and are expected to take effect during the second half of the year.
“The group therefore has sufficient liquidity and will remain a going concern for the foreseeable future,” Koppeschaar assured shareholders.
Meanwhile, as of May 31, the group has achieved a total of 21 months without a work-related fatality but recorded four lost-time injuries, resulting in a lost-time injury frequency rate (LTIFR) of 0.06 against the set target of 0.05.
The current performance indicates a 25% improvement when compared with the same period last year, which saw an LTIFR of 0.08. Exxaro has recorded zero high-potential incidents across the group, compared with four for the year ended December 31, 2023.
“To sustain this further, various safety initiatives have been deployed across all our business units,” Koppeschaar said.
Exxaro will release its audited interim results on August 15.