Exxaro Resources, a diversified miner and renewable-energy company, expects lower coal and iron-ore prices and reduced production for the first half of 2024. The company anticipates an average benchmark API4 Richards Bay Coal Terminal (RBCT) export price of $101 per ton, compared to $112 per ton in the second half of 2023.
Iron-ore fines prices are also projected to drop. The average price for the first half of 2024 is expected to be $117 per dry metric ton (DMT), down from $121 per DMT in the previous six months. Total coal production, including buy-ins, and sales volume are expected to decrease by 14% and 12%, respectively. This decline is mainly due to reduced demand from Eskom for coal produced at the Grootegeluk mine.
Exxaro reported that capital expenditure for the first half of the year in its coal business is expected to be about 33% lower. This reduction is due to lower sustaining capital expenditure at the Grootegeluk complex. As of May 31, the group had net cash of R15.3 billion, excluding energy’s net debt of R4.2 billion.
Despite a soft start to the year, Exxaro’s FD Riaan Koppeschaar mentioned improved global economic growth prospects. This improvement is mainly led by upward revisions in the anticipated economic performances of the US, Europe, the UK, and India. Following a prolonged period of high consumer price index in the US, initial policy rate reductions were postponed and are expected to take effect during the second half of the year.
Koppeschaar assured shareholders, stating, “The group therefore has sufficient liquidity and will remain a going concern for the foreseeable future.”
As of May 31, Exxaro achieved 21 months without a work-related fatality. However, the group recorded four lost-time injuries, resulting in a lost-time injury frequency rate (LTIFR) of 0.06 against a target of 0.05. This performance marks a 25% improvement compared to the same period last year, which had an LTIFR of 0.08. Exxaro also reported zero high-potential incidents, compared to four for the year ended December 31, 2023.
Koppeschaar emphasized, “To sustain this further, various safety initiatives have been deployed across all our business units.”
Exxaro will release its audited interim results on August 15. The company remains optimistic about its future despite the current challenges. It continues to focus on its strategic goals and investments, ensuring long-term sustainability and growth in the mining sector.
Source: Mining Weekly
