Exxaro forecasts higher coal sales, production by year-end

JOHANNESBURG (miningweekly.com) – South African coal producer Exxaro expects thermal coal production from its commercial mines to increase by 6% year-on-year in the second half of its financial year, owing to the inclusion of Exxaro Coal Central (ECC) before the 2016 financial year-end.

However, the JSE-listed miner noted that this would be partly offset by the sale of its Inyanda colliery to a consortium comprising Burgh Group and Lurco Group.

Exxaro further stated that its metallurgical coal production volumes for the financial year were expected to be 9% higher than in 2015.

Coal buy-ins are expected to decrease by 52%, owing to the availability of sufficient coal to fulfil contracts, while export sales volumes are expected to increase by 31% as ECC exports, as well as coal exports from Mafube power station, previously supplied to Eskom, are included.

Sales to the State power utility are expected to decrease by 8%, owing to lower offtake from Leeuwpan colliery – which did not extend the contract to supply Eskom at the end of the first quarter – coupled with lower offtake from Grootegeluk, which is in line with the Medupi coal supply agreement.

Meanwhile, domestic thermal coal sales, other than sales to Eskom, are expected to increase by 73%, as demand in the domestic market improves.

“Demand for our coal remained stable in the year amid some uncertainty in commodity markets. There was an increase in semi-coke sales on the back of sustained marketing efforts, which are expected to continue into 2017,” stated Exxaro.

The diversified miner further noted that new markets were being explored in the Middle East, largely for higher-quality coal.

Growth is also expected to come from Africa and South East Asia.