South Africa: Exxaro to bolster coal exports with innovative sales strategies

• Exxaro eyes 10% hike in exports in CY24
  
  
• Total coal sales guidance set at 40.8 mnt in CY24
  
  

Exxaro Resources, a South African mining company, plans to boost coal exports by seeking new sales routes, bypassing the struggling Richards Bay Coal Terminal (RBCT), according to a statement released on June 25, 2024.

The company anticipates a 23% y-o-y increase in coal sales to 3.3 million tonnes from H1 CY24 compared to the previous six months. Total coal sales for 2024 are forecasted at 40.8 mnt, slightly higher (1%) than earlier estimates.

For the full year, Exxaro expects exports to reach 6.6 mnt, up 10% from its initial projection of just over 6 million tonnes. Chief Financial Officer Riaan Koppeschaar credited this rise to utilizing alternative export channels, especially through Belfast port.

However, domestic sales of thermal coal to Eskom have been lower than expected, primarily due to reduced demand from the Grootegeluk mine. Exxaro remains cautious about Transnet's performance, citing interruptions on the coal export line to RBCT which have decreased transport volumes.

Seaborne thermal coal prices initially faced pressure due to weak demand in Asia and Europe, coupled with lower natural gas prices. However, prices rebounded in the first half of the year amidst concerns over tighter sanctions on Russia, geopolitical tensions in the Middle East, disruptions to US coal exports, and rail interruptions in South Africa. These factors pushed up European natural gas prices.

Despite challenges, Exxaro remains optimistic about coal prices, expecting support from extreme weather patterns and tight spot supply. However, increased production in Australia and the growth of gas and nuclear power pose risks. Prices for lower-quality coal are expected to remain stable.

Note: This article has been written in accordance with an article exchange agreement between SXCoal and BigMint.