Falling Eskom coal demand due to technical problems cuts into Exxaro's profits

Exxaro Resources has reported a drop in coal production and sales for the half year to end-June 2024.

Group revenue declined by 4% to R19 billion 'due to lower export prices, decreased domestic offtake and increased logistics costs'.

Net operating profit was down 14%, coming in at R3.7 billion.

Exxaro declared an interim dividend of R7.96 per share, down 30% compared to the same period last year.

Coal production volumes declined by 12.7% from 22.1 million tonnes for the second half of 2023 to 19.3 million tonnes in the first half of 2024,

This was mainly attributed to continuing low demand from Eskom and Transnet-linked logistical challenges, Exxaro said.

At the same time the coal miner increased exports during the six-month period by over 20% to 3.2 million tonnes.

In conversation with Stephen Grootes, Exxaro Resources CEO Nombasa Tsengwa clarifies that the problems with Eskom were not a matter of demand as such, but of technicalities.

"At their two power stations in the Waterberg they have to have proper infrastructure to be able to lift the coal from the stockpiles, and that's really where the challenges have been.

"There's an advantage that we are so close to these that sometimes they can afford to leave the coal in our stockpile and pick it up when things get better. It'sts just that they didn't recover from those technical issues."

"Looking at the last quarter we've seen some improvement in terms of what they are taking, and we're hoping that by the end of this year they would have covered some ground."

Nombasa Tsengwa, CEO - Exxaro Resources

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