EXXARO Resources said it expected to conclude the sale of its ferroalloys operations by the middle of next year having previously identified it as non-core.
The 12,000 tons a year facility produces ferrosilicon which is used in the production of steel products. Exxaro has previously said the assets were no longer a strategic fit. The sale of the facilities, which will be to a black-owned company, began in the third quarter, it said.
Exxaro, which was commenting in a trading update ahead of its financial year close on December 31, also said there had been no marked improvement in coal deliveries. Industry-wide, full year coal deliveries by Transnet Freight Rail (TFR), the government-owned rail and ports company, were expected to total 47.44 million tons (Mt) for this year. This was based on deliveries to end-October of 39.43Mt.
“Even though the coal export industry has supported TFR where opportunities arose, no improvement in tonnage railed has been experienced,” said Riaan Koppeschaar, Exxaro’s finance director.
Following a high level agreement between TFR and the Minerals Council in January, South Africa’s mining sector has provided support on maintenance, procurement and invested in security aimed at protecting the key rail routes from vandalism and sabotage. But the availability of trains remains a problem.
Exxaro said trains from its flagship Grootegeluk mine in the Limpopo province to Richards Bay averaged three per week from January to end October compared to eight trains per week from its Mpumalanga province mines over the same period.
Commenting on its outlook, Exxaro said first quarter coal prices were expected to improve owing to winter restocking as well as increased economic growth in China and India. The average coal price for this year was forecast to be $122 per ton. Total production for 2023 was expected to remain flat at 43.1Mt while sales would be 3% higher at 41.4Mt.
Net cash as of end-October was R9.4bn while a net cash balance of R13.5bn was reported. Exxaro has said it would retain net cash of between R12bn to R15bn ahead of acquisitions in battery minerals with copper especially targeted.