Exxaro to boost coal exports as circumvents struggling RBCT

Richards Bay Coal Terminal

EXXARO Resources forecast a nine percent period-on-period improvement in coal exports after finding alternative routes for its sales.

The Johannesburg-listed firm said in an update on Tuesday that it expected to register 3.3 million tons in sales for the six months ended June – an increase of 23% over the previous six months.

For the full year, the group forecast export sales of 6.6Mt compared to its full year guidance on sales of just over six million tons, a 9% increase. “An increase of 23% is expected in export sales enabled by moving volumes through alternative export channels, mainly at Belfast,” said Exxaro CFO Riaan Koppeschaar.

Total coal sales of 40.8Mt were expected for the full year, one percent higher than previously guided. Exxaro said that domestic sales of thermal coal to Eskom were lower than expected owing to a decline in demand from its Grootegeluk mine.

All eyes are on Transnet’s performance this year following the appointment of a new management team. So far, there has been disappointment. Exxaro said three incidents on the coal export line had resulted in interruptions.

Transnet Freight Rail (TFR) railed 20.3Mt to Richards Bay Coal Terminal in the five months to end May which is equivalent to an annualised rate of 46.75Mt, lower than last year’s 47.21Mt, itself a new 22 year low in volumes. Management at RBCT said in January that volumes in this year were unlikely to grow.

Said Exxaro: “TFR and the coal industry continue to collaborate on efforts to improve rail performance. Industry has supported various initiatives during the past six months and continues to engage to support improvement initiatives”.

Commenting on market prices, Koppeschaar said extreme weather patterns and anticipated tightness in spot supply would support prices high CV coals although there was a risk that increased production in Australia as well as gas and nuclear power output. Lower quality coal prices would remain range bound.

The average benchmark API4 RBCT export price for the first half of the year was expected to average $101 (2H23: $112) per ton, said Koppeschaar.