EXXARO Resources expected to retain up to R15bn in net cash to fund diversification plans which it said previously were focused on manganese in South Africa.
Commenting in its pre-financial close, finance director Riaan Koppeschaar said net cash as of October 31 stood at R16bn. “The intention is to continue to retain cash of between R12bn and R15bn to fund our growth strategy,” he said.
“We believe that the manganese industry requires a South African champion,” Nombasa Tsengwa, CEO of Exxaro told Bloomberg News in October. Exxaro is aiming to buy “a very good asset or two,” as well as undertake exploration, she added.
Exxaro’s plans to diversify have been more than three years in the making having initially expressed an interest in copper and vanadium before broadening the search to other metals. Failure to meet these ambitions however led senior executives to question Tsengwa, according to reports by Business Times.
Exxaro hoped to expand on its diversification plans “before the end of the year” according to chief growth officer Richard Lillieke in August.
Koppeschaar said the export coal price (API4) for Exxaro was expected to be 12% weaker year-on-year averaging $105 per ton compared to $120/t previously. Total coal product, including metallurgical production, was at 40 million tons (Mt), 6% weaker year-on-year partly owing to poor Eskom offtake from Exxaro’s flagship Grootegeluk mine in Limpopo province. Total sales volumes were expected to be 2% lower at 39.8Mt.
The problems at Grootegeluk, also related to “security, vandalism and a shortage of locomotives” contributed to a 7% in thermal coal sales to 32.3Mt. Exxaro said it averaged three trains per week from Grootegeluk as state-owned Transnet Freight Rail continued to struggle with volumes.
But it wasn’t all bad news on the Transnet front. Koppeschaar said that as of end-October the rail and port utility had railed a total of 42Mt to Richards Bay Coal Terminal which, on an annualised basis was 50.5Mt representing a year-on-year improvement.
Privately-owned RBCT said in January throughout in 2023 totalled 47.21Mt, a level taking the terminal back to below levels last seen in 1992 when 48.59Mt was exported. The terminal exported 50.35Mt in 2022 which compares with its overall annual capacity of 91Mt and the all-time record export volume of 76.47Mt achieved in 2017.
“Our coal business performance continues to be impacted by logistical challenges, and low commodity prices,” said Koppeschaar in his comments. He added, however, the firm’s efficiency programme would help ease the infrastructural logjams.
