We have to look at transforming ourselves into a broader energy company, where coal will become just one of the components.
ROBINSON Ramaite, a former chairman of Wescoal, took on the role of interim CEO in March 2021 after the departure of Reginald Demana a mere two years into the job. There was no explanation for Demana’s departure but his two predecessors - Waheed Sulaiman and Andre Bojé – also left Wescoal abruptly, with the latter’s exit accompanied by an overt clash with Ramaite. By early 2021, Wescoal - now renamed Salungano Group - appeared to be facing a crisis after a difficult two years of Covid-19, social unrest and fluctuating demand from Eskom, its major customer. Debt had to be renegotiated and retrenchments were necessary. But the empowerment shareholders have been steadfast.
In February 2021, they made an offer to buy Salungano shares at R1.20 each. Subsequently, the share price has risen to R1.90 on the back of a stronger performance in the first half of the current financial year. The firm’s Moabsvelden project delivered its first coal to Eskom in 2021 and continues to ramp up, enabling Salungano finally to achieve its long-standing target of eight million tons of annualised run-of-mine production. This generated enough cash to pay down a portion of debt. Another achievement in the past year has been the signing of a 10-year offtake agreement with Eskom for coal from recommissioned mine Arnot, in which Salungano owns 50%.
Salungano has been accessing export markets opportunistically to take advantage of higher prices. It's likely Ramaite will be wanting more export revenue because thermal seaborne coal prices have gone gangbusters following Russia's invasion of Ukraine in February. Still, pressures remain for Salungano. As with the leaders of other coal companies which are now being shunned by lenders and investors, Ramaite plans to diversify away from coal into other resources. There is potential for making investments in renewable energy projects, he has said.