A FORMAL Section 189 consultation has been launched with the relevant trade unions at Exxaro’s lossmaking Leeuwpan Colliery, which has become unsustainable in its current form, CEO Ben Magara said.
He said the process would take 60-90 days and it was too early to say what the outcome would be. Management’s intention was to minimise job losses, while ensuring a viable business.
Magara was addressing investors and analysts on a conference call update ahead of the close of the company’s 30 June interim period.
In its pre-close update, Exxaro said average coal export and iron ore prices in the six months to end-June were likely to belower than in the second half of 2024. Domestic and export coal prices were weighed down by high domestic stockpiles, lower international gas prices, and growth in renewables and nuclear power generation. Total coal sales volumes would bedown to 19.1Mt from 20.5Mt in the second half of 2024, largely due to lower demand from Eskom. Iron ore prices reflected US tariffs on China’s steel exports, discussions on China’s 2025 steel production cap, and broader US-China tensions.
As a result, Exxaro has slightly revised down its forecast forcoal production and sales for the full year from previous forecasts but still expects higher output and sales than in the 2024 financial year.
Head of Marketing Sakkie Swanepoel said there was current global oversupply of coal, even at lower prices in SA and Australia, which had not resulted in substantial reduction of overcapacity. Both India and China have so far produced enough coal for their needs, reducing their import demand. However, he expects another one billion ton seaborne market this year, illustrating that the problem lies in oversupply, not weak demand.
Exxaro, like Thungela Resources, another major South African coal miner last week, noted a slight improvement in coal volumes railed to the RBCT terminal by Transnet to 54.4Mtpa to end-May from 52Mtpa in the year to December 2024, though performance execution was volatile.
Swanepoel said there had just been a second derailment on the line, which would hurt TFR’s first half performance, together with the mid-July annual shutdown of the coal line.
“Generally, we are seeing very slow progress but progress indeed. Investments in infrastructure by TFR and the private sector are definitely helping and we are hopeful that in the second half we may see more sustained performance on a weekly basis of 55-60Mtpa equivalent.”
Providing an update on the recently-announced purchase of Ntsimbintle Manganese, Richard Lilleike, Chief Growth Officer, said the transaction was expected to close in the first quarter of 2026.
He said good progress was being made on the key conditions precedent to the deal. The current focus was on addressing pre-emptive and tagalong rights at the two JVs, where the process has begun. It was hoped responses from both JV partners would be received by end-August. Work had startedon longer-term items such as getting Competition Commission approval and Section 11 approvals, and engagements have begun with the Department of Mineral Resources and Energy in the Northern Cape.
Finance director Riaan Koppeschaar said after this transaction, Exxaro did not intend to build up a war chest. The share buyback programme continued and to date about R400m of the R1.2bn programme has been completed.
