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Exxaro can count on coal

By unknown | Feb 25, 2009 | COMMENTS [ 0 ]

Jim Jones

Jim Jones

Coal last year, coal this year and coal next. That was the strong message from Exxaro at the black economic empowerment mining group's results presentation yesterday.

It was coal that provided a solid underpin for the diversified group last year, as a combination of technical difficulties and falling metals prices adversely affected the group's mineral sands and base metals operations.

And, judging from the group's forecast, shareholders will see much of the same this year as the recession continues to place a damper on demand for metals and minerals.

As chief executive Sipho Nkosi put it in his commentary on the past year's results: "The uncertain market outlook remains a key factor to the group's results for 2009."

Coal benefited from strong demand and prices driven by the world's scramble for minerals that finally fell spectacularly off the cliff in the past year's final quarter.

Still, despite the eventual slide, Nkosi remained optimistic, pointing to a strengthening of demand as Eskom rebuilds coal stockpiles and as international demand, largely for steam coal, shows early signs of volume improvement though at lower prices than those at the peak.

Taking a longer view, much of Exxaro's coal growth will come in 2011 when the Grootgeluk colliery's 40-year contract to deliver an annual 14.6million tons of thermal coal to Eskom kicks in.

In line with the other mining groups that have been reporting recently, Exxaro's focus is and will remain on cash conservation, with capital projects being examined critically.


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