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Exxaro earnings rise

Exxaro’s Leeuwpan
coal mine
Johannesburg, South Africa MININGREVIEW.COM — 20 August 2009 – South African diversified miner Exxaro has reported an 8% rise in 2009 first half-year headline earnings per share, but points out that lower prices and a stronger rand are likely to have an adverse effect on second-half figures.

Reuters reports that earnings at the company’s coal business were boosted by higher sales to Eskom and international clients, but were hit by lower prices and weaker demand from local consumers other than Eskom.

“Although the consolidated operating results show an improvement when compared with the previous year, the group was adversely affected by the vagaries of the current global economic downturn,” Exxaro said in a statement.

Group revenue in the period rose 23% to R7.1 billion, while net operating profit was up 18% to R953 million.

Exxaro’s mineral sands business reported an operating loss of R110 million, hit by lower demand, while the more than 40% drop in zinc prices affected performance at the company’s base metals operations.

The company said it expected demand for mineral sands and zinc to remain depressed during the second half of the year.

It added that it expected demand for power station coal to remain roughly in line with that of the first half-year, and said it saw similar steam coal export volumes, albeit at lower international prices.

“A significant decline in domestic steam and coking coal prices is anticipated in the second half of 2009 due to contractual pricing arrangements,” it added.

Exxaro declared an interim dividend of 100 cents per share.