Exxaro, the second largest South African Coal producer has released a statement today pre-empting the end of year statement (March 2015) and specifically referencing the second half of 2014.
The Company talks of tough trading conditions indicating that the export coal markets continue to be in oversupply, in spite of production cutbacks announced by some producers. Further they stated that up to the end of November the Rand exchange rate weakened against US dollar to an average of R10, 88 compared to the average of R10, 83 that the group realised in 1H14. The API#4 coal export prices dipped to below $63 per tonne, from the average export price realised of $68 per tonne in 1H14. Total export sales are expected to reach 2.4 million tonnes.
However, following the agreement with Eskom regarding the Medupi Power Station coal supply agreement the Grootegeluk Medupi Expansion Project (GMEP), the Company is ramping up to a planned supply of 3.1 million tonnes of coal for 2014.
Overall, coal sales volume is expected to be higher than 2013.
The Company stated:
“FY14 has been a challenging year for the industry and Exxaro has been no exception. Exxaro has proven resilient in the past and will rely on the same to endure the challenges presented by these tough trading conditions.”