Pretoria, South Africa — 22 August 2013 – Having struggled through a difficult first half of 2013, South African coal producers are expecting no improvements, with financial and operational results for the rest of the year being impacted by continuing low coal prices, as well as rand-dollar exchange rate volatility.

Exxaro Resources Limited, South Africa’s second-largest coal producer, said low coal prices would affect profit in 2013, having fallen 39% in the first half, reports Bloomberg News.

Headline earnings, which exclude one-time items, declined to R7.12 cents a share from R11.62 in the same period a year earlier, the company added in a statement. Operating costs were R320 million (US$31million) higher in the half than a year earlier, it added.

Lower prices and a R292 million write-down of assets at the New Clydesdale mine, which employs 402 workers in Mpumalanga province, cut profit, the company continued. It was considering stopping output at the colliery, which has negative margins, and has started talks with unions over layoffs.

“Trading conditions for the coal business continued to be challenging,” the company said. “The financial and operational results for the remainder of 2013 are expected to be impacted by continued low coal prices and rand-dollar exchange-rate volatility.”

Prices for coal shipped from Richards Bay on South Africa’s east coast, the world’s biggest coal-export terminal, averaged US$82.67/t in the first half, down 16% from a year earlier, according to data compiled by IHS McCloskey Group Limited. The rand has been the most volatile of 16 major currencies against the dollar in the past six months, according to data compiled by Bloomberg.

The slide in prices, coupled with rising output costs and slowing Chinese demand, is prompting miners from Glencore Xstrata plc, the world’s biggest shipper, to Peabody Energy Corporation to cancel projects and fire workers.

“Exxaro’s focus remains grounded on improved long-term value creation through improved productivity levels, cost management, and investment in risk-adjusted return projects,” it said.

South Africa’s largest coal producer is Anglo American plc.

Source: Bloomberg News. For more information, click here.