Weak rand, mineral sands lift Exxaro
Miner posts 3% revenue rise despite low coal volumes, export prices
CONDITIONS are expected to remain tough during the second half of this year, and export coal prices are especially expected to remain under pressure, Exxaro CEO Sipho Nkosi said yesterday.
The JSE-listed diversified miner reported stable operational and financial results for the quarter ended June, despite a reduction in volumes.
During the first half of the year, group comprehensive revenue increased 3% to R5.87bn, largely due to weakened local currency and a satisfactory performance by the mineral sands business unit.
Diluted headline earnings per share rose 14% to R11.49.
Although the weakness in international coal prices would put pressure on the company, Mr Nkosi said he was confident domestic demand, especially from Eskom, would remain buoyant.
Mr Nkosi said the group’s Grootgeluk mine project was on track and within budget.
“It’s the right time to buy platinum assets,” Ernst Venter, Exxaro’s executive GM for business growth, told Bloomberg yesterday. They are undervalued, he said.
While copper assets are overvalued, Mr Venter said that he may submit a copper opportunity to the board late this year or in the first quarter of next year.
Exxaro was looking at copper assets in Latin America and in countries to the north of SA, he said. “The coal export price index is anticipated to remain under pressure for the remainder of 2012, while domestic prices are expected to be at marginally higher levels,” Exxaro said.
Coal shipped through Richards Bay averaged $99.40 a ton in the first half, down 18% on the previous year’s average of $121.30, according to data compiled by IHS McCloskey.
Operating profit from mineral sands almost tripled in the first half as prices increased and Exxaro reversed a R103m writeoff in the value of property, plant and equipment at the group’s KZN Sands operations.
Exxaro agreed to a revised deal with utility Eskom for coal supplies to the new Medupi power plant, which is running behind its construction schedule. Exxaro will deliver 160,000 tons to the plant this year, it said, adding the deal may be approved by Eskom’s board this month.
The revision would not alter the cash flow or returns due to Exxaro, finance director Wim de Klerk said.
The company may decide by the end of the year whether to start a venture to extract gold, silver and lead from mine waste at its Zincor property, Mr Venter said. There was also potential for a water treatment plant, he said. With Bloomberg