Exxaro expects full-year production decline for 2024 financial year

Mining and renewable energy giant, Exxaro, says it is prioritising efforts to contain costs across the organisation to maintain financial stability. The company expects a decline in its full-year production for the 2024 financial year.

The resource group attributes this to logistical challenges, as well as low commodity prices. The company has provided an overview of the group’s expected business performance for financial year 2024.

Exxaro says sales from the power utility Eskom as well as domestic demand is expected to fall, while export volumes are expected to improve due to global geopolitical uncertainty.

One of the factors attributed to the operational challenges was the Grootegluk mine, which averaged three trains per week, lower than Mpumalanga’s performance of eight trains a week.

This was due to security issues, vandalism and locomotive shortages.

“The problem we’re having is down at Grootegluk in Lepalale and it’s based purely on the units that they’re operating at Eskom. And I think one of the units is obviously still on maintenance and extended maintenance. That’s causing the problems with the offtake. Once that unit comes in, we should be able to see that coal go over the belt on later on,” says Project Manager, Mervin Govender.

VIDEO | Exxaro reported a drop in profits in its half-year financial results.

The company says it is navigating operational challenges at Leeuwpan, while working closely with Eskom, to stabilise coal supply and demand.

Chief Executive Officer Nombasa Tsengwa says this is essential for both profitability and planning.

“I’ve been promised by Dan himself in our interaction we had recently that at least by June next year, we need to see stability and I don’t want to burst their bubble in terms of what they see that happen, but we have really been urging them to take us to the minimum levels of our contract, which is 25 million tons and we’re hoping that we’re getting there,” says Tsengwa.

At the same time, Exxaro says it will continue to optimise the railway line to Maputo following protests in the country, which caused disruptions.

“On Maputo, I think we’ve done quite well. We have not lost a single vessel out of Maputo due to all the disruptions. We had quite a few business continuity actions that we’ve put in place to ensure trucking continues from our minds, to intermodal stockpiles and from there then with the various mode of logistics, but we currently are not forecasting any vessel to be lost due to that,” says Finance Director, Riaan Koppeschaar.

Exxaro says export volumes are expected to improve.