EXXARO Resources, Eskom’s biggest coal supplier, expects an 8 percent decline in both total coal production and sales volumes mainly due Transnet Freight Rail’s poor locomotive performance.Photo Supplied
EXXARO Resources, Eskom’s biggest coal supplier, expects an 8 percent decline in both total coal production and sales volumes mainly due Transnet Freight Rail’s poor locomotive performance.Photo Supplied

Transnet Freight Rail’s woes expected to knock Exxaro’s coal production by 8%

By Dineo Faku Time of article published Dec 3, 2021

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EXXARO Resources, Eskom’s biggest coal supplier, expects an 8 percent decline in both total coal production and sales volumes mainly due Transnet Freight Rail’s poor locomotive performance.

Riaan Koppeschaar, the finance director of Exxaro, said in his pre-close statement published yesterday: “Total coal production and sales volumes are both expected to decrease by 8 percent, mainly due to logistical constraints and the disposal of Exxaro Coal Central (ECC) operations on September, 3, 2021, being earlier than anticipated”.

Poor locomotive availability, increased incidences of cable theft as well as increased vandalism of rail infrastructure has been one of the biggest headwinds for Transnet.

According to the 2021 Mine Survey conducted by PricewaterhouseCoopers (PwC) released in October, chronic difficulties, particularly on Transnet’s coal rail line from Limpopo and Mpumalanga operations to Richards Bay Coal Terminal had crippled exports of coal and other commodities at a time when global commodity prices were booming.

According to the PwC report, locomotive unavailability, coal line shutdown interruptions, power outages and derailments, combined with vandalism and sabotage of rail equipment and pervasive cable theft were some of the major hurdles faced by Transnet.

Exxaro sold Exarro Coal Central (ECC) to black-owned and private mining operator Overlooked without disclosing the value of the transaction in April. Exxaro said the sale was part of playing a meaningful role in helping black mining operators obtain scale and additional resources. Exxaro offloaded the thermal coal assets amid pressure for mining houses to reduce exposure to fossil fuels.

Koppeschaar said Exxaro reduced the capital expenditure in its coal business by 22 percent in the financial year ended 2021 compared to a year earlier after the sale of ECC and projects reaching completion.

Exxaro concluded its share repurchase programme of R1.5 billion with the last trade executed on November 2. Exxaro was now at a record performance of four years and eight months without a work-related fatality, Koppeschaar, said.

“Zero Harm remains Exxaro’s key business and sustainability objective,” Koppeschaar said. Mining industry fatalities have been climbing and Impala Platinum (Implats) this week recovered the bodies of three mineworkers on Monday following a mudslide at its Impala Rustenburg Shaft 6 operation.

Implats said two employees were rescued and were recovering in hospital.

Koppeschaar said the health and safety of employees and communities had remained their priority. He said on November 17, the group had 5 140 confirmed cases and a recovery rate of 99 percent.

“We remain committed in our fight to prevent further loss of life and continue to implement Covid-19 preventive measures in line with government regulations and recommendations. Our target is to vaccinate 80 percent of employees and contractors and, to date, a total of 9 579 (62 percent) employees and contractors have been vaccinated,” he said.

BUSINESS REPORT

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