Exxaro will increase higher-margin coal exports

According to BDLive, diversified miner Exxaro Resources is set to ramp up higher-value coal exports from its Grootegeluk coal mine, after amending an agreement with Eskom over the South African mine’s supply to the delayed Medupi coal-fired power plant.

The company said it was keen to increase coal exports at better margins. One constraint facing the company had been limited access to the Richards Bay Coal Terminal (RBCT).

Exxaro has committed R10.2 billion to the Grootegeluk Medupi Expansion Project to supply Medupi, which is Eskom’s newest power plant.

Medupi has started to take delivery of coal from Grootegeluk, but the plant is taking less coal than originally agreed.

Exxaro chief financial officer Wim de Klerk said at a presentation on the group’s interim results that the agreement with Eskom meant the utility would only take 3.1 million t of the originally contracted 6.2 million t of coal to be delivered this year. Exxaro would be paid its fixed costs (but not its variable costs), plus a profit margin for the other 3.1 million t, which it will not produce.

Eskom will pay over several years for a total nondelivered tonnage of about 15 million t. Not producing Eskom coal will free Grootegeluk’s capacity to produce coal for export.

When asked about the costs of exports – consideringthe distance between the Waterberg coal fields and RBCT, executive head of coal at Exxaro, Mxolisi Mgojo, said: “Leave that up to us. We will not do these exports in an uneconomical manner.”

Edited from various sources by Sam Dodson

Read the article online at: https://www.worldcoal.com/coal/22082014/exxaro-looks-to-higher-margin-coal-exports-1239/