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Exxaro forecasts higher thermal coal production

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World Coal,

South African coal company, Exxaro, is expecting to increase its half-year production of thermal coal for the six months to 30 June 2016, according to its Finance Director, Wim de Klerk.

In a letter to shareholders posted on its website, the company forecast 1H16 thermal coal production of 19.6 million t – a 9% rise on the 18.1 million t produced over the same period in 2015. Sales were also forecast to rise to 20.8 million t from 19.2 million t.

Thermal coal production a tied mines supplying Eskom power plants fell by 4%, however, on the closure of the Arnot mine. Arnot’s coal supply agreement with Eskom ended on 31 December 2015.

Production at Exxaro’s other mines is expected to jump 12% to 15.6 million t due to the inclusion of Exxaro Coal Central – previously Total Coal South Africa – in the figures, as well as higher production at Grootegeluk and North Block. This offsets lower production at Leeuwpan and the closure of the Inyanda mine.

The company also mined 993 000 t of metallurgical coal, an 8% increase on 1H15, for domestic consumption.

Looking ahead, the company expects 2H16 thermal coal production for the domestic market to remain “at current healthy levels”, while export markets “depend heavily on Indian demand for lower-quality coal products, while pricing is expected to remain flat.”

“Further market growth is expected in the African, Pakistani and Southeast Asian markets and the group is well positioned with a strong product mix to supply these markets,” the company concluded.

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