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Exxaro declares R5.4bn dividends, green energy business thriving

Exxaro CE Dr Nombasa Tsengwa.

Exxaro CE Dr Nombasa Tsengwa.

14th March 2024

By: Martin Creamer

Creamer Media Editor

     

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JOHANNESBURG (miningweekly.com) – Diversified mining company Exxaro, with interests in the coal, energy and ferrous markets, has declared final and special dividends.

The share dividend of R10.10 a share is roughly R3.4-billion and on top of that, the special dividend of R5.72 a share totals some R2-billion.

The declarations are described as being in line with Exxaro’s strategic approach to capital allocation.

The financial results of the Johannesburg Stock Exchange-listed company for the year ended December 31, showed a 17% drop in revenue to R38.7-billion compared with 2022.

A special dividend of 572c a share was declared, augmenting a lower final dividend of 1 010c a share.

Net operating profit of R10.6-billion was down 34% from R16.2-billion in 2022.

Speaking on the results, Exxaro CE Dr Nombasa Tsengwa said the company remained confident in its ability to foster value creation as shown by its latest financial performance.

“Yet again, we’ve maintained our stakeholder returns, robust balance sheet and strong cash flows despite the fluid market and challenging environment.

“We remain focused on embedding efficiencies and governance excellence in our operations. This, coupled with our early value strategy and market-to-resource optimisation strategy placed us in a strong financial position.

“Safety and zero harm remain critical performance indicators for our business sustainability. This year we turned our focus back to basics and reported zero fatalities for 2023,” Tsengwa stated in a release to Mining Weekly.

The lost time injury frequency rate was 0.07 compared with a set target of 0.05. In addition, direct social investment was R1.9 billion.

Revenue from the energy business improved by 16% driven by improved wind conditions. The earnings before interest, taxes, depreciation and amortisation (Ebitda) margin of the energy business was stable at 80%, underpinned by the annuity nature of the long-term offtake agreement

The energy business generated 727 GWh of electricity, an 8% increase from the prior year owing to improved wind conditions, despite the 15 GWh generation loss at one of the wind assets owing to an Eskom distribution line fault that occurred earlier in the year.

Its operating wind assets project financing of R4 348-million will mature and be fully settled by the end of 2031. The energy business’ solar assets project financing, which is in the process of being drawn down, will mature and be fully settled by the end of 2042.

“We remain committed to our sustainable growth and impact strategy as we transition towards becoming a more diversified business through a disciplined capital allocation framework while balancing sustaining our coal business, investment in our growth strategy, consistent returns to stakeholders, and leveraging our strong balance sheet,” Tsengwa said.

Coal production volumes from operated mines, excluding third-party buy-ins, decreased by 2% to 42.5-million tonnes, mainly owing to lower production at Grootegeluk, Mafube and Matla, offset by higher production at Leeuwpan and Belfast.

Sales volumes decreased by 4% to 40.5-million tonnes, mainly as a result of lower Eskom demand, partly offset by higher domestic sales owing to export coal being diverted to the local market.

Coal revenue decreased by 18% to R37-million, largely driven by a decrease in revenue from commercial mines owing to lower export prices and volumes. Higher domestic prices were offset by lower domestic volumes.  

Coal Ebitda decreased by 36% driven mainly by lower commercial revenue (-R8 248-million), higher operational costs (-R1 170-million) mainly as a result of higher overburden removal at Leeuwpan and Belfast, inflationary pressures (-R922-million) driven mainly by electricity tariff increases above the producer price inflation inflation rate.

This was partly offset by lower buy-in costs from Mafube and more favourable fair value adjustments realised on investments and forward exchange contracts totalling R802-million.

Edited by Creamer Media Reporter

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