JOHANNESBURG (miningweekly.com) – Despite heightened geopolitical tensions, increasing inflationary pressures and broader macroeconomic headwinds, South African resources group Exxaro delivered a strong first-half performance, driven by disciplined strategy execution, operational excellence and underpinned by its commitment to achieve zero harm, the company reported on Thursday, August 20.

Overall group revenue increased 7% to R22.1-billion, primarily driven by the coal and energy businesses, with earnings before interest, taxes, depreciation and amortisation (Ebitda) flat at R5.6-billion.

The renewable-energy business continued to scale, with energy generation increasing by 12% to 378 GWh.

Cash generation was up 15% at R6.1-billion, enabling Exxaro to fund sustaining capital, energy expansion capital and dividends.

Headline earnings fell to R3.2-billion on lower equity-accounted income from Sishen and Black Mountain. This was partially offset by the contribution from manganese, which contributed to the group Ebitda for the first time for the last four months of the reporting period.

The group closed the half-year with its best safety performance since listing in 2006, with its injury rate improving year-on-year by 60% to 0.02 per 200 000 worker-hours worked. Zero work-related fatalities marked four consecutive fatality-free years.

“The ongoing implementation of the safety strategy and the commitment of all employees to working safely is very encouraging, ensuring that safety remains the foundation of how we operate at Exxaro, and we must continue to remain vigilant,” Exxaro CEO Ben Magara stated in a release to Mining Weekly.

An interim dividend of 700c a share has been declared on half-year profit of R4-billion.

Full-year guidance for coal production, sales, exports and sustaining capital was reiterated and renewable-energy guidance has been revised downwards on this year’s weaker wind resource conditions.

Operationally, the group’s diversified and defensive portfolio continued to support resilient earnings and cash generation despite inflationary pressures.

Coal production increased 11% to 21.5-million tons on improved output at Grootegeluk and ramp-up at Matla.

Coal sales increased 4% to 19.9-million tons, driven by higher Eskom offtake at Matla and stronger export volumes.

Export coal sales rose 15% to 3.9-million tonnes, supported by improved Transnet performance and use of alternative logistics channels.

 A 91% price realisation was achieved against the average API4 benchmark of $106/t within a volatile market.

Total cash cost per tonne increased by an inflation-aligned 4.6%, despite higher fuel costs. Overall, these factors drove a 5% increase in coal earnings to R5 804-million, while maintaining a margin of 27%.

The renewable-energy business continued to scale, with energy generation increasing by 12% to 378 GWh, driven by the Lephalale solar project's (LSP’s) contribution, which reached commercial operations date in April, delivering 66 GWh of solar power during the reporting period. LSP’s contribution is delivering measurable decarbonisation benefits, reducing Grootegeluk’s reliance on the grid by 30% and achieving a 22% reduction in Scope 2 emissions year-to-date.

Renewable energy’s operational earnings increased by 2% to R548-million, maintaining a high margin of 79%.