DIVERSIFIED mining company Exxaro Resources posted a 39 percent drop in headline earnings for the half year to June after it booked R292 million in pre-tax impairment charges on its New Clydesdale colliery near eMalahleni in Mpumalanga during the period.
In a statement yesterday, the company said its headline earnings dropped to R2.52 billion compared with R4.11bn in the same period last year, or R7.12 a share from R11.62 a share in the comparative period last year.
Earlier this month, Exxaro said it would possibly cease production at New Clydesdale subject to negotiations with unions in line with section 189 of the Labour Relations Act, which signals retrenchments.
The mine has been up for sale since November last year. It employs 400 people and is under stress due to a declining coal price and operational challenges.
The coal export price declined to $77 (R792) a ton in June from about $92 a ton in January. Exxaro said it realised an average export price of $84 a ton in the first half of the year, compared with $103 a ton in the comparable period last year.
The group’s consolidated revenue decreased by 36 percent to R6.245bn for the six months to June following the disposal of the mineral sands business and Rosh Pinah zinc mine in Namibia last year.
Exxaro declared a R2.35 a share interim dividend, a 33 percent decline from last year’s interim dividend. The interim dividend amounted to about R841 million compared with R1.2bn a year ago.
The company posted a net operating profit of R1.2bn. The company produced 209 000 tons of metallurgical coal at the Grootegeluk mine, a 19 percent decrease from the previous comparative period as a result of an unprotected strike in March. Tshikondeni production increased by 30 000 tons, or by 20 percent, mainly due to better extraction ratios and better utilisation of equipment.
Exxaro said it aimed to develop markets for its energy, metal and mineral products and apply appropriate technology throughout the value chain for added value and competitive market advantage.
“Exxaro will invest in commodities that generate sustainable economic returns above the cost of capital for the benefit of all our stakeholders,” it said.
Exxaro shares declined by 1.19 percent to close at R160.60 on the JSE yesterday.