Low prices deter Exxaro from transporting coal by road

Low prices deter Exxaro from transporting coal by road

August 19, 2023

Exxaro Resources cannot consider road transport as an alternative to rail for its coal exports as the prevailing international benchmark prices are too low for it to afford it.

For the first six months of 2023, it has reported a 29% drop in headline earnings to R5.9 billion.

It had better earnings in 2022 for the equivalent period after the war in Ukraine created an energy crisis which propped up international coal prices, it reported.

Since then, both the South African and Australian coal benchmark prices have fallen by about 50% from their peaks.  At this level it cannot afford road transportation.

In June this year Exxaro reported that its exports through the Richards Bay Coal Terminal (RBCT) between January and June had dropped 6%, mainly due to the compromised dedicated coal railway line from the coal basin in southern Mpumalanga to RBCT.  The line is plagued by sabotage, maintenance issues, theft and even a shortage of locomotives. This forced coal mining companies and transport contractors to switch to road to get exports to port.

The report stated that the company would continue to seek all ways to “evacuate” its products.

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