Exxaro Resources is charting a path toward resilience and sustainability through its Environmental, Social, and Governance (ESG) strategy, board chairperson Geoffrey Qhena announced yesterday. The South African mining giant is focusing on decarbonisation efforts that go beyond compliance, while diversifying into more resilient minerals, as part of its ambitious targets to tackle future environmental challenges.
During the first half of the year to June, Exxaro faced ongoing challenges, including poor rail performance due to locomotive shortages, cable theft, derailments, and vandalism. However, collaborative efforts under the Transnet Freight Rail-Industry Recovery Team have helped stabilise services.
Exxaro remains focused on its decarbonisation goals, with a target to achieve carbon neutrality by 2050. The company aims to maximise coal value through an early-value strategy and market-to-resource optimisation. Exxaro is also committed to reducing climate-related risks, targeting a 40% reduction in scope 1 and 2 emissions by 2026 through solar PV self-generation projects and operational efficiency improvements.
Qhena highlighted that the company is addressing scope 3 emissions reduction by partnering with key stakeholders. Exxaro is also aiming to diversify its portfolio toward more resilient minerals, with a goal of achieving 50% of its earnings before interest, taxes, depreciation, and amortisation (EBITDA) from coal by 2030, while growing its renewable energy business to 1.6 GW.
This shift will be driven by disciplined capital allocation and a robust investment process. Exxaro’s Eyesizwe unit has the option to release up to 40.4 million Exxaro shares in December 2024, with consultations ongoing to determine shareholder preferences. A joint Exxaro/Eyesizwe RF committee has been set up to oversee the sales process.
For the half-year period, Exxaro’s total capital expenditure increased to R1 billion, up from R801 million the previous year. This included R1 billion in sustaining capex and R5 million in expansion capex. Due to lower earnings, the company declared an interim dividend of R7.96 per share, a significant drop from the previous year’s R11.43 per share.
The company received an average benchmark RBCT export price of $101 per ton, down 22%, leading to a 24% decrease in its realised export price of $96 per ton. Despite overall coal production volumes decreasing by 955,000 tons or 5%, production gains at Belfast, Matla, and Mafube helped offset declines at Grootegeluk and Leeuwpan.
Exxaro’s sales volumes for the half-year were slightly down by 1% compared to the same period last year, due to lower Eskom sales, though this was partly balanced by a 32% increase in export sales to 794,000 tons, thanks to alternative distribution channels.
