Former Lonmin CEO Ben Magara has been appointed as CEO of Exxaro Resources beginning of April, taking over from acting CEO, Riaan Koppeschaa, following the departure of Nombasa Tsengwa last month after a bitter fall-out with the company.
Image: Simphiwe Mbokazi/independent Newspapers
Tawanda Karombo
Exxaro Resources, which appointed Ben Magara as new CEO effective next month, said on Thursday that improvements on the rail and port logistics front have been slow, with the company’s financial performance for year to the end of December 2024 affected by lower domestic offtake of coal despite growth in exports.
Magara, who was the CEO of platinum mining company, Lonmin Plc, when the Marikana Massacre happened on August 16, 2012.,will become substantive CEO of Exxaro at the beginning of April. He will be taking over from acting CEO Riaan Koppeschaa who now reverts to being finance director.
This follows the departure of Nombasa Tsengwa last month after a bitter fall-out with the company.
In its year to December, Koppeschaa said the company’s “financial performance had been impacted by lower domestic offtake” despite Exxaro managing to raise exports.
The company’s overall coal production dipped 7% to 39.5 million tons, with coal sales for the period down 3% at 39.3 million tons.
While export sales strengthened 37% to 7 million tons, “lower Eskom demand at Grootegeluk mine” contributed to the “decrease in production volumes” for the period, said Koppeschaa.
Exxaro’s revenues for the full year firmed up by 5% to R40.7 billion, although group earnings before interest, tax, depreciation and amortisation (Ebitda) decreased by 22% to R10.4bn.
This meant that headline earnings per share for the period of R30.16 per share fell by 36%. Nonetheless, Exxaro declared a final cash dividend of 866 cents per share, and also resolved to embark on a R1.2bn share repurchase programme.
Koppeschaa told a media briefing after the release of Exxaro’s financials on Thursday that although the company has noted “a lot of improvement” freight rail logistics sector, the pace has been “very slow” in yielding effectiveness.
“It is not just about the condition and availability of rolling stock, but very much constrained by the very poor condition of infrastructure in the country that has been below average investment for many years. So we are seeing better of an improvement, but it will be very slow and it will take very long,” he said.
Rail operations during the year “continued to face ongoing disruptions, including cable theft, vandalism, unavailability of locomotives and wagons as well as infrastructure degradation”. Three derailments affected Transnet Freight Rail volume throughput during the first half of the year.
Despite these challenges and rail execution volatility, Exxaro said that Transnet Freight Rail’s performance to the Richards Bay Coal Terminal had shown improvements, increasing to 51.9 million tonns per annum.
A better performance was particularly recorded during the second half of the period under review.
During the year to December, Exxaro’s total capital expenditure (capex) decreased by 8% to R2.4bn compared to R2.7bn a year earlier. Capex for the year under review comprised of R2.1bn mainly for coal sustaining capital, R302 million in expansion capital for the company’s energy projects and R27 million intangible assets.
This left Exxaro in a net cash position of R16.3bn excluding energy’s net debt compared to R14.8bn a year earlier.
In the outlook, Exxaro expects seaborne thermal coal demand to be influenced by geopolitical factors and energy security needs. Moreover, domestically improvements in the local economic environment are likely to boost coal demand from local end users, particularly as Eskom works to address its operational challenges.
“Continuous rise in iron ore supply and exports remains the key limiting factor for seaborne iron ore prices, affecting the performance of Exxaro’s SIOC investment. While major miners’ supply is increasing, overall Chinese demand remains relatively flat,” said the company.
BUSINESS REPORT