JOHANNESBURG, Aug 20 – Exxaro Resources reported a 20% decline in half-year earnings as higher mining costs and a stronger South African rand reduced the value of revenue generated from commodities priced in US dollars.
The South African diversified miner reported headline earnings per share of 13.77 rand ($0.855) for the six months ended June 30, down from 17.24 rand in the same period a year earlier.
Exxaro said mining input costs increased amid disruptions linked to the conflict in the Middle East, which affected global supply chains and also weighed on earnings from its iron ore joint venture. The company holds a 21% stake in Sishen Iron Ore Company, a subsidiary of Kumba Iron Ore.
Higher costs came despite stronger production across several of Exxaro’s operations. Coal output increased 11% to 21.5 million metric tons during the first half, while coal exports climbed 15% to 3.9 million tons as logistics improved.
Production from Exxaro’s newly acquired manganese operations also increased by 11% to 1.8 million tons, adding to the group’s diversified commodity exposure.
The company’s renewable energy business also recorded growth. Electricity generation from its Cennergi unit increased 12% to 378 gigawatt hours during the period, with output from the Lephalale solar facility helping compensate for weaker wind generation.
The 68-megawatt Lephalale solar plant has reduced Exxaro’s flagship Grootegeluk coal mine’s reliance on electricity from South Africa’s national grid by about 30%, according to the company.
Exxaro is targeting 1.6 gigawatts of renewable energy capacity by 2030 as it seeks to diversify its energy sources and reduce the carbon intensity of its operations.
Cost pressures nevertheless remained significant. Diesel prices increased 21% during the six-month period, contributing to higher logistics expenses. Exxaro said its unit costs rose 4.6%, broadly in line with inflation, while improved production helped cushion the impact of higher operating expenses.
The stronger rand added another challenge for the miner because a significant portion of commodity revenues is denominated in US dollars. Currency appreciation therefore reduces the rand value of those earnings when translated into the company’s reporting currency.
Despite the weaker earnings performance, Exxaro declared an interim dividend of 7 rand per share, representing a 17% reduction from the dividend paid for the same period last year.
The results highlight the pressure facing South African mining companies as they navigate commodity-market volatility, elevated operating costs, currency movements and disruptions to global supply chains, while simultaneously investing in lower-carbon energy systems.
