Exxaro anticipates domestic coal market to remain relatively stable
Exxaro’s coal operations were declared an essential service to ensure continued coal supply for electricity generation in response to the pandemic. Consequently, the company was able to maintain 100% operating capacity for most of its operations since the commencement of the lockdowns, with the exception of its Matla operation, which has been operating at 80%. Matla has since operated at 100% capacity from the beginning of October 2020.
COMMODITY MARKETS AND PRICES
In the Atlantic thermal coal market supplier cutbacks, as a result of persistent low prices, have the potential to swing the market into balance. In Asia, thermal coal prices are supportive as the Indian market recovers, coupled with Indonesian supply cutbacks.
China’s strong demand for iron ore together with a seasonal drop in global supply (Brazil, Australia and China) should support the iron ore markets into 2021. However, as the year progresses, a softening in the iron ore market is anticipated as global seaborne supply recovers, with Chinese steel production stabilising at lower levels compared to 2020.
Exxaro anticipates the demand and pricing for coal domestically to remain relatively stable, as customers return to normal operations.
On the international front, Exxaro expects that the related impacts of the pandemic on coal markets will continue into 1Q21 as the second wave grips parts of the world.
Exxaro will continue the rollout of the integrated operations centres (IOCs) across its operations, thereby enabling operational insights and in-time decision making which will assist it in its journey to improve its safety, productivity as well as cost performance.
