MC Mining: Uitkomst’s high quality coal remains in demand
The Uitkomst Colliery generated 107,188t of ROM coal during the quarter, 2% lower than the comparative Q2 FY2021 (108,945t). The marginal decline is attributable to the suspension of mining for three shifts following production constraints at Uitkomst’s explosives supplier, resulting in three lost underground mining shifts reducing ROM coal production of approximately 3,000t.
Operational challenges at Uitkomst’s largest customer from early November 2021 led to sales of high grade duff and peas being 40% lower than the FY2021 comparative period (43,280t vs. 72,656t), with prior year volumes augmented by the disposal of coal stockpiles. Uitkomst had 10,909t of high grade duff and peas on hand at the end of the quarter compared to 1,727t at the beginning of the quarter and the colliery also sold 5,783t of high ash middlings coal during the quarter (FY2021 Q2: 8,830t).
Uitkomst’s high quality coal remains in demand and the colliery secured a customer for 10,000t of the closing stock. The customer paid a deposit of R6.6 million ($0.4 million) in December 2021 and commenced uplifting the coal in January 2022. Uitkomst presold 16,500t of coal during the previous quarter, realising R29.7 million ($1.9 million). During the quarter Uitkomst delivered a further 5,500t of coal against this contract with the remaining 8,250t to be delivered between January and March 2022.
Demand for commodities continued during the three months with continued improvement in the API4 export coal prices. Average API4 prices for the three months were 123% higher than the comparative period ($163/t vs $73/t) and Uitkomst’s average revenue per tonne increased by 68% to $111/t (FY2021 Q2: $66/t) with the sales mix also including lower value, fixed price arrangements. The significant reduction in sales volumes in the quarter accounted for approximately 75% of the increase in production costs per saleable tonne during the quarter (FY2022 Q2: $98/t vs. FY2021 Q2: $48/t) with higher labour, mining, processing and engineering costs also contributing and cost optimization initiatives are being investigated.
Uitkomst Colliery – Utrecht Coalfields is 70% owned by MC Mining.