Wescoal Production slightly higher than the comparable quarter
Group mining production for the quarter ended 31 March 2021 (Q4’FY21) is in total 1% higher than the comparable quarter ended March 2020 (Q4’FY20) (the “comparable quarter”). Vanggatfontein has been a solid performer for the Group throughout FY21, and although run-of-mine (“ROM”) production was down 17% from the comparable quarter, production was up 68% for FY21 compared to FY20.
Elandspruit ended its solid FY21 production performance with a strong performance in Q4’FY21. ROM production was up 32% from the previous quarter but slightly down from the comparable quarter. The restart of the underground mining section will commence during Q1’FY22.
Khanyisa managed to end FY21 with a solid performance, with production up 24% from the previous quarter, and 4% higher than the comparable quarter in FY20. Despite the good performance in Q4’FY21, overall production for FY21 at Khanyisa was 9% lower than the previous financial year.
Moabsvelden project development is now well underway, contributing just over 10% of the Group’s Q4’FY21 ROM production. Ongoing developmental workstreams are in progress and will support the ramp-up planned to 160 000 tonnes a month of saleable product by July 2021.
Trading sales volumes remain under pressure, but in-line with expectations given the tough trading environment and the impact of COVID-19 during the initial lockdown. Despite this, sales volumes for Q4’FY21 ended 31 March 2021 were 45% higher than sales in the comparative quarter.
However, the business saw its total sales volumes decrease by 12% from 759 000 tonnes in FY20 to 668 000 tonnes in FY21. In the second half of FY21 a structural operational review was undertaken and a S189 process was followed resulting in head-count reductions and operational efficiencies.
Sales for FY21 were 25% higher than FY20 signalling an improvement in coal offtake from Eskom but the increase has also been due to sales being recorded for the full year to Eskom in terms of the Neosho contract sales agreement for the first time in FY21. The coal offtake by Eskom remains lower than pre-national lockdown levels.
While the South African economy is starting to show signs of recovery, concerns remain as the country navigates through the third wave of the Covid-19 pandemic. This coupled with the operational problems being faced by Wescoal’s major customer Eskom as it continues to implement rolling blackouts to manage grid pressure, will continue to impact domestic coal demand.
The seaborne market on the other hand presents a great opportunity for miners with export capability, as prices have surpassed the highs last seen in 2018. The current environment therefore remains challenging but can present opportunities for companies like Wescoal, as export demand starts to drive-up local prices.
