Diversified miner Exxaro Resources reported stronger coal prices and higher volumes in the first half of 2026, despite ongoing rail constraints, elevated diesel costs and geopolitical uncertainty in the Middle East.Exxaro said in a pre-close statement on Monday for its first half that average export coal prices rose to about $105/tonne in the six months to June, from $92/tonne a year earlier, while production increased 10% and sales volumes rose 6%.The stronger pricing environment came amid tighter global energy markets, driven by geopolitical tensions and supply disruptions.Exxaro said uncertainty around Indonesia’s production quotas and the conflict in the Middle East reshaped global energy flows, tightening gas markets and prompting some buyers in Asia to switch from liquefied natural gas (LNG) to coal.Export coal prices strengthened further, reaching about $124/tonne at their peak before easing on expectations of a potential diplomatic breakthrough involving the US and Iran.Export coal sales are expected to increase by 15% to 3.94-million tonnes, “supported by stronger demand conditions”, the company said.On the operational front, production growth was led by the Grootegeluk mine, supported by improved weather conditions and stronger demand from power stations. Metallurgical coal production is expected to rise 41%, supported by improved export demand.Despite the stronger pricing environment, Exxaro said operations continued to face constraints from rail bottlenecks, higher diesel costs and ongoing volatility in commodity markets.The average diesel price in Gauteng rose to R23.55 a litre during the first half, compared with R19.49/l a year earlier.Rail performance showed some improvement, with Transnet Freight Rail volumes to Richards Bay rising 7% year on year on an annualised basis. However, constraints persist on key export routes.Exxaro said direct rail deliveries from its Grootegeluk mine remain well below contracted levels, forcing continued use of alternative transport routes and logistics solutions.The company also flagged weaker domestic electricity demand, noting that Eskom’s available generation capacity continues to exceed demand, limiting coal burn at some power stations.Coal supplied to Eskom from the Matla mine, however, is expected to rise 30% following a ramp-up in production, while overall domestic sales remain broadly stable.Capital expenditure in the coal business is expected to rise 69% to R1.46bn, mainly due to equipment replacement programmes at Grootegeluk and Belfast. Exxaro said its renewable energy portfolio continues to expand, with wind and solar assets expected to generate close to 400GWh in the first half, including the recently commissioned Lephalale Solar Project.The company is also progressing its acquisition of selected manganese assets from Ntsimbintle and OM Holdings as part of its diversification strategy, with further details expected in August.As of end-May, Exxaro reported net cash of R6.6bn, excluding debt linked to its energy business.The company will release interim results on August 20.BusinessDay