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Exxaro used its capital markets day on Monday to reinforce the role of coal in global and domestic energy security, saying the fuel remains central to its business and broader energy mix.CEO Ben Magara said coal continues to sit at the core of the group’s earnings and cash generation, supporting shareholder returns and funding its diversification strategy.“Coal remains the foundation of Exxaro’s portfolio,” he said.Magara said coal will continue to play a role in global energy markets for years to come, particularly during periods of disruption. “When trouble hits, people run back to coal,” he said, adding that the fuel is expected to remain relevant well beyond 2050.Exxaro is using its coal business to fund expansion into manganese and renewable energy, rather than shifting away from it in the near term. “These are our three main businesses that drive earnings,” he said.(Dorothy Kgosi) Exxaro’s capital markets day came as the company reported a stronger first-half performance, with average export coal prices rising to about $105 a tonne in the six months to June, from $92 a year earlier.Coal production increased 10% over the period, while sales volumes rose 6%, supported by improved output and demand conditions. Stronger pricing was supported by 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 during the period, reaching about $124 a tonne at their peak before easing on expectations of a potential diplomatic breakthrough involving the US and Iran.Executive head of coal Caroline Shirindza said the long-term outlook for coal is being shaped by shifts in both demand and supply, with supply tightening faster than demand in some parts of the market. She said an independent assessment commissioned by Exxaro showed that even in lower-demand scenarios, global markets will still require new production capacity as older mines reach the end of their lives.‘Affordability and energy security’“This supports coal’s continued role in global energy supply, particularly in regions prioritising affordability and energy security,” Shirindza said.Despite stronger pricing and higher volumes, Exxaro said its operations continued to face constraints from rail bottlenecks, elevated diesel costs and broader logistics pressures.The company said Transnet Freight Rail improvements have supported some gains in export flows, but direct rail capacity from Grootegeluk remains below contracted levels, requiring alternative logistics solutions.Shirindza said logistics remains a key constraint on export performance and a central focus area for improving value from the coal business.Despite these constraints, production growth in the first half was led by the Grootegeluk mine, supported by improved weather conditions and stronger demand from power stations.Metallurgical coal production is also expected to rise 41%, supported by improved export demand.Coal supplied to Eskom from the Matla mine is expected to increase 30% following a ramp-up in production, while domestic sales remain broadly stable.The company also flagged higher capital expenditure in the coal business, which is expected to rise 69% to R1.46bn, driven by equipment replacement programmes at Grootegeluk and Belfast.Alongside coal, Exxaro said it is continuing to expand its renewable energy and manganese businesses as part of a broader diversification strategy.Magara said the group is building a “balanced portfolio”, with expansions expected in manganese and renewable energy alongside its coal business. “We are not shrinking coal,” he said. “We are growing other businesses.”The company maintained its target of carbon neutrality by 2050.The interim results for the six months to end-June are expected on August 20.
