Integrated report 2020
Exxaro report selector 2020
Exxaro Resources Limited
Integrated report 2020
REPORT SELECTOR
Achievements in 2020
• Product volumes of 47.4Mt
• Sales volumes of 46.8Mt
• Export volumes of 12.2Mt
Despite changes in the coal portfolio, with some operations mining diminishing reserves, as well as delayed expansion projects, our optimisation initiatives are delivering value, particularly operational excellence and digitalisation. Our operational excellence process continues to focus on safety, productivity improvement and cost management, as well as driving the maturity of our LEAN5 initiative. Through our digital programme, we have made remarkable progress in implementing our integrated operating centres and value chain visualisations across our operations, aiming to improve in-time decision making across the entire value chain. Our digital programme will continue to drive value as we focus on mineral resource management integration, data science and selective automation. Our ability to implement expansion projects and deliver early value positions us well to launch into the next phase of value growth.
The average Argus/McCloskey Coal Price Index (API4) price for coal exported from Richards Bay was weaker in 2020 at US$65/t vs US$72/t in 2019. The international seaborne market was largely oversupplied in 2020, due to a drop in demand arising from COVID-19 impacts, from an oversupply of cheap liquid natural gas (LNG) into Europe, China's adherence to import quotas and China's clampdown on Australian imports.
Cost per tonne was mainly affected by increased distribution cost resulting from higher export volumes, as well as electricity, general and labour inflation increases and higher cost linked to higher production volumes. This was partially offset by lower support costs and the downward adjustment of rehabilitation provisions.
Having implemented the integrated operations centres across all our BUs, and enabled by our value chain visualisation capabilities, we have enhanced our in-time decision making and we are now beginning to gain and quantify the benefits of our digital transformation journey, which we embarked upon a few years back.
The effective date of consolidation of Cennergi into the Exxaro group is 1 April 2020, reporting core EBITDA of R648 million for the nine-month period ended 31 December 2020. Free cash flow generated by Cennergi for the nine-month period was R152 million.
Total generation output at 553GWh for the nine-month period is marginally below planned numbers due to lower wind conditions. Equipment performance and Eskom grid availability remain according to plan. Electricity generated for the 12 months amounted to 727GWh, is 4% lower than 2019, which was an exceptionally good year for generation, especially in July 2019 where the Amakhala windfarm generated more than 150% of its intended target.
Exxaro continues to evaluate its options to dispose of its 26% shareholding in Black Mountain following the suspension of the sale process in December 2020. At 31 December 2020, the investment no longer met the criteria to be classified as a non-current asset held-for-sale with the retrospective reinstatement of the equity method from 1 November 2019.
As mentioned previously, we undertook a strategic decision to dispose of our total equity interest in ECC and Leeuwpan, having identified these assets as non-core to the future objectives of Exxaro. The resultant sales process is well underway and good progress has been made notwithstanding the COVID-19 environment. Subsequent to 31 December 2020, Exxaro signed a sale and purchase agreement with Overlooked Colliery Proprietary Limited, who will acquire ECC. The sale will only be effective once all conditions precedent have been met. The disposal process for Leeuwpan continues.
Rail siding at Delmas near the Leeuwpan mine
