Ahead of closing the 2025 financial year on December 31, diversified mining and energy group Exxaro Resources says the year was marred with shifting global trade dynamics, inflationary pressures, dampened global investor sentiment and heightened volatility in financial markets.

The company expects the API4 Richards Bay Coal Terminal (RBCT) free-on-board export price to average $89/t for the year, compared with $105/t last year.

The iron-ore fines price is also expected to trend lower in the year under review at $100/t, compared with $109/t in the prior year.

Exxaro, nonetheless, anticipates its coal production for the year to be in line with its guided range of 38.9-million tonnes to 42.8-million tonnes. Export sales are also expected to be within the guided range of 6.5-million tonnes to 7.2-million tonnes.

Thermal coal sales are expected to increase by 2% year-on-year owing to stronger local demand, while metallurgical coal sales are expected to decrease by 49% year-on-year, owing to lower demand from steel and metals industries.

Encouragingly, Exxaro says, Transnet Freight Rail’s (TFR’s) performance has improved, with fewer disruptions having been experienced this year. TFR tipped 46.8-million tonnes of coal at RBCT from January to October, which translates to a yearly tempo of 56.4-million tonnes.

This is on par with TFR’s performance in the prior year, when the entity moved 56.9-million tonnes of coal.

Exxaro’s renewable-energy business, Cennergi, expects to have generated 695 GWh of clean electricity in the full year, which will be 4% lower year-on-year owing to weaker wind conditions.

Cennergi continues advancing construction activity at both the 68 MW Lephalale solar PV and the 140 MW Karreebosch wind farm sites, with starts of electricity generation expected early in 2026 and in 2027, respectively.

Commenting on the market landscape in the year, Exxaro FD Riaan Koppeschaar says the global seaborne thermal coal market continues to face a challenging period of adjustment as was the case throughout the year.

He says coal producers have had to navigate weak demand, oversupply, evolving energy policies and economic uncertainty, with major shifts having happened in markets such as China and India as these countries prioritised domestic supply over imports.

The Indian steel market also had lower demand and prices owing to weak activity in the construction industry, as well as heightened competition from cheaper steel imports, which affected demand for South African coal in that region.

Positively, the domestic market demand for coal remained resilient over the year despite macroeconomic headwinds having affecting end-user industries. In Eskom’s case, Koppeschaar explains, coal offtake was constrained owing to operational challenges at two of its Waterberg-based power stations, however, Medupi power station had increased demand following the return to service of Unit 4.

Exxaro has managed to mitigate some of the impacts of external pressures – softer export pricing and variable Eskom offtake – through optimisation efforts and strengthened coordination across the value chain.

Cost discipline remains a core focus for the group, as well as operational excellence to achieve higher efficiencies.

CORPORATE ACTIVITY

Exxaro has completed permanent appointments to its group management structure, with the last appointment having been that of Fortune Ntlhoro as head of commercial operations.

The company says various management changes have positioned the group well for execution of its sustainable growth and impact strategy.

Additionally, Exxaro successfully concluded the disposal of its FerroAlloys business to a consortium led by EverSeed Energy for R250-million, as well as the last suspensive conditions for Exxaro to acquire manganese assets from Ntsimbintle Holdings and OMH Mauritius.

The manganese transaction remains subject to a few more conditions, including regulatory approval processes.

The manganese assets represent a significant milestone in the group’s strategic growth ambitions within energy transition metals.

Moreover, the group completed a share buyback programme in October, acquiring 7.3-million shares, or 2.12% of the company’s issued share capital.

Exxaro expects its capital expenditure for the coal operations to be 7% higher year-on-year in the reporting year.

As of October 31, Exxaro had a net cash balance of R18-billion.

OUTLOOK

Global economic momentum remains fragile owing to the unpredictability of US trade policy, Koppeschaar states.

Although China-US strategic competition intensified this year, a framework agreement was reached on October 30 during a bilateral meeting in South Korea. This signalled the countries’ intent to bring greater certainty to US-China trade relations and enable follow-on talks toward a more comprehensive trade agreement – which will be well received by the markets.

Domestically, South Africa’s real GDP growth has been modest throughout the year, but policy reforms in the energy, water, ports and railway sectors continue.

Exxaro is encouraged by South Africa’s removal from the Financial Action Task Force grey list and the country’s upgraded foreign currency sovereign credit rating from BB- to BB in the year – which mark crucial steps towards reaching an investment-grade rating in the country.

Koppeschaar expects China and India’s pivot towards domestic coal production, increased renewable-energy penetration and greater gas price competition in key markets to shape thermal coal demand in 2026.

In Exxaro’s case, he anticipates that cost pressures and logistical constraints will remain a defining feature of the company’s operating environment in the new year.

“However, our focus on driving disciplined cost-optimisation initiatives and unlocking further efficiencies across the value chain will ensure that the business continues to thrive.

“Our commitment to operational excellence, resilience and value delivery will remain central as we navigate the challenges and opportunities ahead,” he concludes.