A South African coal miner, Exxaro Resources (EXXJ.J), warned Tuesday that weaker domestic demand and rail logistics issues would reduce production and sales in the year’s first half.
Exxaro reported a 4% drop in coal production and a 7% drop in revenues for the six months ending June 30.
Due to locomotive shortages, cable theft, and infrastructure damage, state-owned freight train operator Transnet struggles to transport minerals to the port, lowering export sales by 6%.
After Europe banned Russian coal over Moscow’s invasion of Ukraine, thermal coal prices rose to record highs in 2022.
After a mild winter, European utilities have large coal and gas stocks, but renewable energy availability improved. Demand has dropped, and coal businesses expect big losses.
“The bearish market sentiment in the first half is characterised by price declines, due to sufficient gas and coal stocks in Europe, exacerbated by warmer than usual winter temperatures, strong renewables performance, and materially lower gas prices,” Exxaro stated.
The miner reported that the average coal export price in the first half of 2023 was $127 per metric ton, down from $265 last year.
