Exxaro Resources Reports Strong Performance Amidst Coal Price Fluctuations

Exxaro Resources, a prominent diversified resources group in South Africa, has announced an impressive 15% increase in its final dividend for the financial year ending December 31, raising the payout to R10 per share. This decision reflects a commitment to enhancing shareholder returns, despite challenges in the coal market.

Financial Performance Highlights

The company reported a 3% increase in revenue, reaching R41.8 billion, although profits dipped by 7% to R7.1 billion. CEO Ben Magara expressed optimism during an online presentation, stating that the performance was resilient given a 14% to 15% decline in coal prices. Notably, headline earnings per share increased by 8%, hitting 3,247 cents.

Magara noted, “Despite weaker export coal pricing, our strong marketing capabilities, disciplined cost management, and robust production allowed us to achieve a resilient EBITDA (earnings before interest, tax, depreciation, and amortisation) performance, which slipped marginally by only 2% to R10.23 billion.”

Operational Improvements and Challenges

After facing operational difficulties in the first half of the year due to heavy rainfall, Exxaro reported a significant 9% rise in export coal volumes. Improvements in performance from Eskom and Transnet contributed positively towards the year-end results. Transnet Freight Rail (TFR) transported 57 million tons of coal in the past year, up from 52 million tons, though this remains well below the Richards Bay Coal Terminal’s capacity of 91 million tons annually.

Exxaro expressed interest in joining public-private partnerships for freight rail, indicating a willingness to invest capital for improved transport logistics.

Strategic Developments in Resources

During the past year, Exxaro expanded its portfolio by acquiring stakes in key South African manganese mines, including Tshipi Borwa, Mokala, and Hotazel, for R11.67 billion. The divestment of FerroAlloys on October 31, 2025, marked an exit from a non-core asset as the group pivots toward energy-transition minerals.

The turnaround strategy for Leeuwpan Mine is showing positive results, and all employees affected by the restructuring have been relocated within the group.

Upcoming Projects and Future Plans

Exxaro’s Matla mine extension project is proceeding ahead of schedule, contributing to a 14% production increase. Additionally, progress continues on the 140MW Karreebosch project, expected to commence operations in the first half of 2027. The commissioning of the 68MW Lephalale solar plant, which supports Grootegeluk mine operations, has also been finalized.

Furthermore, Exxaro received approval from the Competition Tribunal to acquire the 138MW Gouda wind farm and the 75MW Sishen solar plant, enhancing its commitment to sustainable energy solutions. The group is also poised to recover approximately R100 million annually in electricity costs.

Focused Commitment to Shareholder Returns

The group’s revised dividend policy demonstrates a dedication to superior shareholder returns, with the dividend cover adjusted to a range of 1.5 to 2.5 times on adjusted earnings, moving from the previous 2.3 to 2.5 times. The completion of R1.2 billion in share buybacks last year underscores this commitment.

Exxaro Resources continues to build a robust foundation with a strong coal base, anticipating sustained demand beyond 2050. The company is also enhancing its energy solutions business and pursuing interests in iron ore and base metals, thanks to the recent acquisition of select manganese assets in the Kalahari Manganese Field.

Safety and Occupational Milestones

In an industry-leading achievement, Exxaro reported zero work-related fatalities throughout the financial year, achieving 40 consecutive months without a fatality—a notable acknowledgment of the group’s commitment to safety.

With the successful acquisition of manganese assets, Exxaro has reassessed its previous target cash buffer, reducing it from R12 billion to R5 billion, showcasing its strategic focus on growth and sustainability.