Riaan says that various measures have been put in place to combat the impact of Covid-19.
In a recent report on the overview of Exxaro Resources’ expected business performance for the period ending 30 June 2021, FD Riaan Koppeschaar said that the health and safety of the organisation’s employees and communities continues to be its priority as South Africa experiences a third wave of Covid-19 infections.
He explained that, in line with Exxaro’s Health and Wellness Strategy, which focuses on diagnosis, management and prevention of diseases, the group’s response to the pandemic has prioritised avoiding, reducing and managing Covid-19 infections. “We remain committed in our fight to prevent further loss of life and continue to implement Covid-19 preventative measures in line with Government regulations and recommendations,” Riaan said.
He further stated that Exxaro has successfully vaccinated 100 percent of its healthcare workers and has commenced with the vaccination of employees over the age of 60. “The Grootgeluk and Matla occupational health centres have been registered and approved as primary vaccination sites with the National Department of Health,” he said, adding that these sites have commenced with the procurement processes of vaccines for the inoculation of the group’s employees.
“Against the backdrop of the pandemic, it is pleasing to be able to report on our record year-to-date safety performance as at 31 May 2021,” Riaan said. “We have achieved a total of 51 months without a work-related fatality and a lost-time injury frequency rate of 0.08, the same as the set target.”
Performance review
Riaan explained that, after a temporary pause during the first quarter of 2021, the global economic expansion resumed in the second quarter, lifting global economic output above pre-pandemic levels. “However, increased commodities prices, poorly functioning supply chains and some labour supply challenges increased global inflationary pressures during the period under review.”
He added that total coal production, excluding buy-ins, and sales volumes are expected to decrease by 11 and nine percent respectively, mainly due to logistical constraints linked to Transnet Freight Rail performance, the impact of the pandemic on Exxaro’s operations and some adverse weather conditions.
“We expect the capital expenditure for the first half of 2021 in our coal business to decrease by 39 percent compared to the second half of 2020, mainly due to timing in sustaining capital expenditure and some projects nearing completion, offset slightly by the roll-over of expansion spend from the 2020 financial year due to the pandemic,” Riaan said.
As at 31 May 2021, the group’s net debt was R1.4 billion after concluding its strategy to monetise its investments in Tronox during March 2021, receiving proceeds of R5.76 million from the disposal.
Riaan added that Exxaro has continued its strategy to reward shareholder investment and approximately R1.95 million was paid to shareholders as a special dividend in May 2021. Exxaro has also implemented a share repurchase programme of R1.5 billion.
On 26 April 2021, Exxaro implemented and effected a drawdown on a new facility agreement with various financial institutions as a combined facility to refinance the term loans and revolving credit facility.
“From a solvency and liquidity perspective, in addition to operational measures implemented to combat the spread of Covid-19 and the drawdown on the new facility, further downside scenarios have been used to stress test our position,” Riaan said. “As a result, management and our board of directors believe that the group has sufficient liquidity to withstand an interruption to our operations and will remain a going concern for the foreseeable future.”
