Exxaro Resources Ltd. (EXX) said first-half profit dropped as much as 78 percent after sales by the South African coal producer of zinc and mineral-sands operations boosted earnings a year earlier.
Profit for the six months through June fell to as low as 1.98 billion rand ($203 million), or 5.56 rand a share, the Pretoria-based company said in a statement. Earnings were also curbed by a 292 million-rand writedown in the value of assets at the New Clydesdale mine, known as NCC, in Mpumalanga province. The company is considering stopping output at the colliery, which has negative margins, and has started talks with unions.
“Exxaro had also received a number of expressions of interest from parties with operations adjacent to NCC as well as other parties who indicated possible benefit from the usage of NCC’s infrastructure,” it said. “A third party may be better placed to extract optimal value from this unique asset.”
NCC employs 402 workers and produces steam coal, used to generate power, mainly for export. Coal delivered to northwest Europe has declined 19 percent this year and reached $82.40 a metric ton yesterday, the lowest since at least January 2010. Power-station fuel at Australia’s Newcastle port has dropped 15 percent in 2013 and on July 5 reached $76.25 a ton, the lowest since November 2009, data from IHS McCloskey show. The slide in prices, coupled with rising output costs and slowing Chinese demand, is prompting miners from Glencore Xstrata Plc, the world’s biggest shipper, to Peabody Energy Corp. (BTU) to cancel projects and fire workers.
Exxaro erased an earlier gain of as much as 3.4 percent, trading 1 percent down to 151.06 by 2:43 p.m. in Johannesburg.
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