Minergy fired up by rising international prices
Following record-breaking sales in the last two months, local coal producers, Minergy are looking to cash in on the red-hot regional demand for the black rock.
The mining outfit, which mines coal in Medie settlement, is optimistic the momentum in international coal pricing for Southern Africa will remain in place.
Updating stakeholders recently, Minergy Chief Executive Officer (CEO), Morné du Plessis revealed the higher prices have resulted in coal being withdrawn from the inland market to the attractively priced international markets.
Current international coal prices stand at USD133.35 (P1, 333. 50) per tonne.
“The regional market is currently undersupplied which supports pricing and new customer opportunities. Sales volumes for the 2021 financial year have doubled from the prior year. Record sales volumes were achieved in May and surpassed in June,” declared Du Plessis.
He explained Minergy has benefited from the price momentum of a burgeoning commodity market, including South African coal, which has seen the highest export coal pricing in a decade.
In addition, Du Plessis noted average pricing has increased from a stronger South African Rand, resulting in higher Pula recovered prices in the last six-month period. They have also benefitted from a better product mix featuring larger fraction products.
With the company currently working to complete its processing plant, marked for the conclusion next month, its availability is expected to provide another big boost. This includes additional material handling and associated processing costs savings and stabilized supply at full capacity.
“The objective for the 2022 financial year is to achieve nameplate capacity during this calendar year by completing final ramp-up of operations,” explained Du Plessis, adding this will enable Minergy to generate sufficient cash flow to allow the business to break even or better.
Due to booming commodity markets, Du Plessis said this has allowed Minergy to reconsider a listing in London, with evaluations currently taking place to decide the best way to achieve this.
The CEO also told shareholders the Eskom due diligence process is gaining momentum and Minergy looks forward to closing this out during the current calendar year.
Meanwhile, Du Plessis revealed Minergy has exported more than 615, 000 tonnes of coal in 22 months from late 2019 – a period that includes three months of halted operations due to Covid-19.
Nevertheless, despite the steady rise in international commodity prices, during the half-year period ended December 2020, Minergy recorded a loss.
“As operations continued below breakeven on the journey towards nameplate capacity further operating losses are as expected, albeit at lower levels with better cost recoveries at increased volumes, especially during the latter part of last six-month period,” concluded Du Plessis.