S.Africa's Exxaro to sell ferroalloys unit by end-June 2024

South Africa's Exxaro Resources (EXXJ.J) said on Wednesday it planned to sell its ferroalloys unit to a Black-owned business by the end of June 2024.

The Johannesburg-based coal miner, which has diversified into renewable energy and is looking for battery metal assets, has said the ferroalloys unit does not fit into its long-term strategy. The unit produces ferrosilicon, mostly used in steelmaking.

"Exxaro aims to enhance the economic participation of Black-owned companies in the South African economy. In line with this intent, Exxaro has earmarked the ferroalloys disposal process to target Black ownership. The sales process is anticipated to be concluded in 2Q24," the company said in a statement.

Exxaro, a major supplier of thermal coal to South Africa's power utility Eskom, is itself a majority Black-owned business in line with South Africa's broad-based Black economic empowerment policy and regulations that seek to redress historic economic inequalities created by apartheid.

Exxaro expects its coal production to be flat at 43 million metric tons in the year to Dec. 31, in line with previous guidance. Export sales are also seen flat this year at just over 5 million tons, amid persistent freight rail logistics challenges.

The miner said the API4 coal export price was expected to average $122 per ton this year, compared with $271 per ton in 2022 due to lower demand due to sufficient gas and coal stocks in Europe, Japan, Korea and Taiwan.

"The coal price decrease was exacerbated by warmer than usual winter temperatures, robust performance in renewables and nuclear, and significantly lower gas prices," Exxaro said.

There was, however, a resurgence in Indian demand this year compared to 2022, due to lower coal prices.

Exxaro said it had a net cash balance of 13.5 billion rand ($728.3 million) at the end of October.

($1 = 18.5377 rand)

Article and image originally appeared on Reuters