South African coal giant shoots the lights out

Exxaro is South Africa’s biggest coal miner, but has been in the process of adding other minerals to its portfolio.

The company recently acquired the country’s largest manganese mines for around R11.67 billion as part of this strategy.

Exxaro also recently experienced a shakeup at the C-suite level after its former CEO, Nombasa Tsengwa, resigned following a probe into allegations over her conduct.

In April 2025, mining veteran Ben Magara stepped into the role as Exxaro’s permanent CEO, tasked with leading the company’s diversification strategy.

On Thursday, 21 August, Exxaro released its results for the six months through June 2025, which showed a strong financial and operational performance.

Group revenue for the six‑month period increased 8% to R20.6 billion compared to R19 billion in the first half of Exxaro’s 2024 financial year.

The miner’s EBITDA rose by 10% to R5.6 billion, maintaining an EBITDA margin of 27%. Magara attributed this to the strong performance of Exxaro’s coal business. 

he coal business’s EBITDA increased by 10% year‑on‑year to R5.6 billion due to higher export and domestic sales volumes and a 96% price realisation achieved by the company’s marketing team in a softer commodity price environment. 

The company’s headline earnings increased to R4.2 billion, up 14% from R3.7 billion in the comparative period, while headline earnings per share rose 13% to 1,724 cents per share.

Magara said Exxaro’s portfolio of high‑quality, well-capitalised assets, supported by disciplined operational execution and effective working capital management, continued to deliver strong and consistent cash generation.

During the period, cash generated by Exxaro’s operations increased by 10% to R5.3 billion from R4.8 billion in the first half of 2024. 

In addition, dividends received from the miner’s equity‑accounted investments, primarily its Sishen Iron Ore Company stake, contributed R1.7 billion.

Operational boost and dividends

Magara said these cash flows enable Exxaro to reinvest in the business, pursue value‑accretive growth opportunities, and return capital to shareholders. 

Exxaro’s total capex increased to R2 billion from R1.1 billion in H1 2024, comprising R0.9 billion sustaining capex and R1.1 billion expansion capex, which was largely utilised in the initial construction of the 140 MW Karreebosch project.

“Our balance sheet remains strong and flexible, underpinned by robust cash generation and prudent capital allocation,” he said. 

Exxaro closed the period in a net cash position of R18.3 billion, excluding its energy’s net debt of R5.8 billion.

From an operational perspective, the miner’s coal production increased by 1% year‑on‑year to 19.4 Mt from 19.3 Mt in the first half of 2024, supported by strong contributions from its Mpumalanga operations.

The group’s Mafube, Leeuwpan and Belfast operations collectively supported a 14% year‑on‑year production increase within the region.

This strong result came on the back of improved plant performance, equipment availability, and benefits from the introduction of a modified mining sequence at Leeuwpan. 

However, this performance was partially offset by modest reductions in the Waterberg region, primarily due to reduced offtake, and at Matla, following the planned decommissioning of the short wall section. 

Total coal sales volumes for the period increased by 1% to 19.1 Mt in H1 2025, compared to 18.9 Mt in H1 2024, due to improved domestic sales and stronger export performance.

On the back of this strong performance, Exxaro declared an interim dividend of R8.43 per share.

Magara noted that this is Exxaro’s 45th consecutive dividend declaration since listing on the JSE in 2006.

Issued on Daily Investor by Blanke Neethling | https://dailyinvestor.com/mining/98702/south-african-coal-giant-shoots-the-lights-out/