Coal boom rescues Minergy
Outburst of coal demand has rescued Minergy’s Masama Coal plant from heavy losses, the company’s financial results for the year ended 30 June 2022 has revealed.
“The challenging market conditions in the first nine months, resulted in total operating losses of P74 million,” said Minergy Chief Executive Officer, Morné du Plessis.
He however said the boom in coal prices boosted sales in the fourth quarter and allowed for break even during the final quarter, including first- time achievement of an operating profit during a single month.
The sales explosion comes after Minergy exported two 30 000- tonne vessels of coal in May and June freight on board ( FOB) basis.
In addition, the company also exported coal through Maputo by rail to the port, with two trains dispatched in June 2022 on a free- on- rail ( FOR) basis. “Sales performance was generally higher on increased output compared to financial year 2021, but improved significantly in the fourth quarter on the back of the coal boom, which brought opportunities to seaborne export markets,” said du Plessis.
The positive annual sales saw the company’s total sales volume for the financial year increase by 40 percent, with record sales achieved in May 2022, on average pricing of 26 percent, higher than the previous year. Du Plessis also highlighted that high coal prices, brought about by the war in Ukraine, allowed Minergy to obtain export parity prices back on the mine and adjusted its selling prices in line with the market demand for the regional supply. “Selling prices were also increased to partially recover increases in fuel and explosives costs, contributing to better overall pricing.”
Meanwhile, Minergy says its strategy remains to operate at production capacity and maximise sales, to reverse past trends where plant and market factors limited the company from operating at optimal capacities.
“As coal export prices remain high, the company continues to capitalise on viable export opportunities through Walvis Bay and Maputo through the establishment of new sales agreements with coal traders,” said du Plessis.
Currently, Minergy now operates at production capacity of 125 000 tonnes of run of mine ( ROM), achieving better pricing and planned product mixes. “These turnarounds support the expansion of mining operations to produce additional coal, and the mining fleet has been increased to capitalise on this. “Overall, the outlook for the coming year is positive and is forecast to be operationally profitable, as demonstrated in quarter four, which would be the first year for such an achievement after challenging start- up years,” said du Plessis.