Wescoal profit dips in tough climate

Johannesburg - South African coal miner and trader Wescoal Holdings reported a 66.4 percent plunge in headline earnings per share for the six months to end-September and said it would not pay a dividend as it struggles to weather a challenging economic and mining climate in South Africa, hindered by delays in finalising contracts with Eskom.

Wescoal, which acquired trading business MacPhail and said its interim results were comparable, said that headline earnings fell to 5.1 cents per share from 15.2 cents per share after total revenue slipped 15.6 percent to R758.1 million.

“Our trading division performed well but earnings overall were negatively impacted by several factors, including domestic trading conditions which remain challenging,” said Waheed Sulaiman, the acting CEO of Wescoal, in a statement.

Wescoal said revenue from its mining division was hurt because of delays in concluding long-term contracts with Eskom. Eskom sales in the period amounted to about 362 000 tons compared with 906 000 tons previously.

“We are pleased with progress at Elandspruit which has to date been funded from internally generated cash flows. The recently announced rights issue will allow Wescoal to be better positioned to conclude this project, take advantage of other growth opportunities and to rebalance our internal cash flows,” Sulaiman added.

Wescoal said its Elandspruit project was on track and able to generate two million tons a year.

“De-bottlenecking and optimisation projects at the Elandspruit mine and processing plant continue in order to increase production capacity and reduce operational risk. Focus is on water management systems and improving road networks in the mining area to reduce operational risk,” it said.

ANA