The country’s newest colliery, Minergy Limited, posted a P117.6 million pretax loss in its first year of production weighed down by the impact of COVID-19, BusinessWeek has learnt.
The pandemic resulted in lockdowns which limited Minergy’s sales from its Masama Coal Mine at Medie, while coal prices plummeted beyond what the company had forecast. The virus’ impact forced the company to cut its targeted sales from 80,000 tonnes per month to 60,000 tonnes.
The COVID-19 impact also resulted in Minergy intensifying its fundraising activities and refocussing its targets for its first year towards simply breaking even.
Commenting on Minergy’s results for the year ended June 30, 2020, chief executive officer (CEO) Morne du Plessis said Masama’s sales volumes had dropped dramatically to roughly 10 to 15% of volumes supplied prior to the lockdown, with coal stockpiles at Masama sufficient to cater for the limited demand during this period. “COVID-19 lockdowns impacted the group from the third week in March 2020, with the most severe effects being felt in April 2020 and May 2020 when sales were limited to certain essential supply customers from stockpiles existing at the end of March 2020,” he said.
“About 90% of the target market was shut down during this period.
“Sales volumes showed a slow recovery in June 2020 as customers started to return to operations following the lifting of certain lockdown restrictions applicable in South Africa.”
Further du Plessis noted that the pandemic had also forced Minergy to critically relook its strategy to achieve
However, the coal miner also highlighted that there were signs of hope, as the period after the end of the financial year had witnessed robust sales. “Subsequent to year-end, July 2020 and August 2020 have seen further recoveries in sales volumes, including record sales levels achieved in August 2020,” du Plessis said.
“To put this into perspective, post the year-end to the end of August 2020, Minergy has already sold 40% of the year-end 2020 volumes.”
In addition, Minergy is eyeing emerging opportunities in the region.
“There are game-changing opportunities ahead in anticipation of the submitted Eskom supply tender and progression of the Mmamabula-Lephalale rail link for exports. Minergy has already successfully delivered six trains of coal to a customer in South Africa post year end,” the CEO said.
Minergy is also finalising debt facilities and share issuances to boost its working capital and cash reserves while also funding capital expenditure for outstanding infrastructure.