- Wescoal reduced loss from R136 million in 2020 to R36 million in the 2121 financial year.
- The company is in the process of kickstarting the delivery of coal from the Arnot mine to Eskom.
- There are no plans of pursuing inorganic growth options in the short to medium term within the coal space.
Wescoal narrowed its losses in the full 2021 financial year, but the coal producer saw lower sales volumes during period due to muted domestic demand.
The company reported a loss of R36 million in the year to end of March, down from the R136 million incurred in the previous year.
Although the sales target was lower, deliveries to Eskom, which is the company's major client, increased to R2.1 billion from R1.6 billion in 2020, thanks to its Moabsveden coal sale agreement.
Moabsvelden was a greenfield project in Mpumalanga developed in 2020, and the majority black-owned company previously said it expects it to supply three million tons a year of coal to Eskom's Kusile power station.
"The project is now well advanced, having commenced in June 2020. The first coal blast was successfully performed in the third quarter of 2021," the company said.
First coal deliveries from the mine to Eskom went out in the fourth quarter and the project contributed 187 000 tons to the group's 1.8 million tons of run of mine production in the last segment of the year. Wescoal invested R228 million into the Moabsvelden project development, which was financed internally.
The South Africa-focused coal miner is in discussions with Eskom for a 200 kiloton per month supply agreement from Arnot Opco, an empowerment entity in which it acquired a 50% stake. The operation is currently under rehabilitation and an offtake agreement with Eskom would boost its business with the state-owned power utility.
"The imminent restart of the Arnot mine where we hold an effective interest of 50% in line with targets, operational performance, and cost-saving initiatives implementation are positioning the group well to return to profitability in 2022," interim CEO Robinson Ramaite said.
Wescoal operates the Elandspruit mine, Khanyisa, Vanggatfontein and Moabsvelden, and a total of R773 million was generated from operations, compared to R183 million in 2020.
In light of the Covid-19 pandemic, the coal producer said aims to use the operationalisation of Moabsvelden, the imminent restart of the Arnot mine and other life extension projects as its main strategic pillars of scalability.
"The company will not be pursuing any material inorganic growth options in the short to medium term within the coal space," said Ramaite.
No final dividend was declared for the 2021 financial year.