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Exxaro cuts expansion capex on weak commodity price forecast

South African coal miner Exxaro Resources has cut its planned capital expenditure for expansion over the next five years by 13% as it expects commodity prices to weaken further, Reuters reported, citing the company as saying on November 19.

The company said it is cutting costs by trimming jobs and increasing efficiency at its operations.

The 13%drop in planned capital spending would include reducing investment in the Waterberg coalfield to 15 billion rand ($1 bln) over the period, from a previous estimate of 16.9 billion rand, Exxaro said. It will also delay six other coal projects, it said.

The company supplies most of its coal to power utility Eskom through a long-term fixed price deal and this has partly shielded Exxaro from the slump in global coal prices.

"The coal business is to a great extent hedged against falling U.S. dollar-denominated coal export prices through the exchange rate as well as domestic Eskom prices remaining stable," Exxaro said.

Coal and iron ore prices have fallen steeply on global oversupply concerns and a shift to cleaner fuel.

source: http://en.sxcoal.com