Exxaro’s profit after tax increased by 134% in 2008. The net operating profit from the company’s coal operations alone increased by 200%. All of the company’s coal assets are located in South Africa. The company produced 41,3 megatons of coal in 2007 and increased that by 8,5% to 44,8 megatons in 2008. The company’s production of power station coal increased by 7,3% from 34,2 megatons in 2007 to 36,7 megatons in 2008. Of the 36,7 megatons, 36,3 megatons (34,2 megatons in 2007) or 99% was sold to Eskom. The increase of 200% in net operating profit from coal for Exxaro was therefore almost exclusively funded by Eskom, by way of the pockets of electricity consumers in South Africa.
“It would therefore seem that any increase in Eskom’s tariffs specifically aimed at covering the (projected) increasing primary energy cost will go directly into the coffers of South Africa’s coal producers. In effect, such a tariff hike will be a tax on consumers to subsidise the coal companies in an inefficient manner. Coal producers should not be allowed to exploit South Africa’s long-term electricity crisis in this manner,” Hermann added.