Optimum Coal FY profit surges on higher output

Thu Aug 25, 2011

JOHANNESBURG (Reuters) - Optimum Coal, South Africa's sixth-largest coal producer, on Thursday reported a surge in full-year earnings, boosted by higher group production and said the outlook for the coal market remained robust.

Optimum reported diluted headline earnings per share of 201.42 cents, up from 25.08 cents the previous year. Headline EPS are the main profit gauge in South Africa and exclude certain one-time items.

"Notwithstanding various production challenges at Optimum Collieries during the year, production at Koornfontein Mines has exceeded our expectations," Chief Executive Mike Teke said in a statement.

Production of coal rose 26 percent to 13.6 million tonnes.

The company said domestic and international demand for thermal coal is expected to remain strong on the back of healthy demand from Asia and from South African power utility Eskom.

The miner said it expects Optimum Collieries to produce around 5.3-5.5 million tonnes of export coal and 5.5 million tonnes of Eskom coal in the current financial year, while Koornfontein Mines is expected to produce 1.7 million tonnes of export coal and 1 million tonnes of Eskom quality coal.

While transport remains a challenge for Optimum and other South African coal miners, logistics group Transnet is investing heavily to boost volumes on the coal line leading to the export terminal at Richards Bay.

South African coal miners exported 63 million tonnes of coal last year from the Richards Bay Coal Terminal, far below its expanded capacity of 91 million tonnes, largely due to bottlenecks on the rail line leading to the port.

Transnet has said it plans to expand capacity on the coal export line to 81 million tonnes by 2015, and is studying the possibility of freeing up some 14 million tonnes of capacity on the coal line in two to three years by moving non-coal cargo to a new line via Swaziland.

Optimum declared a special dividend of 30 cents per share.

Optimum shares are down 4.64 percent so far this year, compared with an 8.9 percent fall in Johannesburg's All-Share index.