Coal
Production volumes for the coal commodity business overall were 9% higher than the previous year.

Power station coal production at the Eskom tied mines was significantly higher due to a good turnaround at Arnot mine after successful implementation of improvement initiatives. The commercial mines, most notably North Block Complex (NBC) and Inyanda, increased production to supply higher demand from Eskom. NBC started mining new reserves and increased overall capacity.

Coking coal production, however, decreased by 402kt in 2008 due to challenging geological and mining conditions at Tshikondeni. In addition, Grootegeluk mine used its no 6 plant tipping capacity to channel run of mine tonnages to the production of additional power station coal from the no 2 washing plant, thereby contributing to the reduction in coking coal production.

Steam coal production was significantly higher than the previous year mainly due to Inyanda ramping up during 2008, good production levels at Leeuwpan resulting from additional overburden removal in 2007, as well as increased production at NBC.

Sales of power station coal to Eskom increased by 2Mt to 36,3Mt as a result of improved production performance at the tied operations and demand from the electricity utility to increase stock levels at various power stations.

Other domestic sales were negatively affected by the lower production at Tshikondeni as well as a 13% decrease in sales to ArcelorMittal SA Limited in line with reduced demand in the steel and ferroalloy industry in the last quarter of 2008. The coal business was able to fully offset these lower sales volumes through additional sales from Leeuwpan and NBC to the domestic market.

Export volumes increased from 1,8Mt in 2007 to 3,3Mt in 2008 as a result of increased export allocation at the Richards Bay Coal Terminal (RBCT) and production volumes from the new mines, Mafube and Inyanda.

Revenue increased by 78% to more than R9 billion due to significantly higher average international coal prices linked to global oil and energy price increases, and stronger demand. Domestic prices followed this upward trend with international prices, however, declining in the last quarter of 2008 following the global economic crisis.

The commodity business reported an annual record net operating income of R2 654 million, an increase of 200% compared to 2007 despite infl ationary pressures, especially in respect of labour and diesel costs, exploration costs for Moranbah South in Australia and higher expenditure on projects in the Waterberg and Mpumalanga province.