Johannesburg — PRICES for coal sold domestically would probably continue to fall for the rest of this year and into the first half of next year as the manufacturing sector remained depressed, but they were likely to continue trading at a premium to export prices for the same coal quality, Wescoal CEO Andre Bojé said yesterday.

Export coal prices had stabilised and this would help to stabilise domestic prices, he said. By the end of March, benchmark export coal prices had fallen 55% to 58,65/ton from 131,50/ton in September last year. This caused inland coal prices to drop 20% and the domestic market had now become more competitive.

Benchmark coal prices for exports through Richards Bay were now about 60/ton and the inland price was about 10%-15% higher.

In the year to March, Wescoal, a coal trader and washer, grew revenue 52% to R570,6m compared with last year, but operating costs doubled to R32,7m because of the cost of acquiring new coal depots, an increase in the number of employees, and general inflation. Bojé said Wescoal had brought more skills into the company to boost its growth strategy.

Headline earnings rose 23,5% to 14,2c per share but no dividend was declared. Bojé said Wescoal was not paying a dividend because it needed to retain its cash for growth and acquisitions, and as a matter of prudence under these market conditions.

At the end of March, Wescoal held R56,6m in cash, after raising R80m through a rights issue and spending R26,7m on acquiring properties, plant and mineral rights. It recently announced it would acquire the low-cost Khanyisa Mine for R36,5m in cash and a potential further R6m payment to a maximum of R42,5m if it mined another portion of the property. The deal would be funded from its cash resources.

Bojé said Wescoal was looking at other acquisitions, specifically small productive coal mines like Khanyisa producing about 50000- 100000 tons a month. It had deferred the expansion of its briquetting plant, at a cost of R10m, until the brick-making industry revived.

Wescoal shares were unchanged at 74c on the JSE yesterday afternoon, above their lows of 55c in early March .