South Africa’s Exxaro Resources reported a 26% rise in half-year profit on Thursday, boosted by rising coal prices, but rail capacity problems limited its ability to take advantage of strong European demand.

Exxaro said demand from Europe, which began to rise in late 2021 as customers replaced expensive natural gas with coal, had intensified after the Russian invasion of Ukraine in February and before the Russian coal ban. , which came into force this month.

Europe’s share of Exxaro’s exports quintupled during the second half of 2021 to 32% in the first half of 2022, making it the company’s largest export market.

South African coal sales to Europe increased eightfold during the first half of 2022 compared to last year, top exporter Thungela Resources said on Monday.

However, the export capacity of South African coal miners has been limited by deteriorating rail infrastructure.

The railway network of the state-owned company Transnet has been paralyzed by poor maintenance, a lack of locomotives and the theft of copper cables, which has reduced its ability to transport minerals to port.

Despite rising export prices, Exxaro exported 2.5m tonnes of coal in the first half, down from 4.1m tonnes a year earlier.

However, the average export price rose from $117 to $262 per tonne, which was a 48% rise in revenue to R22.3bn ($1.34bn).

Exxaro’s global earnings per share – the main measure of earnings for South African companies – rose to 34.26 rand ($2.05) from 27.22 rand.

Exxaro declared an interim dividend of R15.93, returning $334.09 million to shareholders.

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